EUR/USD pares the sharp decline following the European Central Bank (ECB) interest rate decision, but the recent rebound appears to be losing steam as the Governing Council endorses a dovish outlook for monetary policy.
Fresh comments from ECB official Peter Praet suggest the central bank remains in no rush to normalize monetary policy as the board member pledges to retain the zero-interest rate policy (ZIRP) ‘as long as necessary to ensure that inflation developments remain in line with current expectations of a sustained adjustment path.’ It seems as though the ECB will keep the door open to further support the monetary union as the Governing Council struggles to achieve its one and only mandate for price stability, and the Euro remains at risk of facing additional headwinds over the coming months as the quantitative easing (QE) program is now set to expire in December.
With that said, a bearish trend appears to be materializing in EUR/USD and the Relative Strength Index (RSI) as the ECB looks to carry the record-low interest rate well into 2019, and the euro-dollar exchange rate may continue to give back the rebound from earlier this month should it snap the recent series of higher highs & lows. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!
EUR/USD Daily Chart
EUR/USD appears to have marked failed attempt to test the monthly-high (1.1852) as it struggles to hold above the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region, with a close below the stated levels opening up the 1.1510 (38.2% expansion) hurdle, which lines up with the May-low (1.1510). Next region of interest comes in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion) followed by the 1.1290 (61.8% expansion) hurdle.
For more in-depth analysis, check out the Q2 Forecast for the Euro
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--- Written by David Song, Currency Analyst
Follow me on Twitter at @DavidJSong.