EURUSD Price Analysis: Breaking Lower Ahead of ECB
EUR price, news and analysis:
- EURUSD is looking weak technically.
- From a fundamental perspective, price action this week will likely be dominated by Thursday’s ECB monetary policy meeting.
EURUSD outlook: shaky
EURUSD has broken below the support line of a bearish rising wedge pattern on the charts ahead of Thursday’s monetary-policy announcement by the European Central Bank.
EURUSD Price Chart, Hourly Timeframe (February 12 – March 5, 2019)
Chart by IG (You can click on it for a larger image)
As the chart above shows, it is now not far from the psychologically important 1.13 level, and a further fall to that point would be no surprise.
ECB meeting in focus
Meanwhile, from a fundamental perspective, this week’s big event is Thursday’s monetary policy meeting in Frankfurt of the ECB’s Governing Council. It is expected to leave its key interest rates – and its forward guidance on rates – unchanged so attention will likely focus on possible downgrades of its economic growth and inflation forecasts.
Traders should also look out for any news Thursday on its Targeted Long-Term Refinancing Operations (TLTROs), its method of providing more cheap funding to banks to encourage them to boost economic activity by lending more. At present, the ECB seems unlikely to announce a new round of TLTROs but to leave open the possibility of more loans in the future: a possible bearish development.
Eurozone PMIs revised upwards
Ahead of that, Tuesday’s final data on the Eurozone purchasing managers’ indexes in February showed a larger-than-expected increase in the composite PMI: up to 51.9 from 51.0 in January and above the “flash” reading of 51.4. However, that still suggests first-quarter GDP growth of just 0.2% according to IHS Markit, which compiles the figures.
Separately, retail sales figures for the Eurozone in January beat forecasts modestly both month/month and year/year.
On the other side of the EURUSD pair, the US Dollar is continuing to benefit from hopes of a successful US-China trade deal but talk Tuesday of a new trade dispute between the US and India could hold it back.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.