EUR/USD Price: Resistance Remains Firm Ahead of ECB Meeting, PMIs
EUR/USD Price, News and Analysis:
- EUR/USD rangebound as ECB nears.
- Will ECB’s Draghi continue his call for fiscal expansion?
EUR/USD – Resistance Continues to Thwart any EUR/USD Upside
The 200-day moving average has proved to be the thorn in the EUR/USD bull’s side over the last year, acting as strong resistance to further upside. The only break above the 200-dma in late June/early July was quickly reversed and led to further falls. It is likely to remain the case in the short-term that EUR/USD will remain weak and test support at 1.1107 ahead of 1.1100 and the 1.1065 area, leaving the recent uptrend under pressure.
EURUSD Daily Price Chart (January – October 23, 2019)
Thursday’s ECB meeting will be President Mario Draghi’s last and while no policy levers or settings are expected to be touched, he may well reiterate his call for a round of fiscal stimulus within the Eurozone. President Draghi has injected around EUR2.5 trillion into the Eurozone’s economy via various bouts of quantitative easing, expanding the central bank’s balance sheet to over EUR4.65 trillion, and recently announced another round to try and boost price pressures in the single block. In recent weeks, President Draghi has called for countries within the Eurozone to help boost growth and inflation via new fiscal stimulus measures.
Ahead of the ECB meeting, the latest batch of French, German and Eurozone PMIs will be released with little, or no, improvement expected from the current lowly levels. The important manufacturing sector remains weak with the German reading in September the lowest since mid-2009, while the Eurozone number pointed to the steepest contraction in the sector since October 2012.
Euro Area Manufacturing PMI
IG Client Sentiment shows that traders are 61% net-short EURUSD, a bullish contrarian bias.
However recent daily and weekly positional changes give us a mixed outlook for EUR/USD.
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