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Euro Dollar Forecast: Key EUR/USD Levels to Watch

Euro Dollar Forecast: Key EUR/USD Levels to Watch

2020-01-23 12:00:00
Justin McQueen, Analyst
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EUR/USD Analysis and Talking Points

  • EUR/USD | Don’t Expect Fireworks From ECB
  • Euro Technical Outlook | Holding Tight Range
  • Italian Risks Re-emerging, Eyes on Regional Elections

EUR/USD | Don’t Expect Fireworks From ECB

The ECB are scheduled to announce its latest monetary policy decision, where the central bank is expected to stand pat on policy with forward guidance likely unchanged. While Euro traders will be eying the decision, don’t expect any fireworks, as implied volatility is at its lowest level for any ECB decision over the past 12-months, signalling a 36pip break-even.

Since the last meeting, external uncertainties receded, while Eurozone data has stabilised, as indicated by the recent German ZEW survey, which saw the economic situation metric rise to its highest level since April 2015. Therefore, while the ECB may be slightly optimistic, they will likely stick to its rhetoric that risks remain tilted to the downside. Much of today’s focus will be on the ECB’s strategic review (first review since 2003), which the ECB will look to complete by the end of the year. The review will likely entail a change to the ECB’s guidance on inflation with some looking at possible symmetry of the 2% target.

EUR/USD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 21% -21% -9%
Weekly 20% -26% -13%
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Euro Technical Outlook | Holding Tight Range

EUR/USD has traded within a tight range throughout the week as a cluster of DMAs contain price action. In turn, this has seen the pair struggle to consolidate above 1.1100, while downside has been curbed at 1.1070, which also coincides with the rising trendline from the 2019. Consequently, with Euro implied vols relatively muted, recent ranges are likely to be maintained.

Italian Risks Re-emerging with Focus on Regional Elections

EUR/USD Vanilla Options: 1.1005 (801mln), 1.1075 (665mln), 1.1100-05 (500mln), 1.1110 (1bln)

EUR/USD Support & Resistance

Support

Resistance

1.1084

100DMA

1.1110

Vanilla Options

1.1075

Vanilla Options

1.1115

50DMA

0.6780

Trendline Support

1.1130

200DMA

EUR/USD Price Chart: Daily Time Frame

Euro Dollar Forecast: Key EUR/USD Levels to Watch

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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