Germany loosening the purse strings by this much and calling for the EU to accommodate that is something not on the bingo list for this year. And when you couple that with a break of the 1.0500 level and 100-day moving average (red line), after several attempts of trying, it's been quite a run up in EUR/USD this week.
For trading today, we will still be building on the same key drivers all through this week. The euro is moving from one technical resistance to another, now contesting the 1.0800 mark and 61.8 Fib retracement level at 1.0817. A break of that will provide scope for a potential run towards 1.1000 next, which will arguably be a key topside target for buyers on this run.
Looking to the session ahead, there won't be much significant data releases but we do have the ECB policy decision coming up. A 25 bps rate cut is a given at this stage with a temporary pause after. And the ECB now has more reason to move to the sidelines, following the positive developments in Germany.
As things stand, traders are pricing in another 25 bps rate cut for June but they might have to revise that depending on how the ECB wants to position their move to the sidelines here. My guess will be the ECB will still lean towards a more dovish tone even when pausing. And that means they don't necessarily need to change their guidance below:
If the language holds, that should keep a June rate cut in play until we get better clarity in the weeks ahead from policymakers themselves.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
This article was written by Justin Low at www.forexlive.com. Read More Details
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