The Euro stands at the front foot on Thursday, supported by weaker dollar, which got under increased pressure after the Fed signaled and end of a tightening cycle and rate cuts in 2024.
Extended recovery from 1.0723 (correction low) hit two-week high ahead of today’s key event – ECB policy decision.
The European Central Bank is expected to keep interest rate unchanged at a record 4.5% for the second time, with focus on signals for the future steps, which will provide more details about the ECB’s stance in the near future.
Softer inflation in the Eurozone is supportive factor, however weak economic condition suggest that the ECB is unlikely to further raise interest rates, but will have more cautious approach in current conditions, as the story with fighting inflation is not over yet, but slowing economy is a strong warning.
Technical picture on daily chart has improved, as moving averages turned to bullish configuration, but momentum is still negative and stochastic indicator in overbought territory.
The Euro may rise further if policymakers turn more hawkish, though overall conditions suggest that this is unlikely scenario, while softer than expected tones may deflate the single currency.
Violation of pivotal support at 1.0827 (200DMA) would weaken near-term structure and risk deeper drop.
On the other hand, lift above 1.0947 (Fibo 76.4% of 1.1017/1.0723) would bring bulls fully in play for attack at key 1.1000/17 barriers (psychological / Nov 29 high).
Res: 1.0947; 1.0965; 1.1000; 1.1017.
Sup: 1.0870; 1.0827; 1.0817; 1.0792.
