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Will the ECB push the EUR/USD below 1.1200 today?

April 10, 2019 11:30

Economic events calendar

Source: Economic Events April 10, 2019 - Admiral Markets' Forex Calendar


Today all eyes will be on the ECB rate decision. Since the last rate decision at the beginning of March, the technical picture for the EUR/USD hasn't dramatically changed with the currency pair still trading within the existing range of 1.1200 and 1.1500.

At today's press conference, the main focus is assumed to address tiered interest rates and plans of the European Central Bank to ease the stress put upon European banks in an era of sub-zero interest rates. In general, the whole discussion casts Euro-negative light, critical of low-interest rates in the Euro-Zone, leaving the currency vulnerable to a push lower.

On Monday, we heard that since Mario Draghi's speech on the March 27, where he discussed steps to soften the impact of negative rates if necessary, the ECB hasn't discussed this matter any further with the Euro seeing a push higher against 1.1200 in a thin market environment.

While such rhetoric could result in a short-squeeze in the Euro, based on the current short-bias in the Euro which can, for example, be spotted in the latest Commitment of Traders reading, and push the EUR/USD back towards 1.1200, we think that chances are higher that the ECB will start an attempt to somehow downtalk the Euro.

This conclusion is drawn mainly out of the fact that more and more central banks became increasingly dovish (Fed, RBA, RBNZ) over the last few months. And given the tensions around the Brexit, the trade war between the US and China which seems to easily be capable of spilling over to Europe, and a slowing German economy, the ECB would surely be happy about a lower Euro to counter any negative economic and trade developments.

That said, we favour a dovish ECB today, and a technical downward break out of the range between 1.1200 and 1.1500 with the EUR/USD heading towards 1.0900/0950 over the days to come.

EUR/USD index daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between January 14, 2018, to April 10, 2019). Accessed: April 10, 2019, at 10:00 PM GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the EUR/USD fell by 11.9%, in 2015, it fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, meaning that after five years, it was down by 16.5%.

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