Will the ECB support the euro’s rally?

Today at 14:45 MT time, the European Central Bank releases its monetary policy statement. Shortly after that, we will hear the comments by the ECB President Christine Lagarde at 15:30 MT time. The expansion of the Pandemic Emergency Purchase Program (PEPP) last month to 1.35 trillion euros put the European markets on more stable ground. The monetary stimulus combined with better economic data (improved CPI for Germany, better-than-expected PMIs for Germany, France, Eurozone in general) pushed the euro levels against the USD to last March’s. Some analysts worry that the regulator will hold its bond-buying program earlier than needed.  

What to expect?

It’s all about balance. According to analysts, Ms. Lagarde needs to acknowledge that the data is improving, but, at the same time, to confirm the inevitability of a stimulus until clearer figures on employment and corporate bankruptcies. At the same time, the ECB President will likely ask the European governments once again to provide a joint fiscal stimulus. Some experts suggest that reaching a consensus between the member countries may be the trigger for EUR/USD’s jump towards 1.15.

Therefore, the main focus will be on the press conference with Christine Lagarde at 15:30 MT time.

Levels for the euro pairs

EUR/USD

After the test of the 1.1450 level yesterday, the pair corrected lower. There’s a “shooting star” candlestick on the daily chart. Also, we can see a bearish divergence with the MACD oscillator. Technically, we may expect the pair correcting even lower to 1.1340. At the same time, bulls may take action during the ECB meeting. As a result, the retest of 1.1450 is also possible today.

EUR/AUD

If you trade this pair, you need to focus on a breakout of the long-term descending trendline (the key point lies at 1.6420 – 50-day SMA). The Australian dollar got weaker after the worse-than-expected unemployment rate (7.4% vs. 7.2% expected). If the euro gets stronger, the breakout of the long-term resistance will motivate buyers to push the pair towards the 200-day SMA at 1.6550. The support is placed at 1.62.

EUR/GBP

The pair keeps trading within the ascending channel. At the moment, bulls keep pair close to the 50 Fibo level. The resistance lies at 0.9178, while 50-day SMA is acting as a dynamic support.

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FBS Analyst Team