ECB Rates Decision to Drive the EUR/USD

EUR/USD Analysis 21 January 2019

EUR/USD Spot Price: 1.1362

Support - 1.1300, 1.1270, 1.1210

Resistance - 1.1400, 1.1450, 1.1500

Trade-Ideas - The EUR/USD is Falling

  • Position: Short
  • Entry Point: 1.1400
  • Stop Loss: 1.1450
  • Take Profit: 1.1300

I want to get short at 1.1400 with a stop loss at 1.1450 and a profit target of 1.1300.

2019-1-21-eurusd-trade-ideas

EUR/USD 240 min Chart - EUR/USD is Falling

EUR/USD on the Slide

During the risk-off period during the Christmas break, the EUR/USD held up relatively strongly. Unfortunately, as the bulls have wrestled back control, the slide in the EUR/USD has returned.

This week, the EUR/USD is expected to be under even more pressure as the ECB meets again to discuss the outlook for their monetary policy.

The big item of recent times has really been the poor state of inflation within the Eurozone. CPI was ticking over at a meagre 1.6% per year, which is far short of the target band of 2-3%, that most central banks would be happy with.

As such, the chances of a hike at this meeting of the ECB appear to be virtually zero. However, the question on everyone’s mind is now surrounding when Draghi might finally look to pull the trigger on a rate hike.

He had previously signaled that he was looking at ‘Summer 2019’, but given the lagging inflation figures, it appears even that might be too optimistic.

If in fact, he does signal that the expectation for monetary policy to start tightening has been pushed back even further, expect to see the EUR/USD tumble.

Key Economic Data

Outside of the ECB interest rate decision, there are a number of data points from Germany that will likely have an impact on the EUR/USD.

German ZEW sentiment, Business Climate and Manufacturing PMI. Across the board, these indicators have all been on the slide, which is a good reflection of where the EUR/USD is at the moment. A lift in any of these could well see a surprise spike to the upside.

Technical Levels

The EUR/USD trading tange of 1.1300 and 1.1500 continues to remain intact for the time being. 1.1400 and 1.1500, appear to be offering very strong resistance at the moment and as such are good levels to key off for short positions.

While to the downside a clear target is the 1.1300 which is major support for the time being. Any more dovish undertones from the ECB will likely wee 1.1300 tested in a significant way.

2019-1-21-eurusd-key-levels

EUR/USD - Key Levels

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