The Euro finished the day in positive territory in yesterday’s trading session and the good news has continued today with the currency opening on a higher note as the market awaits the crucial European Central Bank interest rate decision and press conference later today.
The ECB is widely expected to keep interest rates on hold at 0 percent so with no changes expected here, the focus will be on the following monetary statement and press conference from ECB president Christine Lagarde and will be the key to weather the Euro can continue to grind higher.
The main focus for investors will be the plans from the ECB regarding their asset purchase program (APP) and the pandemic emergency purchase program (PEPP) and whether there will be any adjustments made to further support the Eurozone economy or maybe hints of a reduction.
The central bank has recently lifted its inflation target to 2% and put in place measures which will accommodate spikes in inflation and have recently announced that any temporary readings above the 2 percent level will be no cause for concern and will be tolerated by the ECB.
On the chart we can see that the bulls defended a key support level for the 2nd straight day at the $1.1755 level, and early on in the European trading session the Euro/USD currency pair is hovering around the $1.1800 mark.
A movement of up to 100 pips is expected for this pair surrounding the news release form the ECB and a test of the $1.1840 resistance level is expected should the Central Bank surprise the market with a bullish tone.
A more dovish tone will cause the US dollar to strengthen, and we are likely to see a retest of the $1.1755 support level with a possible break and a move down towards the next support level at $1.1714.