EUR/USD: Range-trade to extend ahead of ECB?

The EUR/USD pair paused its two-day bullish momentum and fluctuated between gains and losses above 1.19 handle in the Asian session this Wednesday, as markets eagerly await the ECB policy announcement for fresh direction.

EUR/USD: Eyes on ECB                                                               

The major managed to find fresh buyers just ahead of 1.19 handle, having stalled its retreat from two-day tops of 1.1940 reached on the back of downbeat US factory orders data and dovish Fedspeaks.

The US dollar was battered across the board in tandem with Treasury yields, after the Fed officials urged caution on raising interest rates further, with the latest one being the FOMC member Kaplan, citing that the Fed should be patient on rates.

Moreover, with markets expecting the ECB to shrug-off the Euro appreciation and offer hints on the tapering plans, narrowing monetary policy divergence between both continents is back in play, which keeps the sentiment around the common currency buoyed.

However, it remains to be seen if the bulls can retain control above 1.19 handle, as the US dollar makes recovery attempts against its main competitors so far this session. Meanwhile, risk trends will also have a major bearing on the spot amid the North Korean risks and increased nervousness heading into the ECB policy decision due tomorrow.

In the meantime, focus remains on the German factory orders, Eurozone retail PMI and US ISM services PMI report for near-term trading opportunities.

EUR/USD Technical Set-up  

Valeria Bednarik, Chief Analyst at FXStreet, explained: “Up for the week, the 4 hours chart shows that the price keeps hovering around a horizontal 20 SMA, while technical indicators remain around their mid-lines, with no clear directional strength. Below 1.1860/70, the risk should turn towards the downside, exposing first the 1.1822 low set last week, en route to a stronger static support in the 1.1780/90 region, whilst renewed buying interest above 1.1920, could see the pair attempting a test of the 1.2000 price zone. Support levels: 1.1860 1.1820 1.1785 Resistance levels: 1.1920 1.1965 1.2000.”