ECB Decision: Will The Euro Dip Below 1.10?
The U.S. dollar sharply accelerated after yesterday’s hotter-than-expected U.S. inflation data and sent the EUR/USD to a test of the next lower support at 1.10, whereas the GBP/USD fell towards 1.30. The U.S. CPI report was the final significant data release before next week’s FOMC meeting where policymakers are expected to stick with the smaller 25bp rate cut.
Today we have the European Central Bank decision and ECB policymakers are unlikely to accelerate interest rate cuts in response to the weakening eurozone economy. The ECB is widely expected to implement a 25bp rate cut today.
Given the sluggish EU economy it is not looking very rosy for the euro but from a technical perspective, the recent short-term uptrend in the EUR/USD has not yet ended. Only a break below 1.0950 and further 1.09 will draw a different picture and will shift the outlook back to neutral in short-term time frames.
EUR/USD: A crucial support is seen around 1.0950 which could stop the euro from falling further. On the upside, the 1.11 hurdle will be interesting to watch and price breaks above 1.1110 and 1.1160 could reactivate bullish momentum.
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Our trading ideas for today 12/9/24:
EUR/USD
Long @ 1.1060
Short @ 1.1015
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