This week’s ECB meeting presents an opportunity for a change in price positions for the Euro. However concerns over the impact of a strong Euro on Eurozone inflation and the possibility of more stimulus could affect temporary moves for the pair.
The highlight of the week is the ECB meeting on Thursday (September 10). No doubt a strong EUR will be a hot topic, as will a change in the Fed’s monetary policy strategy. On the other hand, there is starting to be some mild verbal intervention to the strength of the Euro. Of particular concern in this meeting are the following : how low the ECB will revise its 2022 inflation forecast (which is currently at 1.3%) and whether it will start to provide clues about future easing, given the broad momentum behind dollar weakness.
It is likely that the ECB can only slow down, not reverse EURUSD appreciation. Data for next week are July industrial production figures across Europe and the Sentix Investor Confidence survey, which are expected to pick up further.
EURUSD – The intraday bias remains neutral as the consolidation has not broken away from the moving range. However, as long as support at 1.1762 and 1.1695 last, another rise and break of 1.2010 will resume the rise from 1.0635 . However, a break of 1.1762 will confirm short term tops and turn bias to the downside.
The price is still above the EMA 200, between the EMA 26.50 and 120. The RSI and MACD are still showing negative sentiment, before exiting the consolidation zone, the price will not move.
In the D1 view, the bias is still up and the price is sitting above the EMA 26. The height of the peaks formed tends to diverge , this can be seen from the RSI and MACD histogram which tend to decrease.
In the bigger picture, the downtrend from 1.2555 (2018 high) has finished at 1.0635. As long as the resistance at 1.2010 remains intact, the possibility of correction is wide open for both 1.1494 and 1.1168. The rally’s advance will further target 1.2555. In terms of price action, the descending trendline has been broken, it’s just that the price doesn’t move straight up, and always forms waves.
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Ady Phangestu
Market Analyst – hfindonesia
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