The Euro (EUR) extended upside movement against the US Dollar (USD) on Friday, increasing the price of EUR/USD to more than 1.0550 following the ECB’s monetary policy announcement. The technical bias remains bearish because of a lower high in the recent upside rally.
Technical Analysis
As of this writing, the pair is being traded around 1.0595. The pair is expected to face a hurdle near 1.0630, the trendline resistance area ahead of 1.0819, the 50% fib level and then 1.0990, the upper trendline resistance as marked with red color in the given below chart.
On the downside, a support may be seen near 1.0514, the trendline support area as demonstrated in the given above daily chart with brown color. A break and daily closing below the 1.0514 trendline support shall incite renewed selling interest, validating a move towards the 1.0400 support zone which is a psychological number. The technical bias shall remain bearish as long as the 1.0819 resistance zone is intact.
Draghi Remarks
Draghi said the ECB removed a reference to using all available measures to induce growth and inflation “because the sense of urgency is not there.” The Governing Council had also discussed removing a reference to lowering interest rates in its forward guidance and had increased its inflation and growth profile for the euro zone next year, he added. The euro rose above the $1.06 level during Draghi’s remarks, reversing earlier selling that had brought it to a six-day low. It was last up 0.5 percent at $1.0593. The dollar index, which tracks the greenback against the euro and five other major world currencies, hit a session low of 101.700 as Draghi spoke. It was last down 0.2 percent at 101.880.
Trade Idea
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term.
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