EURUSD Tests Channel Resistance Ahead of Draghi’s Remarks

FXOpen

Talking Points:

  • Euro/Dollar to test hourly channel resistance
  • ECB chief Mario Draghi scheduled to speak today
  • Technical bias remains bearish

The Euro (EUR) extended downside movement against the US Dollar (USD) on Monday, increasing the price of EURUSD to more than 1.0500 ahead of the European Central Bank (ECB) chief Mario Draghi’s remarks. The technical bias already remains bearish due to a Lower Low in the recent downside move.

Technical Analysis

As of this writing, the pair is being traded around 1.0525. A support may be seen near 1.0461, the swing low of the recent downside move ahead of 1.0000, the parity level which is also a huge psychological level.

EURUSD Tests Channel Resistance Ahead of Draghi’s Remarks

On the upside, the pair is likely to face a hurdle near 1.0589, the trendline resistance as demonstrated in the above hourly chart. A break and hourly closing above the channel resistance could incite renewed selling interest, validating a rally towards the 1.1000 handle. The technical bias will however remain bearish as long as the 1.0683 resistance area remains intact.

Draghi Speech

The ECB chief Mario Draghi is expected to give hints about future monetary policy outlook of the Eurozone economy in his today’s speech. The ECB has already announced a Quantitative Easing (QE) package worth 100 trillion Euros for the ongoing year which is constantly keep the shared currency under selling pressure. Many analysts believe that the Euro/Dollar pair may breach the parity level by the end of this year due to aggravating financial situation of the European Union.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around the channel resistance appears to be a good strategy in short to medium term. The trade should however be stopped out on an hourly closing above the trendline resistance area as described above.

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