EURUSD is advancing above 1.1 as the ECB meeting draws near. The following technical analysis is based on the Elliott wave theory.
September 12, 2019 | AtoZ Markets - The Euro-dollar currency pair is trading above 1.1 on Thursday just before the ECB meeting kicks in. The pair went bearish on Thursday - dropping from 1.1055 to 1.0985. However, it has now picked and looked optimistic ahead of the important economic event in the Euro-zone and the US Inflation reports.
The ECB will announce its new rates today which include the Euro-zone deposit facility rate, interest rate and the marginal lending facility rate. The Central Bank will also state its monetary policies before attending to the press in a conference 45 minutes after. The EURUSD is usually volatile during and after this event especially if the statements come out more hawkish or dovish than the market expects. The ECB is expected to come out defensive today after such bad months the zone has had. Germany and Italy have battled with recession or near-recession since the turn of the year while the UK Brexit appeal is becoming uncertain and dramatic. EURUSD continues to plummet since it started the bearish run in January 2018. The market will expect a quantitative easing today but the ECB might come with a big surprise. The US will also release its CPI and Core CPI data for August.
EURUSD analysis: important price levels
The important price levels are very clear on the price chart. Price is currently holding above 1.1. If it advances further to break above 1.1085 resistance level, 1.1165, 1.125 and 1.14 are medium-term bullish targets. To the downside, a minor support level was formed at 1.098 on Wednesday above the 1.092 swing low.
EURUSD Elliott wave analysis
After the intraday impulse wave rally to 1.1085, EURUSD started a bearish correction. In the last update, we expected a test of 1.1 to complete wave ii as the chart below shows.
Price bounced off 1.1 as expected. The new chart below shows that the near-term direction supports further rallies especially if the price breaks out of the wave ii channel.
Meanwhile, the near-term direction depends heavily on today's ECB meeting and the US inflation reports. These are high-impact events that could cause a fast break above 1.1085 to compliment this forecast or fast dip below 1.092 to shatter it. We will have to see what happens afterwards.