22 July, 2019 | Axiory - The EURUSD pair was volatile in the previous week, but bulls failed to defend the earlier gains and the single currency reversed on Friday, bringing the pair back to the 1.12 level.
The focus of investors throughout the next days will be on three key elements: Eurozone's PMIs for July, the ECB decision and the US GDP.
The first thing is going to be released on Wednesday, with the manufacturing survey expected to remain near June's 47.7, while the services sector is seen slowing slightly, from 53.6 to 53.3. The same trend is forecast for German numbers. Weaker figures could be negative for the euro as they increase the chance of a dovish ECB decision.
On Thursday, the European central bank is expected to leave monetary policy unchanged, with the main rate staying at 0.0% and the deposit rate should remain at -0.4%. However, investors are speculating that the meeting should sound ultra dovish, with ECB preparing the markets for future rate cuts and a possible restart of the QE program.
Should this happen, the euro might lose ground, possibly attacking the 1.11 level, while gold, German bonds, and stocks might levitate higher. Volatility will surely be elevated after the monetary policy decision and the ECB presser.
The last important thing will be released on Friday - the US GDP reading for the second quarter. The market forecasts a huge slowdown and the economic activity should decelerate to 1.9%annualized, down from 3.1% in the first quarter.
EURUSD technical analysis
Technically speaking, the support for the pair still remains near the 1.12 level and it has been tested a couple of times already. Shouldthislevelfall, stop losses will be hit, which could drag the euro lower, targeting 1.1180 in the initial reaction. Another zone to watch is near 1.1120, where the current cycle lows are located.
On the other hand, should the ECB decision sound neutral, the euro could spike higher significantly, withthefirstresistancenearThursday´shighsof 1.1280 and the next level to watch might be near 1.1320.
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