The ECB has removed the easing bias on its asset purchases. The macroeconomic assessment has not changed since January 2018 meeting. Market participants got only a little update regarding the forward guidance changes, but we see the changes were not encouraged to be on the bullish euro.
The market responded little hawkish to the forward guidance changes, but the euro exchange rate price action was capped by the end of Draghi’s press conference.
- February EZ services PMI down to 56.2 from 58.0
- 4Q 2017 GDP up by 0.6% in both euro area and EU from 3Q 2017
- ECB leaves policy unchanged but updated forward guidance
This week’s economic calendar is unlikely to alter the major range bound status. We expect January euro area IP (Wed) to fall by 0.07% on MoM basis. Final CPI (Fri) should be retained at 1.2%.
This week’s US inflation data should fix the major weekly trend. We expect February CPI to slow by 0.2% from January 0.3%.
EURUSD traced out a near-term price top between 1.2540-1.2555 in January-February 2018 via the formation of a double top pattern. While the resulting downward stalled in early March, later corrective phase has ended before the ECB meeting.
The daily RSI and oscillator studies are remaining bearish. This suggests that rallied to resistance at 1.2435-1.2445 should attract selling interest with support against the February 22 low at 1.2260 below there, the focus will move down to February 09 low 1.2200. Noting that the major posted a double top last week at 1.2445.
- A move below 1.2260 needed, to forecast further retracement to 1.2200 and 1.2165.
- A move above the double top could open in the mid-Feb high of 1.2550.
View: Locked in sideways
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