EUR/USD slightly dips below 1.0900 ahead of ECB’s decision
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- Euro registers minor losses as markets prepare for the European Central Bank's monetary policy announcement.
- Federal Reserve officials enter blackout period; San Francisco's Fed President Daly adopts a dovish stance on monetary policy.
- Traders eagerly await ECB President Lagarde's comments on forward guidance, with expectations of potential rate cuts by the Summer.
The Euro (EUR) registers minuscule losses against the US Dollar (USD) early in the North American session as risk appetite improved and traders brace for the European Central Bank (ECB) monetary policy decision on Thursday. At the time of writing, the EUR/USD meanders at around 1.0890, down 0.06%.
EUR/USD could witness sideways price action ahead of ECB’s meeting
Wall Street has opened Monday’s session in the green, while US and global bond yields take a toll and are lower in the day. Even though the Greenback (USD) is down as shown by the US Dollar Index (DXY) at 103.45, losing a mediocre 0.02%, Euro buyers had failed to underpin the pair, failing to crack key resistance at 1.0900.
Meanwhile, Federal Reserve (Fed) officials began their blackout period ahead of January’s 30-31 meeting. The latest policymaker that crossed the newswires was San Francisco’s Fed President Mary Daly, who commented that monetary policy is fine and that risks of achieving the central bank’s mandates are more balanced. She’s adopted a more dovish stance, adding that rates could be lowered without impacting the progress on inflation.
In the Eurozone (EU), traders are laser-focused on the ECB’s monetary policy meeting. The ECB is expected to keep the deposit rate at 4%, though traders would be dissecting ECB’s President Christine Lagarde’s comments on forward guidance. Even though she said that it’s too early to cut rates, she added the central bank could begin reducing interest rates by the Summer.
EUR/USD Price Analysis: Technical outlook
Although the EUR/USD headed south, it found support at the 200-day moving average (DMA) for two consecutive days in January 17 and 18, forming a ‘tweezers bottom’ chart pattern, that could open the door for further upside. Despite hitting a daily high above 1.0900, buyers need a daily close above that level to begin trading within the 1.0900/1.1000 area. On the other hand, if sellers drag prices below the 200-DMA at 1.0845, that would expose the 100-DMA at 1.0770.
