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Forex Update: EURUSD Struggling at Resistance with ECB to Come

Published: 04.05.2023
by Joseph Jeffriess

Today’s focus EURUSD

Pattern – Resistance stall
Possible targets – 1.1165 Upside 1.0965 downside
Resistance – 1.1065
Indicator support – ECB meeting MA slope up

With the ECB to come, we are focusing on the EURUSD as the price continues to be held at 1.1065 resistance. Price has continued to trade in an up trend but, for now, remains held back at the resistance that started in April.

The ECB could be a short-term catalyst tonight. Rates are expected to be increased by 25 points. The talk is that the ECB could step back as core inflation slowed to 5.6%, and the inflation figure sits at 7%. A larger-than-expected credit drop and tighter leading criteria are other factors that could maintain the trend of small hikes. Another 25-point hike is forecast for June.

Another possibility could be a reduction in the balance sheet. QT has already been happening with a reduction in the massive bond holdings.

Price-wise, we will need something positive from the ECB to drive the EURUSD higher. Price continues to weaken at resistance, and the USD, another factor, continues to firm today. If the ECB confirms that rates may not rise as much as expected, it could push the EURUSD lower, maintaining resistance. If we see a hawkish surprise in the statement, this could be enough for the price to break resistance and start a new leg higher.

Don’t forget about the USD and tomorrow’s NFP. The USD is holding above 100.80 support, and if it can form a solid comeback with a more dovish ECB could set the EURUSD up for a leg lower.

EURUSD Daily Chart

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