EUR/USD is trying to get back above the 20 EMA at 1.1830 as traders await the Interest Rate Decision from the European Central Bank which is due to be released today.
The interest rate is expected to stay unchanged at 0% so the market will mostly focus on the commentary from ECB.
The key question is what ECB plans to do with inflation which slipped to -0.4% in August. Officially, ECB wants to bring inflation closer to 2% but current inflation rate is very far away from this target.
The U.S. Fed has recently adopted an average inflation target of 2% which will allow it to keep rates at the bottom even if inflation rises above 2%. Some traders believe that ECB will adopt a similar target in order to provide more confidence to the market and stop the rapid increase in the value of euro.
ECB may choose to deliver dovish comments aimed at containing the euro rally but it remains to be seen whether the market will take them seriously. In short, EUR/USD is set for a very active trading session today.
Technical Analysis
EUR/USD tries to continue its rebound and settle above the 20 EMA at 1.1830. In case this attempt is successful, EUR/USD will gain more upside momentum and head towards the next resistance level at 1.1910.
The resistance at 1.1910 is set to be strong, and EUR/USD will need additional catalysts to get above this level. If this happens, EUR/USD will move towards the next resistance level at 1.1965.
On the support side, the nearest support level for EUR/USD is located near the recent lows at 1.1765. If EUR/USD manages to get below this level, it will head towards the next support level at the 50 EMA at 1.1730.
A move below the 50 EMA will be a major problem for EUR/USD bulls since EUR/USD will leave the wide range in which it traded since early August. In this scenario, EUR/USD will have great chances to establish a new downside trend.
Reprinted from Fxempire，the copyright all reserved by the original author.
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