Euro steady against US dollar

Over the last 2 weeks, the Euro has been on the front foot against the US dollar and after reaching a 4 month low of $1.1523, the currency has managed to claw its way back to around $1.1640 as we enter todays European trading session.

The big question now, is can the Euro continue to push higher against the greenback or are we going to see a protracted sideways movement as the market await news from the European Central Bank regarding their intentions about monetary policy.

As it stands now, the ECB is one of the central banks, along with the Reserve bank of Australia and the Bank of Japan who are last in line to begin a reduction of their stimulus programs introduced to tackle the devasting effects of the coronavirus which means any chance of a rate hike is likely even further away.

For the time being, this probably answers the question above and the EUR/USD currency pair is likely to drift sideways for some time or even fall against the greenback as traders await clearer signals on the ECB’s intentions which should be known by the end of the week when they release their latest interest rate decision followed by a monetary statement

As it stands, the meeting of the ECB’s policy-setting Governing Council is set to result in the ECB keeping the current status quo by leaving interest rates in the Eurozone on hold and the bank’s current bond-buying programs left unchanged and this news is already well and truly priced into the Euro. If the market is wrong, and there is some talk on changing the current monetary policy path the Euro may get an unexpected boost.

From a technical point of view, the EUR/USD currency pair has managed to stay above the upward trend line which begun on October 13th and as we enter today’s trading session it is once again providing support.

There are a number of barriers ahead for EUR/USD pair such as the next resistance level at $1.1682 and the 50 day MA which is hovering around the $1.1690 mark and it is hard to see a break through these critical resistance levels this week unless the ECB surprises to the upside with regards to their stance on monetary policy.