The current price action in EURUSD is worth monitoring into tomorrow’s ECB meeting. Following the breakdown below the 1.1961 level, the decline has been much more laboured, with weaker downside momentum, as highlighted by the falling wedge pattern which describes the recent sell off. Price is now close to testing the big 1.1703 support level and with MACD and RSI both showing plenty of bullish divergence, there are topside reversal risks here. If price breaks back above 1.1840, bulls can target the 1.1961 level initially and a.1071 thereafter.

Key Data to Watch

The key focus this week is of course the July ECB meeting. The expectations are heavily built up in favour of the bank delivering a dovish message. On the back of the ECB lifting its inflation target (higher bar for rate hikes) the market is looking for further elaboration on this. Additionally, there is some expectation that the bank will extend its current QE program. Clearly, if the ECB follows through on these expectations, EUR is likely to trade lower. However, if the bank refrains from extending QE or giving any dovish signals, this could see EURUSD move sharply higher.