© Dukascopy Bank SA
Amid a lack of fundamental news from Europe the most traded currency pair was driven by news from the United States. Due to the fact the economy sent mixed signals, with consumer confidence and jobless claims coming stronger than expected, and new home sales and pending home sales surprising markets to the downside, the pair managed to close just 40 pips below the week's opening price last Friday.
This week the pair has a potential to be even more bearish, when being based on the fundamental and technical analyses. A vast majority of Dukascopy traders is having a bearish view on the pair, while the consensus forecast stands for 1.3710, more than 80 pips below the market price at the moment of writing. The pair is still trading in boundaries of several trade patterns, including a falling wedge on a 4H chart and a rising wedge on a daily chart. In the first case, the pair is approaching pattern's resistance, and a 200-period SMA, a move that is usually interpreted as a ‘sell' signal. Regarding the pattern on a daily chart, there are not clear indications; however, the pair moved slightly closer to the pattern's lower boundary. The first strong support is represented by a weekly and daily pivots around 1.3770, while before hitting traders' target, the pair will have to penetrate a daily S1 at 1.3729.
This week's main highlight will be the ECB's meeting, where Mario Draghi and his team are likely to introduce fresh stimulus by using one of the tools they have to stimulate the economy. While almost 60% of Dukascopy traders believe the event will push the Euro higher, the latest inflation report is raising concerns of deflation. At the same time, the single currency close to 1.40 is a threat to the economy, to exporters in particular, therefore, even when staying pat on the policy Draghi can provide dovish comments.
© Dukascopy Bank SA