On Monday, the common European currency traded between two levels of technical analysis between 1.1435 and 1.1455.
As the rate broke a previously described ascending channel pattern, a decline further is highly likely. Namely, if the level at 1.1435 is passed, the rate could drop as low as 1.1420.
The European Single Currency appreciated against the US Dollar, following the EU Main Refinancing Rate release on Thursday at 12:44 GMT. The EUR/USD exchange currency rate gained 11 pips or 0.10% during a minute, right after the release. The European Single Currency continue trading at the 1.1340 area against the US Dollar.
The European Central Bank released the EU Main Refinancing Rate data in line with expectations of 0.00%.
"The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties," Draghi told a news conference, citing trade and geopolitical threats and emerging market volatility. "The near-term growth momentum is likely to be weaker than previously expected."
Bank of England announcement takes all attention
There are various minor data releases scheduled for this week, which are unlikely going to influence the financial markets. However, there is one event that is set to take all attention and cause a reaction.The major event will be the Bank of England rate announcement on Thursday. The rate announcement and the results of the central bank's monetary policy vote will be published at 12:00 GMT.
Another notable event during this week will be the Canadian Employment data release on Friday at 13:30 GMT.
Both of these events are scheduled to be covered by Dukascopy Analytics on our Dukascopy Webinars YouTube channel. The streams start ten minutes before the data release.
EUR/USD daily review
The EUR/USD has broken the lower trend line of the medium term ascending channel pattern and begun to trade between technical levels at 1.1435 and 1.1455.Due to the breaking of the pattern the rate is more likely expected to pass the monthly pivot point at 1.1435 and decline further down to the 1.1420 level. At that level the rate would be met by the 200-hour simple moving average.
On the other hand, the pair might trade sideways, as it attempts to pass the 55 and 100-hour simple moving averages and the weekly pivot point at 1.1455.
Hourly Chart
On the daily chart the lower trend line of a massive scale ascending pattern forced the rate into a surge last week.
In general, from the daily chart's perspective the pair is consolidating its short term gains. Afterwards it should resume its surge until it reaches the upper trend line of a large scale descending pattern, which can be best seen by zooming out.
In addition, take into account that the pair is being supported by the 100-day simple moving average. Meanwhile, the 200-day SMA should provide resistance in the future, as it is heading down near 1.1560.
Daily chart
On Monday, traders of the Swiss Foreign Exchange had massively oversold the EUR/USD in expectations of a decline.
Namely, 71% of traders had open short positions for the pair.
Meanwhile, by looking at the pending orders in a 100-pip range above and below the current exchange rate, it can be seen that additional selling will not occur. 53% of pending orders are to sell and 47% are to buy in that range.
To sum it up, traders have opened short positions due to the breaking of the surge and following decline. They expect to profit from descent of the pair.