EUR/USD Checks Resistance Forward of ECB, EU Summit

Euro Value Evaluation:

• Tomorrow’s financial calendar brings a price choice from the ECB, set to happen at 7:45 AM ET with the accompanying press convention kicking off at 8:30 AM ET.
• Whereas little is predicted round tomorrow’s ECB price choice, the EU Summit could also be extra eventful or contentious for monetary markets.
• Forward of the drivers, EUR/USD has pushed as much as a contemporary four-month excessive, testing a key zone of resistance alongside the best way. So far, patrons have been held at bay by this space on the chart, establishing an attention-grabbing backdrop within the pair and the Euro for the approaching days.

EUR/USD Checks Key Resistance Forward of ECB, EU Summit

The stage is establishing for the Euro and earlier this morning, EUR/USD pushed as much as a contemporary four-month-high, discovering resistance within the lower-portion of a zone that’s been in-play going again to 2018. I had regarded into this in yesterday’s webinar, relating the bullish transfer in EUR/USD to the bearish transfer in USD.

In EUR/USD, the large zone of resistance referred to above spans from 1.1448 as much as the 1.1500 psychological degree. The latter of these costs is taken from the 2017-2018 main transfer with 1.1448 being the 50% marker. This zone first got here again into the equation in Could of 2018 because the Euro was promoting off on the again of rising political threat. This was shortly after that M5/Matteo Salvini wins in Italy as world market individuals equipped for a debt standoff between Rome and Brussels.

That zone slowed the sell-off, first coming into play in Could however lastly giving manner in November of 2018. A late-year rally noticed costs agency however this space quickly grew to become resistance, and after an inflection in March of final 12 months costs sold-off and didn’t return till a 12 months later.

EUR/USD Weekly Value Chart

Chart ready by James Stanley; EUR/USD on Tradingview

It was the check of that zone a 12 months later that is still of curiosity. Within the month of March, because the coronavirus was being priced-in, the US Greenback rapidly dropped as expectations have been gearing up for softer coverage out of the US Federal Reserve. Briefly order the USD was buying and selling at contemporary yearly lows and EUR/USD at contemporary yearly highs.

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Value motion jumped into the 1.1448-1.1500 zone, and patrons even drove for a bit. However – they slowed down earlier than 1.1500 got here into play and the excessive ended up displaying simply four pips shy of the psychological degree. That’s round that point that USD-strength got here screaming again, and EUR/USD folded-lower in response, rapidly speeding all the way down to a contemporary yearly low simply two weeks after setting the excessive.

Now, 4 months later, that massive resistance zone is again in play. And there are two massive drivers sitting forward with tomorrow’s ECB price choice and the EU Summit. Is now the time that bulls can push by way of this resistance zone, crafting a contemporary yearly excessive within the EUR/USD?

EUR/USD Day by day Value Chart

Chart ready by James Stanley; EUR/USD on Tradingview

— Written by James Stanley, Strategist for DailyFX.com

Contact and observe James on Twitter: @JStanleyFX