EUR/USD in search of fresh direction, ECB - key

The EUR/USD pair traded choppy in the Asian trade this Thursday, having stalled its overnight recovery at 1.1935 levels, as the bulls turn cautious ahead of the key ECB policy event.

EUR/USD: 1.1850 or 1.2000 on ECB?                                         

The main currency pair is seen consolidating the overnight recovery from just ahead of 1.19 handle, as markets eagerly look forward to the ECB monetary policy announcement for the next direction in EUR/USD.

Markets are expecting the ECB Chief Draghi to refrain from EUR jawboning, while leave the policy settings unchanged. Although he could throw fresh hints on the QE tapering plans, which could be viewed as a major policy shift towards a hawkish narrative. In this case, the common currency could extends its recent bullish momentum against its US counterpart and reclaim 1.20 handle.

On Wednesday, the spot failed to chew the offers lined up near 1.1950 levels and slumped sharply to test 1.19 handle amid a sharp US dollar rebound seen across the board, following the release of upbeat US ISM services PMI report and reports of the three-month extension of the debt ceiling in the US.

Ahead of the ECB decision, EUR/USD will take some cues from the German industrial production, sentiment on the European open and Eurozone final Q2 GDP revision.

EUR/USD Technical Set-up  

Valeria Bednarik, Chief Analyst at FXStreet, explained: “The pair has relevant intraday lows in the 1.1860 region, the immediate support, followed by last week's low of 1.1822. Below this last the risk will turn towards the downside, but there's still a long way ahead before calling it bearish. Steady gains beyond 1.2000 after the ECB's dust settles, will open doors for gains beyond the yearly high set late August at 1.2070. Support levels: 1.1900 1.1860 1.1820 Resistance levels: 1.1960 1.2000 1.2035.”