EUR/USD refreshes daily lows at 1.1915, ECB in focus

The EUR/USD pair broke its consolidative mode to the downside in early Europe, now heading for a test of NY lows struck at 1.1908, as investors gear up for the ECB policy decision.

EUR/USD: Eyes on ECB                                                               

The latest leg lower in the spot can be mainly attributed to fresh EUR selling, as the bulls were disappointed by the German industrial figures, which showed a flat reading for July versus +0.5% expected.

In the Asian trades, the major traded volatile but in a narrow below 1.1935 levels, digesting the latest headlines on North Korea and amid increased nervousness ahead of the key ECB policy event.

The ECB is expected to make no changes to its monetary policy settings, however, markets are expecting the ECB President Draghi to hint towards the taper plans announcement later this year.

Hence, the sentiment around the Euro remains underpinned amid narrowing monetary policy divergence between the ECB and Fed, with a Dec Fed rate hike bets dwindling on the back of poor show of macro data recently.

Apart from the ECB verdict, markets await the European open and Eurozone final Q2 GDP revision for fresh momentum.

EUR/USD Technical Set-up  

Karen Jones, Analyst at Commerzbank, explained: “EUR/USD is side lined to bid above the uptrend but we suspect it will struggle to regain the 1.200 level and our attention is on the trend line support at 1.1868. We suspect that the market may have topped near term, but this will only be confirmed on a close below the uptrend. The new high has also been accompanied by a divergence of the daily RSI. Below the 2 month uptrend lies the 4 month uptrend at 1.1742.”