I see 1.4500 as the near-term line in the sand for the EUR/USD

The dust from the EUR/USD sell-off is slowly settling and as this happens the 1.4500 is coming into focus as the line in the sand. This price level is either going to become support or resistance as traders and investors determine whether or not there will be a rate hike or hawkish comments from the ECB or alternatively, if the slower inflation forecast will cause the rate hike story to fall behind the sovereign debt story.

That’s the real battle for the ECB and slower inflation could be the determining factor for how soon or how much later rates will budge from 1.25%.

The 1.4500 level comes into play as price action is still testing this level as support after the post-sell-off bounce carried prices over the psychological level but the market has not yet decided on which side of this price the pair should remain. In my opinion, the decision at this price level will reflect the degree to which the market believes that the rat increase will happen OR that Trichet will at very least have hawkish comments at the next meeting.

Technically the 1.4449 and 1.4476 are recent lows that could also have buying support waiting if the “00” is pierced.