EUR/USD Forecast: Range Trade Likely Ahead Of Thursday's ECB Decision

The EUR/USD pair extended Friday's rejection slide from the 50-day SMA hurdle and dropped to mid-1.1700s during the Asian session on Monday. Persistent US Dollar buying interest, supported by revived tax-reform hopes, has been one of the key factors weighing on the major. The greenback's recent up-move got an additional boost on Friday after the US Senate passed a budget blueprint for the next fiscal year and cleared a critical hurdle in the GOP push to overhaul the tax code.

Meanwhile, Spanish political uncertainty, with the central government preparing to suspend Catalonian rule, kept the shared currency on the back-foot and further collaborated to the pair's mildly weaker tone at the start of a new trading week.

Investors, however, seemed reluctant to initiate aggressive bets ahead of this week's key event risk - the ECB monetary policy decision. The key focus will be on the central bank's long-awaited announcement to scale back its asset purchase program, which would eventually drive the shared currency in the near-term.

From a technical perspective, the pair struggled to break through the 50-day SMA hurdle but has been finding some buying interest at lower levels. With short-term technical indicators holding in neutral territory, the pair seems more likely to extend its range-bound price action ahead of the ECB announcement on Thursday.

Hence, any up-move back above the 1.1800 handle might continue to confront strong supply near the 1.1845-90 region. However, a convincing break through the mentioned hurdle might trigger a short-covering move and lift the pair beyond the 1.1900 handle, towards its next major barrier near mid-1.1900s.

On the flip side, the 1.1750-30 region might continue to protect the immediate downside, which if broken decisively might turn the pair vulnerable to break below the 1.1700 handle and head towards testing an important horizontal support near the 1.1670-60 region, also coinciding with the 100-day SMA.