EUR/USD Rising Before Draghi Drags It Down?

• EUR/USD is trading in the upper part of the range.
• All eyes are on the ECB meeting, and later on the FOMC Minutes.
• The technical picture is improving for the pair.

EUR/USD is trading in the upper half of the 1.1200 handles, rising gently as markets anticipate the all-important decision from the European Central Bank.

The Frankfurt-based institution took a dovish stance last time by pushing back on the next rate hike, announcing a new funding scheme for banks, and slashing forecasts. No new decisions are due now, but every word from President Mario Draghi about the recent economic developments will be eyed.

Recent price action suggests the euro is already immune to bad news, but if Draghi makes more than a tweak, it could fall. There have been tentative signs of a recovery or green shoots, but most signs strengthened the narrative of a broad slowdown.

Join us for a live coverage of the all-important event. 

While the ECB decision is the primary event of the day, there are three additional critical events.

3 additional events
1) US inflation: At the same time that Draghi speaks, the US publishes its inflation report. Consumer prices are not going anywhere fast, allowing time for the Fed to remain patient. 

2) FOMC Meeting Minutes: Later in the day, the Federal Reserve will have its say, countering the ECB. The US central bank releases the FOMC Meeting Minutes from the latest decision in March, where they took a dovish twist, just like the ECB. The Fed removed rate hikes from the agenda for this year and also announced an early end to the balance sheet reduction scheme. The minutes may reveal how worried they are about the situation.

3) Brexit Summit: And last but least, Brexit is always ready to move the pound and also the euro. EU Leaders convene in Brussels for an extraordinary summit to discuss Brexit, just two days before Brexit day. UK PM Theresa May asked for a short extension through the end of June but the EU wants a longer one, perhaps in the form of a "flextension": a one-year extension of Article 50 but giving the UK an option to leave earlier.

EUR/USD Technical Analysis

EUR/USD is enjoying upside Momentum on the four-hour chart and the Relative Strength Index is also on the rise without breaking the 70 levels, thus refraining from overbought conditions at the moment. It is trading above the 50 Simple Moving Average but remains slightly below the 200 SMA.

All in all, the technical picture is improving. 

Resistance awaits at the recent highs of 1.1285 also capped the pair in late March. It is closely followed by the 200 SMA which comes out at 1.1295. 1.1335 is the next level to watch after it capped EUR/USD in late March. 1.1360 is next.

Looking down, 1.1255 provided support in recent days and capped euro/dollar beforehand. 1.1210 supported the pair last week, and 1.1176 was the low point in 2019.