EURUSD: Expect Range-bound Trading Ahead Of ECB

EUR/USD tested again last Friday's low at 1.3588 on Tuesday. ("Mondays price action shows that the EUR bears are still in control. Every small bounce was sold immediately. This will probably not change until we know the outcome of Thursdays ECB meeting. We expect new lows below the last week`s low of 1.3588 – anything else would be a surprise. Traders should stay away from long positions for the moment. Only a move back above 1.3650 and 1.3730 can negate the bearish scenario with new lows ahead of the ECB. Watch CPI flash estimate data for the euro zone at 11 am CET – this could be the catalyst for another leg lower.")

The pair saw another move lower yesterday but we did not get any follow through to the downside. It seems that traders are not overly eager to put up new positions ahead of the ECB decision tomorrow. Bargain hunters stepped in and pushed the pair higher towards 1.3650 but of course: no follow through. We expect this “game” to continue and expect a trading range in between 1.3650 and 1.3590 for Wednesday. The ADP employment report due this afternoon could provide for a bit of a catalyst for a somewhat larger move as it is often a good indicator for Friday`s non-farm payroll data. If you want to trade the EUR/USD today we recommend buying near support (green) and selling near resistance (red). Trend followers should stay sidelined until we see a break out of the above mentioned range.
EURUSD Technical Analysis Chart