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MTrading Team • 2024-06-06

EURUSD bulls need validation from 1.0920 and ECB

EURUSD bulls need validation from 1.0920 and ECB

EURUSD prints the first daily gains in three while approaching the top line of a two-month-old rising wedge bearish chart formation. Apart from the 1.0920 upside hurdle comprising the stated resistance line, the European Central Bank’s (ECB) widely expected rate cut also poses a challenge to the major currency pair’s further upside. Additionally, the sluggish MACD signals and unimpressive RSI line also raise bars for the buyers. Hence, the quote is likely to witness a pullback toward the weekly support line of around 1.0860 unless the ECB surprises the market, either with no rate cut or by providing hints of no more actions in the near term. In a case where the bears dominate past 1.0860, the 200-bar Exponential Moving Average (EMA) support of near 1.0815 could gain the spotlight. It’s worth mentioning that the Euro sellers will gain conviction if the pair confirms the rising wedge pattern by falling beneath the 1.0765 support, which in turn opens the door for a theoretical fall toward 1.0450.

Meanwhile, the ECB’s ability to convince the buyers, despite announcing the 0.25% cut to its benchmark rates, could help the EURUSD pair to cross the 1.0920 resistance. In that case, the quote’s run-up toward March’s peak surrounding 1.0980 and then to the 1.1000 threshold can’t be ruled out. However, the yearly high of near 1.1040 and the late 2023 top around 1.1140 will challenge the Euro pair’s upside past 1.1000.

To sum up, EURUSD braces for a post-ECB pullback while rising towards a short-term key resistance ahead of the event. However, the ECB’s hawkish halt might convince the buyers to return, which in turn requires traders to remain cautious before the outcome.

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