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  • The pair exchanges gains with losses around the 1.1300 handle.
  • The greenback struggles for direction below 97.00.
  • The ECB is expected to leave rates, forward guidance unchanged.

After a brief test of the 1.1290/85 band earlier in the week, EUR/USD managed to regain a tepid buying interest and advance to the 1.1300 neighbourhood ahead of the ECB event.

EUR/USD looks to ECB meeting

In spite of a few occasional bullish attempts, the pair remains within a bearish scenario and meanders the lower bound of the recent range.

The quite moderate pick up in the demand for the greenback in past sessions has forced spot to recede from last week’s tops beyond 1.1400 the figure to the current 1.1300/1.1290 region, all against the backdrop of low volatility and lack of significant developments in both the US-China trade negotiations and Brexit talks.

Looking ahead, the ECB is expected to keep rates and forward guidance unchanged at today’s event. However, market consensus sees the central bank revising lower its forecasts for inflation and growth in the region. Furthermore, the prospects of some kind of stimulus via another TLTRO still remains on the table.

What to look for around EUR

In line with the broader risk-associated complex, the shared currency continues to look to developments from the US-China trade negotiations for near term direction. Additionally, the ECB is expected to remain in ‘pause mode’ for the foreseeable future amidst the ongoing slowdown in the region. Furthermore, investors have practically priced out any up move in rates this year and they’re even considering the probability of another TLTRO in case the outlook deteriorates further. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among members.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.1305 and faces the next support at 1.1285 (low Mar.6) followed by 1.1234 (2019 low Feb.15) and finally 1.1216 (2018 low Nov.12). On the upside, a breakout of 1.1326 (21-day SMA) would target 1.1381 (55-day SMA) en route to 1.1419 (high Feb.28).