EUR/USD: Probing key hurdle on trade optimism, ECB minutes eyed

• EUR/USD ticked higher in Asia on trade optimism.  
• The pair is currently flirting with the stiff 21-day moving average hurdle.  
• The tone of the ECB minutes and the US monthly inflation data to provide  near-term clues.

EUR/USD is teasing a break above key hurdle while heading into the London open. The currency pair may end the day with solid gains if the European Central Bank minutes sound less dovish-than-expected.

The pair eked out 0.16% gains in Asia, as the markets offered US Dollars on trade optimism generated by a Bloomberg report stating that the US is planning to enter into a currency agreement with China. Further, The New York Times reported that the Trump administration may issue licenses that will allow some US companies to supply products to China’s Huawei.

As of writing, the pair is 21-day moving average (MA) at 1.0987. The technical line has been capping upside since Oct. 3 and is the level to beat for the bulls. A close above the key MA would open the doors for a stronger corrective bounce, possibly to 1.1110 (Sept. 13 high).

Focus on the ECB minutes

The minutes of the European Central Bank’s (ECB) September policy meeting are scheduled for release at 11:30 GMT.

The central bank lowered its deposit rate by 10 basis points to -0.50% in September and also announced a fresh bond-buying program, scheduled to begin from November.

The  fresh stimulus announcement, however, was contentious. Governing Council member Robert Holzmann recently criticized the zero interest rate policy (ZIRP) in Europe, by stating that it leads to less growth and lower productivity.

The EUR may pick up a bid if the minutes underscore the growing dissent within the Governing Council. However, if the minutes show growing consensus regarding the need for more stimulus, the EUR could come under pressure – more so, as Federal Reserve’s (Fed) September meeting minutes released on Wednesday showed increasing concern among some policymakers that financial markets are expecting more rate cuts than the US central bank will deliver this year.

Also, the American Dollar may find bids if the Consumer Price Index (MOM) (Sep) beats estimates by a big margin, forcing investors to scale back expectations of an October rate cut.

Technical levels