EUR/USD to forget ECB meeting and focus on the Fed while 100-DMA at 1.2057 caps – TDS

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The European Central bank (ECB) has left its policy unchanged. The April Governing Council meeting was largely a non-event for the FX market. Economists at TD Securities expect investor attention to pivot quickly to next week’s FOMC. This should keep EUR/USD loosely anchored within the 100/200-day moving average range ahead of that risk event.

EUR/USD caught between moving averages

“The ECB left its policy levers unchanged today, with the deposit rate steady at -0.50%, the PEPP envelope unchanged at €1.85tn, and PEPP purchases set to continue this quarter at a “significantly higher” pace.” 

“EUR/USD has failed to mark a fresh high for the current cycle as the 100-DMA (1.2057) remains a potent attractor for price action.”

“We think market attention will pivot quickly to next week’s FOMC meeting. This should leave EUR/USD likely to trade with overall FX market direction. If anything, we can see the pair trade with a slightly lower beta to broader market moves than usual now that the ECB is behind us.”

“The running 100-DMA and 200-DMA (levels 1.1927) will continue to serve as important anchor points. We see some elasticity around these levels, but we think rallies above the 100-DMA will find sellers while dips below the 200-DMA will be bought.” 

“Widening out the lens a bit, the next obvious attractors to the upside come in at 1.2113 ahead of 1.2180. Looking lower, we think meaningful support should emerge in the 1.1870/85 zone.” 

 

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