- EUR/USD’s recovery rally has stalled in the last two days. Repeated failure at 1.1370 is a slight cause of concern for the bulls.
- German GDP, scheduled for release at 07:00 GMT, is expected to show the growth rate stalled in the fourth quarter. The EUR could also take cues from the forward-looking German IFO readings, due at 09:00 GMT.
- ECB President Mario Draghi delivers Speech on the occasion of the awarding of Laurea honoris causa to him by Universita degli studi di Bologna in Bologna, Italy, according to Reuters. The central bank head is likely to sound dovish, confirming a rate hike is unlikely to happen any time soon.
EUR/USD’s stalled recovery rally will likely gather traction if the newfound resistance of 1.1370 is convincingly breached.
The long upper shadow attached to the previous two daily candles signals rejection or selling near 1.1370. As a result, that is the level to beat for the bulls.
A close above 1.1370 would signal a continuation of the rally from the Feb. 15 low of 1.1234. Meanwhile, a close below the previous day’s low of 1.1320 would validate candles with long upper shadows and shift risk in favor of a drop to recent lows below 1.1250.
The probability of a bearish close below 1.1320 would rise if the German IFO surveys miss estimates and the fourth quarter GDP prints negative, forcing markets to price in a renewed stimulus from the ECB.
The focus would shift to Draghi speech post-German data. The central bank head will likely sound dovish, strengthening bearish pressures around the common currency.
EUR/USD, however, may find acceptance above 1.1370 if German data better estimates, alleviating the fears of a deeper slowdown to some extent.
EUR/USD Technical Levels