Hello, welcome to this week's CMC Markets Currency Snapshot with myself, Jasper Lawler.
EUR/USD focus & ECB meeting
We're focusing on the EUR/USD ahead of the ECB meeting today. I'm going to have a look at this chart and some of the things to consider for this meeting and where the EUR could go.
ECB inflation target & QE program
So there had been a bit of expectation a week or so ago when ECB member, Novotny, said that he saw the ECB clearly missing its inflation target. That was taken as a signal by the market the ECB, the European Central Bank, may be willing to do more and increase their current state of easing program, maybe cut interest rates at this October meeting. But since then we've heard a few different comments, Noyer, saying that the policy is well calibrated. Sort of suggesting that maybe the rest of the board are sort of keen to keep things as they are at the moment. It's probably going to be dovish commentary from Dragee that could well send the EUR lowered during and after the press conference, but we've got to look to see whether EUR can move after that.
EUR/USD chart analysis There's a key pattern on the longer term chart that we're going to focus on next, where the EUR finishes past this meeting inside and outside of that pattern is really what's going to determine the movement going forward. Here is said pattern. It's the weekly chart for the EUR/USD. What we can see here is an ascending triangle pattern at the bottom of this deep decline that we've had. Now, there's a kind of zone at the top of the triangle here, but I'm calling 1460. So, 1.1460 is really the key level to watch at the top of this chart, and you can see it intersects with some of these peaks here. We've had a couple of false breakouts. And so we've got to be wary of that should we get above that level again. But, to me, a weekly close above here and then above 115, the round number, could signal that we're starting to move and then break out of here. You can see that this pattern actually does correspond with some Fibonacci levels. The 38, the 50 works quite well so far. The 62%, the 61.8% above here is right just beneath the 120 level, the round number. That could be a resistance if we do break out from here. If we take the pattern as it is, the length of the pattern, the height of it, rather, would actually carry us all the way up to around 125 which obviously would be a pretty gigantic move from here. And it would be interesting to see if that kind of thing is possible. So that's it for this week's CMC Markets Currency Snapshot. Let's see what the ECB have to say today. Hopefully, it can generate some movement in the market, and let's watch this longer-term triangle pattern in the EUR/USD.
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