The EUR/USD pair is testing key support at the 1.1400 level as traders await the European Central Bank’s decision and guidance on the future path of interest rates.
Tracking the price action of the euro against the dollar, we find that the euro remains under pressure from a declining trendline while stabilizing near support levels close to 1.1400. Over the past 4 weeks, the euro has been moving up and down within a price range between 1.1485 as the high and 1.1325 as the low. Therefore, we do not expect major fundamental price changes for the euro unless it successfully breaks above the 1.1485 resistance, considering it represents:
1. A descending trendline resistance extending for about 3 months.
2. The 35-day moving average resistance.
On the other hand, levels near 1.1400 are considered important technical support levels because they represent:
1. Horizontal price action support illustrated in the attached chart, from which 3 previous bounces occurred.
2. Support of the "rising wedge" technical pattern, and breaking this support would signal the continuation of the downward trend.
Today, we await European interest rate data amid expectations of stability at 2.40%. Consequently, the ECB President's speech, expectations regarding future interest rates, and the overall economic outlook will have a clear impact on the euro's price movement.
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