EURUSD Upside Prevails, Market Turns to ECB Policymakers

Summary:
• ECB policymakers are expected to provide hints on the Eurozone interest rate trajectory, and this will likely be the highlight for EURUSD.

The euro paused its rally against the US dollar on Thursday after traders reduced their buying appetite. EURUSD traded at 1.0929 in the intraday session, having declined by about 0.1 percent. The currency pair has been on a strong upward momentum in the last three weeks, and is on course to register the fourth consecutive weekly gain as of this writing.

The highlight of the day will be the ECB monetary policy meeting, much as traders do not expect changes to the current interest rates. Nonetheless, the ECB policy statement will provide cues on the likely monetary policy trajectory in the fourth quarter of the year.  Also, ECB President Christine Lagarde will add her voice later in the day, and that could inject some volatility into the pair.

Meanwhile, the dollar remains under pressure from heightened expectations of Fed interest rate cuts starting in September. That means that traders are likely to give lesser weight to Thursday’s Initial Jobs Claims figures and the Philadelphia Fed Manufacturing Index.  Instead, speeches by two FOMC members, San Francisco’s Mary Daly and Michelle Bowman, a Member of the Fed Board of Governors, will likely carry more weight. Markets will weigh comments by the FOMC policymakers to see whether they are likely to vouch for more than one rate cut this year, with September rate cut a near certainty.

EURUSD will find support from US treasury bonds, whose yields have declined significantly in recent days. Yields on benchmark 10-year bonds were at 4.184 percent at press time, signaling rising pressure on the dollar.

Technical analysis

The EURUSD pair will likely to maintain the upward trajectory if it stays above the pivot mark at 1.0929. With the buyers in control, the first resistance could come at 1.0936, but extended control by the buyers could strengthen the upside momentum to test 1.0943. Conversely, a move below 1.0929 will favour the sellers to take control. They will likely find the first support at 1.0920, but extended control by the sellers could breach the support and invalidate the upside narrative. Furthermore, it could result in further losses to test the second support at 1.0912.