Current trend

The EUR /USD pair is under strong pressure from the difference between monetary policies, led by the EU and US. The ECB aims at extending its quantitative easing programme as the forecast for inflation was revised down due to the strengthening in the EUR.

At the same time, despite of a slight decline in inflation expectations, Fed officials believe that necessary conditions for a hike in the US interest rates will be achieved in the short term.

Today, attention needs to be paid to Consumer Price Index, due in the eurozone. On a monthly basis, CPI is expected at 0.1% and at 0.0% on an annual basis. If the indicator comes in below the forecast, a significant decline in the EUR may follow.

ECB President Draghi's Speech is due today as well. His dovish outlook for the EU economy may add to pressure on the European currency.

Support and resistance

On the daily chart, MACD is below its signal line, forming a sell signal. Stochastic lines are in the neutral zone and directed horizontally.

Moreover, an engulfing pattern was formed that suggests a possibility of a correction.

Thus, a likelier scenario is a correction to the level of 1.0893 after which a downward trend will resume.

Support levels: 1.0673, 1.0624, 1.0571.

Resistance levels: 1.744, 1.0829, 1.0940.

Trading tips

Long positions can be opened after the breakout of the level of 1.0750 with the target at 1.0820 and stop-loss at 1.0730.

Short positions can be opened when the price reaches the level of 1.0670 with targets at 1.0630, 1.0580 and stop-loss at 1.0690.

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