Euro fell broadly against the US Dollar (USD) last week before finding support near the 50% fib level; the shared currency is expected to hold range ahead of the European Central Bank (ECB) monetary policy statement which is scheduled on Thursday, EUR/USD might begin steep correction if the central bank adopts QE or negative deposit rate to cope with the falling inflation across the Eurozone.
The pair closed last week at 1.3754, well above the 50% fib level, showing considerable signs of bullish momentum. The pair is expected to find hurdle near 1.3779, 38.2% fib level, ahead of the channel resistance which is currently sitting in around 1.3880. A daily close above the channel could push the pair into stronger bullish momentum, exposing fresh multi-month highs above the 1.3966 level.
On the downside, the pair is likely to find support near 1.3700-30 that is a confluence of the 55 daily Moving Average (DMA), Psychological Level and 50% fib level, ahead of 1.3662 that is the channel support, 100 DMA and 61.8% fib level. A daily closing below the channel support is required for further dips towards the 1.3500 handle or even below.
On Monday, EuroStats will release the Consumer Price Index (CPI) report—a main gauge for inflation—for the month of March. According to forecast, CPI declined to 0.6% in March as compared to 0.7% in the same month of the year before, worse than expected actual outcome will be seen as bearish for EUR/USD and vice versa.
On Tuesday, Bundesagentur für Arbeit will release Germany’s unemployment rate data for March. The seasonally adjusted unemployment rate remained steady at 6.8% in March as compared to the same rate in the month before, median projection of different analysts says.
ECB Monetary Policy
On Thursday, ECB is due to release the monetary policy statement followed by the press conference. Analysts believe that the central bank might announce some new policy measures such as QE, negative deposit rate or another rate cut to deal with the falling inflation.