EURUSD Is Creeping Just Above Parity As We Await ECB Meeting Later Today
The EURUSD currency pair is currently trading just above parity, with the European Central Bank (ECB) being the main focus of market participants.
The ECB is set to announce its latest monetary policy decision later today, and there is growing speculation that the bank could take additional steps to support the Eurozone economy.
The EURUSD has been Range-bound in recent weeks, but a dovish ECB could see the pair move lower in the short-term.
- Another case of damned if you do, damned if you don’t for the ECB
The biggest reason for the price action we’re seeing in EUR/USD today is because of the large number of options expiring at the parity level. This is likely to continue to be a key factor during the session, and we could see some more movement when the ECB releases its decision later today.
The ECB is in a difficult position as it prepares to announce a large rate hike of 75 bps. This is being done in an attempt to quell fears of inflation, but it comes with the cost of further damaging an already struggling economy. There is a risk of the economy entering a recession in the winter, due to the looming energy crisis.
- So, what are the key levels to watch ahead of the ECB decision?
If we do see any positive reaction to the euro, the recent swing highs around 1.0075-90 will be key levels to watch. I would expect sellers to lean on those levels to keep a lid on price action for the day.
There are a few downside risks to keep an eye on, but the 0.9900 handle is the most important one to watch out for on the daily chart.
On the balance of things, I would expect the euro to remain pinned lower against the dollar and if we do see any form of bounce for whatever reason, that will make a good sell on the rally scenario.
