EUR/USD: Will Draghi Drag The Currency Down?
EUR/USD breached down the lower border of its sideways channel at 1.1330 and settled in the new range between 1.1300 and 1.1230. American economic figures weren’t very impressive, so the decline was limited.
The highlight of the next week will be the European Central Bank’s meeting on Thursday. Last month the ECB President Mario Draghi said that the regulator is not planning to cut rates further anytime soon. If he repeats this position, the euro will get support. If Draghi hints that the euro area’s economy needs further monetary stimulus, the euro will suffer. Other important events in the European economic calendar include the release of German and the euro area’s ZEW economic sentiment indicators on Tuesday and the region’s flash services and manufacturing PMIs on Friday.
All in all, the strength of the US dollar will largely depend on the results of the meeting between the large oil producers of OPEC and Russia on Sunday, April 17. Crude oil prices have strengthened ahead of this event, so there is the risk that after the meeting itself we will see a selloff. This will be a positive factor for the US dollar and negative for EUR/USD.
Support is at 1.1140 ahead of 2016 support line at 1.0935. Resistance is in the 1.1340/75 area (March 17, February highs) ahead of 1.1440/60.