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EURUSD price aims to regain 1.0200 ahead of ECB policy

  • The EURUSD price has shown signs of recovery and is likely to regain 1.0200 on expectations of a rate hike by the ECB.
  • DXY pulled back with confidence after sensing lower selling pressure around 106.40.
  • Political turmoil in Italy and fresh uncertainty about gas supplies from Nord Stream1 dampened market sentiment.

EURUSD moved into price correction mode after failing to surpass Tuesday’s high at 1.0269 on Wednesday. The availability of barricades is a fresh three-week high active selling pressure and pulled the asset near 1.0156. On a broader note, the asset is growing at a higher rate with full momentum. The pair has shown signs of a rebound and is expected to extend the recovery above 1.0200.

Meanwhile, the US Dollar Index (DXY) picked bids around 106.39 and displayed a pullback move above 107.00. Market participants expected a decent pullback in the DXY as vertical downside forced profit-booking at lower levels. DXY is trying to establish selling pressure below 107.00 but a test of Tuesday’s low of 106.40 is now the basis for a short-term bullish reversal.

Also Read: EUR/USD Forecast: EUR Corrects Higher Ahead of Crucial ECB Decision

ECB President Christine Lagarde will announce the rate hike today

EURUSD price is facing the heat of low consumer confidence

EURUSD price witnessed a decent corrective action after the release Low consumer confidence. Consumer sentiment data fell to -27, worse than expectations of -24.9 and the previous release of -23.8. A slippage in consumer confidence in the economy leads to an economic downturn, further losses for the Eurozone. It is worth noting that the US economy reported consumer confidence last week. The data was a subtle increase to 51.1 versus 50 previously reported.

Political instability in Italy put pressure on the shared currency

is in force Political unrest In Italy, Prime Minister Mario Draghi has put some pressure on the EURUSD price after announcing his resignation despite winning a confidence vote in the upper house Senate on Wednesday. Political instability has soured market sentiment as the economy is already facing the heat of soaring price pressures and political instability raises concerns over growth prospects.

Ambiguity over Nord Stream 1 still persists

EURUSD price remains under pressure due to uncertainty over gas supply Nord Stream 1 Still further to Europe. Earlier, two Russian sources familiar with the export plans told Reuters that gas supplies would be below full capacity of about 160 million cubic meters (mcm) per day. The European Commission did not expect the pipeline to reopen. Now Russian President Vladimir Putin’s comments that he still does not see what condition the equipment for Nord Stream 1 will be in after it returns from maintenance have created uncertainty over gas supplies in the eurozone.

EURUSD price remains sideways ahead of ECB policy

The European Central Bank (ECB) is set to paddle its interest rates for the first time in 11 years as price pressures seek control. It is worth watching whether the ECB will initially test the waters by raising interest rates by 25 basis points (bps) or opt for a new normal of 50 bps. The announcement will surely cushion shared currency bulls against the DXY as the event trims the ECB-Federal Reserve (Fed) policy divergence.

EURUSD Technical Analysis

The EURUSD price tried to rebound above the positive divergence formation, indicating the resumption of the uptrend after the corrective action. The asset recorded a positive divergence after closing higher around 1.2907 while Momentum Oscillator Relative Strength Index (RSI) (14) edged lower. This dictates an oversold situation in an uptrend that is considered a bargain buy for market participants.

The key is trading between the 50- and 200-period exponential moving averages (EMAs) at 1.0195 and 1.0160, respectively, indicating minor consolidation ahead.

EURUSD hourly chart

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