For better understanding the future movement of the EUR/USD currency pair we should take a look over last week’s events.
Wednesday we published our scenarios for what could happen at the ECB monetary policy from the next day and one of the preferred scenarios was for the ECB to cut the interest rate. Unexpectedly, on Thursday, the ECB has cut the minimum bid rate to 0.25% and mentioned that it can be lowered if needed. This had a negative impact for the Euro, which dropped in front of the US dollar.
Chart: EURUSD, Daily
The uptrend became sensible when the price of EURUSD broke the 1.3450 support and the trend line. On Friday the United States posted the Non-Farm Employment change above the expectations, sending the US dollar higher.
From the technical point of view we can see that the price has stabilized itself around 1.3400 with a very good support at 1.3300 and a key resistance at 1.3450. A daily close above this resistance could mean a rally towards 1.3500, but our preferred scenario would be a rejection from 1.3450/70 followed by a drop under 1.33 with a target of 1.3200.
The drop in the price would also be sustained if the flash GDPs and the Industrial Production for the Euro Area will be published in line or under the estimates, while for the USA the Trade Balance and the Unemployment Claims would surprise with better readings.