EURUSD – Awaiting Draghi’s view on OPEC Decision

After commencing the week within touching distance of the current yearly low of 1.2358, the Eurodollar bounced back to rally as high as 1.2530 last week. The combination of improved economic data from Germany, USD profit-taking ahead of Thanksgiving holidays, and comments from ECB President Mario Draghi that time is still needed for current stimulus measures, reduced speculation that the ECB will act this Thursday and provided Euro bulls with some momentum.

The upcoming week is going to be a volatile one for the pair, with the ECB under pressure to introduce further stimulus on Thursday. While the Euro found reprieve from Dollar profit-taking last week, EU Sovereign Yields falling to record lows suggests investors are still anxious towards the Eurodollar risks remaining strong. In the event the ECB leaves monetary policy unchanged on Thursday, the pair would likely attempt a rally but Euro bulls may be left halted by Mario Draghi’s press conference. The ECB President is more than likely to be quizzed on whether the OPEC decision not to cut oil production will further weaken EU inflation levels. If Draghi signals there will now be further inflation pressures in the short-term, it would not be a surprise if traders become very tempted to begin pricing in potential stimulus early next year.

From a technical standpoint on the Daily timeframe, the Eurodollar continues to trade in a bearish direction. If the pair moves to the downside, support can be found at 1.24, 1.2376 and 1.2358. In the event the pair unexpectedly rallies to the upside, resistance can be found at 1.2486, 1.2522 and 1.2560.

Written by Jameel Ahmad, Chief Market Analyst at FXTM.

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