How will ECB meeting affect the EUR?

It's no longer news that Eurozone's headline inflation rate rose in April, exceeding the European Central Bank's target. Eurostat's preliminary data revealed that the headline inflation rate reached 7% last month, a 0.1% rise from 6.9% in March. In contrast, core inflation, which excludes food and energy prices, unexpectedly slowed to 5.6% in April. The latest figures come right after the ECB's policy decision on Thursday, 4th of May, with market players speculating on a possible 25 or 50 basis point increase. The higher headline inflation rate could lead to a 50 basis point hike, while the slower core price growth could push for a more dovish stance with a 25 basis point hike. Despite the consistent rate increases, inflation in the Eurozone remains above the ECB's target of 2%, and further tightening is required to defeat inflation, according to the IMF's Alfred Kammer.

EURUSD - H4 Timeframe

In line with my previous analysis here (https://fbs.com/analytics/articles/can-usd-reverse-in-april-37668), EURUSD remains somewhat stranded inside the weekly supply zone. The most encouraging indicator for a bearish move is the recent breakout of the wedge pattern. My confirmation for this sentiment is based on the trendline resistance, the rally-base-drop supply zone, and the 76% of the Fibonacci retracement tool.

Analysts’ Expectations:

Direction: Bearish

Target: 1.11011

Invalidation: 1.09551

EURNZD - Daily Timeframe

EURNZD had an eventful week at last month's close; a pin bar rejection candlestick formed inside a supply zone on the weekly timeframe. Because of this, I expect to see a continuation of the bearish rally from the marked supply area with an initial target of 1.75390.

Analysts’ Expectations:

Direction: Bearish

Target: 1.75390

Invalidation: 1.80908

EURCAD - Daily Timeframe

EURCAD is at a key supply zone on the weekly timeframe and has reacted with an initial rejection which closed off last week with a hammer pattern. Therefore, my sentiment is bearish on EURCAD, pending the ECB's decision, based on the resistance trendline of the consolidation channel, the rally-base-drop supply zone, and the weekly supply zone.

Analysts’ Expectations:

Direction: Bearish

Target: 1.48160

Invalidation: 1.51209

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

TRY TRADING NOW

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Author: Adetola-Freeman Ogunkunle

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