EUR/USD Seesaws at 1.8000 Ahead of ECB Monetary Policy Statement

Summary:

EUR/USD has extended its previous losses ahead of the ECB monetary policy statement. The pair is also reacting to Fed minutes.

EUR/USD remains in a downtrend ahead of the ECB monetary policy statement later in the day. The released results will mark the end of a two-day meeting on ECB’s strategy review, which is the first in close to 20 years.

As one of the key outcomes of the meeting, the central bank will raise its inflation goal to 2%. It will allow for inflation to rise past the target temporarily when need be. The decision is a significant shift from the current goal of ‘below but close to 2%’.

Notably, the strategy may result in a prolonged ultra-loose monetary policy as ECB strives to reverse the effects of below-target inflation, which has put a strain on the region’s economic potential. The decision will also guide the policymakers on the measures to take as the European economy recovers from the coronavirus pandemic.

At the same time, EURUSD is reacting to Fed’s minutes in the previous session. The minutes confirmed that the Fed is moving towards tightening its policy from as soon as the end of the current year. In today’s session, the US jobless claims will impact the currency pair.

EURUSD technical analysis

EUR/USD is up by 0.02% at 1.1793. The pair is trying to find its footing after a three-day decline. After hitting the week’s high of 1.1895 on Tuesday, it has since dropped by about 0.88%. On a two-hour chart, it is trading below the 25 and 50-day EMAs.

EUR/USD is likely to waver around 1.8000 ahead of the ECB monetary policy statement and US initial jobless claims data. As a reaction to the ECB review results, the pair may move past the current resistance level as the bulls target 1.1850. On the flip side, a decline past its current support level will have the bears eyeing 1.1750.