EUR/USD approaches the monthly-low (1.1135) ahead of the European Central Bank (ECB) Minutes, with the Euro Dollar exchange rate at risk of facing headwinds over the coming days as the Governing Council warns that ‘the risks surrounding the euro area growth outlook remain tilted to the downside.’
The account of the April meeting is likely to highlight a dovish forward-guidance for monetary policy as the ECB prepares to launch another series of Targeted Long-Term Refinance Operations (TLTRO) in September, and the central bank may keep the door open to further insulate the monetary union as the ‘the risks surrounding the euro area growth outlook remain tilted to the downside.’
In fact, President Mario Draghi & Co. may start to discuss a range of non-standard measures as the central bank struggles to achieve its one and only mandate for price stability, and a batch of dovish comments may keep EUR/USD under pressure especially as the Federal Open Market Committee (FOMC) endorses a wait-and-see approach for monetary policy.
EUR/USD Rate Daily Chart
Keep in mind, the broader outlook for EUR/USD remains tilted to the downside as both price and the Relative Strength Index (RSI) continue to track the bearish formations from earlier this year, with the near-term outlook mired by the failed attempt to push back above the Fibonacci overlap around 1.1270 (50% expansion) to 1.1290 (61.8% expansion).
In turn, the monthly-low (1.1135) sits on the radar, with a break/close below the 1.1140 (78.6% expansion) region raising the risk for a move towards the 1.1100 (78.6% expansion) handle, with the next area of interest coming in around 1.1040 (61.8% expansion).
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For more in-depth analysis, check out the 2Q 2019 Forecast for the Euro
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— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong.