The European currency is waiting for a new information driver: tomorrow the ECB meeting for the month of March will take place. Against the background of numerous disputes about how the regulator will affect the exchange value of the single currency, it is logical to ask - is Mario Draghi capable of breaking the upward trend of the EURUSD pair?
Undoubtedly, the central bank with its rhetoric can provoke a deep correction, reducing the price by 300-400 points. But here it is necessary to take into account two nuances: firstly, such a rollback will have a short-term nature, and secondly, the market (as a rule) expects "dovish" comments from the ECB head, therefore, Draghi must exceed these expectations in order to seriously affect the value of the euro.
On the eve of the March meeting, many foreign exchange strategists are also skeptical. In their opinion, the regulator will postpone the adjustment of its statement before the June meeting, and the fate of its quantitative easing program will be decided not earlier than July. This position is already partly embedded in current prices, and does not make a special impression on the market. And although the euro in this case will still be reflexively reduced, in the context of the overall long-term trend the situation will not change.
Thus, the prospects for the March meeting of the ECB are largely predictable. Mario Draghi will certainly pay attention to the slowing of inflation in the eurozone (up to 1.2 percent), as well as the uncertainty of the political situation in Italy. In addition, the regulator is unlikely to correct its language, toughening the general statement. And traditionally, Draghi will allow the probability of extension of the stimulus program if key economic indicators decline. All this the market has heard and expects to hear again. Therefore, it is not necessary to make trading decisions tomorrow immediately after the ECB meeting and the press conference.
Moreover, the American political Olympus is again troubled. Another colleague left U.S. President Donald Trump's administration - this time, it is economic adviser Gary Cohen. It should be noted that this is the same Cohen, who was most recently expected to take the position of head of the Federal Reserve - he was among those who passed an appropriate interview with the US president. But the reprehensible Trump is quite easy to fall into disgrace - enough to disagree with his policies. Cohen also disagreed with the introduction of tariffs for the import of steel and aluminum, having lost his post thereafter.
This suggests that the trade war that Trump plans to "easily defeat" is not a political bluff, and the military actions that have been voiced in this direction will begin in the very near future. Europe has already announced the tactics of its defense, threatening to raise duties on a number of imported goods from the US (the total volume is estimated to be at billions of euros). Moreover, these response measures will be applied immediately after the introduction of the promised duties on the import of European cars to the United States. The European Union will not wait for the appeal decision of the WTO, since the process of considering the complaint can take a long time (from several months to one and a half years).
The rest of the countries will take on a wait-and-see attitude, at least in the public eye. Canada has not yet responded to Trump's ultimatum, which promised not to raise tariffs for steel imports for Canadians in exchange for "accommodating" in the NAFTA negotiation process. So far, China has remained silent, although representatives of the country have previously repeatedly stated that the actions of the US president will not remain unanswered.
In other words, the financial world is on the threshold of grandiose events, against which the ECB meeting looks very insignificant. And given the fact that the dollar will be in the near future "at the forefront of the attack," the upward trend for the EURUSD pair will continue, regardless of the rhetoric of the head of the European Central Bank. Here it is worth emphasizing that I do not exclude the temporary decline in prices within the correction, but the future prospects for the pair will be determined by the external fundamental background and the vulnerability of the US currency.
Speaking directly about target levels, let's turn to technical analysis. Technically, the pair overcame and consolidated above the key resistance level of 1.2350. Now on the daily chart the price is between the middle and top lines of the Bollinger Bands indicator, and the indicator Ichimoku Kinko Hyo has generated a bullish "Parade Line" signal. All this indicates the development of the northern movement. The immediate target of the bulls is the 1.2490 mark (the top line of the Bollinger Bands indicator). However, their main task is to go to the 25th figure, having become entrenched in this area. Traders made such an attempt in January and February, but without success. In March, there will be another attempt, which, in my opinion, will end with the victory of the EURUSD bulls . The support level (where you can place a stop-loss) is 1.2330 - at this price point, the lines Tenkan-sen and Kijun-sen coincide with the middle line of Bollinger Bands on D1.
