ECB Interest rate decision due out today

The ECB’s interest rate decision is due to take place today. Market participants are currently anticipating the bank to remain on hold with EUR OIS currently implying a 91.4% probability for such a scenario to occur. As such, our attention turns to the bank’s accompanying statement following the announcement of the bank’s decision. Should the accompanying statement be perceived as predominantly hawkish in nature, i.e implying rates remaining at their current levels for a longer time period it could provide support for the common currency and vice versa. The FOMC’s March meeting minutes were released during yesterday’s late American session. The bank’s accompanying statement could be perceived as hawkish in nature, with policymakers stating their concern about the uneven progress in combating inflationary pressures in the US economy. Furthermore, it was stated that the bank did not deem that it would be appropriate to reduce the target range until they had “gained greater confidence that inflation was moving sustainably toward 2 percent”, implying that interest rates may stay at their current levels for a prolonged period of time. Therefore, the bank’s march meeting minutes may have aided the greenback. The US CPI rates came in higher than expected during yesterday’s American session. The better-than-expected rates, imply that inflationary pressures remain persistent in the US economy when looking at the Core CPI, yet seem to have accelerated when looking at the headline rate, which appears to have aided the greenback.

On a technical level, EUR/USD appears to be moving in a downwards fashion. We maintain a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure near 30, implying a strong bearish market sentiment. Further aiding our bearish outlook, could be the pair’s breaking below our upwards-moving’s trendline which was incepted on the 2^a. of April. For our bearish outlook to continue, we would require a clear break below the 1.0725 (S1) support level with the next possible target for the bears being the 1.0620 (S2) support line. On the other hand, for a sideways bias we would require the pair to remain confined between the 1.0725 (S1) support line and the 1.0790 (R1) resistance level. Lastly, for a bullish outlook we would require a clear break above the 1.0790 (R1) resistance line with the next possible target for the bulls being the 1.0880 (R2) resistance level.

WTICash appears to be moving in a sideways fashion. We maintain a sideways bias for the pair and supporting our case is the RSI Indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment in addition to the narrowing of the Bollinger bands which imply low market volatility. For our sideways bias to continue, we would require the pair to remain confined between the 84.05 (S1) support level and the 86.90 (R1) resistance line. We would immediately switch our sideways bias in favour for a bullish outlook should the commodity make a clear break above the 86.90 (R1) resistance line, with the next possible target for the bulls being the 89.60 (R2) resistance line. Lastly, for a bearish outlook we would require a clear break below the 84.05 (S1) level, with the next possible target for the bears being the 80.35 (S2) support line.

Other highlights for the day:

Today, during the European session, we begin with Norway’s GDP rate for February. In the American session, we note the US weekly initial jobless claims figure and the US PPI Machine Manufacturing figure for March. In tomorrow’s Asian session we note New Zealand’s Manufacturing PPI figure for March, China’s trade data for March and Japan’s revised industrial output rate for February. On the monetary front, we highlight the ECB’s interest rate decision, followed by the speeches by New York Fed President Williams, ECB President Lagarde, Richmond Fed President Barkin, Boston Fed President Collins and Atlanta Fed President Bostic.

EUR/USD H4 Chart

Support: 1.0725 (S1), 1.0620 (S2), 1.0530 (S3)

Resistance: 1.0790 (R1), 1.0880 (R2), 1.0980 (R3)

WTICash H4 Chart

Support: 84.05 (S1), 80.35 (S2), 75.80 (S3)

Resistance: 86.90 (R1), 89.60 (R2), 93.50 (R3)

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