The Euro traded in tight range in Asia on Tuesday with rising 10SMA holding the downside for now but limited upside action on sales of EURJPY cross.
The pair is holding between sideways-moving daily Kijun-sen (1.1866) and north-turning daily Tenkan-sen (1.1921) which mark key points and break of either side would generate stronger direction signal.
Bullish daily studies remain supportive however, the outcome of ECB policy meeting on Thursday is expected to be the key driver. In addition, markets are eyeing developments over North Korea crisis, which could also affect markets strongly in case the situation deteriorates.
Markets are expecting the ECB to keep rates unchanged but focusing on comments from ECB President Mario Draghi about signs of starting reduction of central bank’s QE programme, which could boost the single currency.
Otherwise, if Draghi disappoints, which is seen as very possible scenario, as current conditions of the bloc’s economy are not satisfactory, the Euro may come under increased pressure.
Bearish extension below next strong support at 1.1829 (20SMA) would generate bearish signal and risk retest of key near-term support at 1.1662 (17 Aug trough).
Series of Services PMI data from Eurozone countries today could also influence the performance of the Euro.
Data released until now (Spain and Italy) were below expectations, with focus on German and EU releases, which could deflate the Euro on weaker than expected releases.
Res: 1.1911, 1.1922, 1.1979, 1.2000
Sup: 1.1868, 1.1829, 1.1814, 1.1773