The EUR/USD is experiencing a decline due to concerns about banking vulnerabilities in the European Union, ahead of the European Central Bank 's (ECB) rate decision at 9:15 AM. Market expectations are divided between a 25 basis point and a 50 basis point hike. Although the ECB had all but assured a 50 basis point increase after their previous rate decision, recent banking and financial market concerns have dampened those expectations. The expectations for a 25 basis point hike is now up to around 62% from 50% prior to the ECB banking headlines.
Technically, the EUR/USD rose overnight after surpassing a key swing area between 1.0573 and 1.0585 during the early Asian session. The currency pair extended its gains up to the 200-hour moving average, currently at 1.0633, with the high price reaching just above that level at 1.06349 before reversing its course. Since the headline, the price has dropped from approximately 1.0612 to a low of 1.0575, which is just above the low end of the aforementioned swing area at 1.05732.
Looking forward, if the price falls below this level, it could pave the way for a potential retest of the 100-day moving average at 1.05544. It is worth noting that yesterday, the price briefly dipped below this moving average level, reaching a new low dating back to January 9th (the low price reach 1.0515 yesterday). However, it failed to maintain momentum and eventually climbed back above the crucial 100 day moving average level.
On a break of the 100 day moving average today, traders would target first the swing area between 1.05244 and 1.05323 and then the swing low from yesterday at 1.0515.
On the topside, the 1.0612 area is a old swing area (modest resistance). Above that, and the 200 hour MA at 1.0633 is the key barometer for buyers and sellers. Move above, and the 100 hour MA at 1.06717 becomes the next key target.