The EUR/USD pair tested the support level of 1.0778 once again last Friday. At the same time, the session was closed by a "bullish" takeover. The main scenario remains the growth of quotes after breaking through a wide triangle.
It is worth noting that major players continue to build up a long position in the single European currency for the seventh consecutive week. Therefore, they stimulate quotes to further increase.
On the other hand, the European currency has declined to its lowest levels since the end of March. Considering that the fundamental background only worsened over the week, the recovery of the EUR/USD pair to the 8th figure area was due to technical factors. The situation is expected to change in the coming days, and fundamental impulses will be visible again.
This week, traders will focus their attention on the meeting of the largest central banks in the world. In the case of the Fed, the expectations are weak in the sense that the regulator is unlikely to surprise the markets after large-scale instruments were launched in March to support economic activity and the financial system. Most likely, the American regulator will limit itself to a statement of readiness to react if the situation requires it.
Now, the most interesting will be the ECB meeting on Thursday. As the markets expect, Christine Lagarde and her colleagues will decide on additional economic incentives. The measures will include the extension of special long-term refinancing operations, an obligation to reinvest proceeds from redeemable securities bought by the Central Bank as part of an emergency program to deal with the consequences of a pandemic of 750 billion euros. It is also possible to increase the volume of this program by 50 billion euros. Such a development of events may return the EUR/USD pair to the area of Friday lows - 1.07.
EUR / USD
The upcoming ECB meeting should strengthen the position of euro sellers. This is due to a significant worsening in the macroeconomic situation in the euro area.
As for technical analysis, the main currency pair completed a wave of decline to the level of 1.0730 and traded in a growth structure on Monday. Therefore, there is a chance of developing a correction. The market went beyond 1.08 and further up. The growth of the pair may rest at around the level of 1.0860. After corrective growth, the start of another wave of decline to 1.07 is expected.
