- EUR / USD remains stable above 1.21 after Monday’s 0.13% drop.
- Analysts expect a pullback ahead of the ECB’s rate decision on Thursday.
- German data at 10:00 GMT is expected to provide mixed signals on the economy.
The EUR/USD consolidating below the 100 hourly SMA at 1.2120 for the 10th hour in a row, with bulls waiting on the sidelines amid the anticipation of a pullback ahead of Thursday’s European Central Bank (ECB) monetary policy decision.
“While stronger-than-expected German data keeps EUR / USD near 2-1 / 2-year highs, it still we are waiting for a take profit before the announcement of monetary policy“said Kathy Lien of BK Asset Management.
The central bank is expected to accelerate its asset purchase program and try to reduce the euro focusing on low inflation. The EUR / USD has risen more than 3% since November, despite the euro zone facing the second wave of coronavirus. As such, investors can reduce long-term exposure before the ECB event.
The currency pair has already retreated from 1.2178 to levels below the 100 hourly SMA. The drop could accelerate the pace if today’s data from the euro zone and Germany come in below estimates..
The survey of Zew economic sentiment for Germany, which measures institutional investor sentiment, will rise to 46 points in December from November 39. However, the current situation index is expected to deteriorate to -66 from -64.3.
Attention will also focus on the survey of Zew economic sentiment for the Eurozone and in the data for gross domestic product GDP and change in employment for the third quarter.
And finally, the news flow related to Thursday’s European Union (EU) summit could influence demand for the common currency. According to Reuters, a senior diplomat has said the EU will bypass Hungary and Poland to set the budget and recovery fund if the two nations do not abandon their veto on Thursday.
EUR / USD technical levels
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