The EUR/USD pair has regained the bullish impetus on Monday, with the price is testing the 1.18 once again. The euro is underpinned by bullish expectations ahead of this week’s ECB meeting, even as US-EU trade tensions persist. The pair remains above the 20-DMA but will hardly dare to jump to 1.20 and above any time soon as traders will likely be cautious ahead of the two major central banks’ decisions.
The ECB is expected to deliver the date of QE end and will also provide its latest forecasts for economic growth and inflation. The risk for the single currency is that the market expectations may already be rather high after the recent signals from the central bank officials. So if Mario Draghi shows a rather cautious rhetoric, the euro may fall the victim of profit taking and give up some of its previous gains.
In this case, EUR/USD will get back below the 20-DMA at 1.1730 and will derail the 1.17 mark again. But we also should remember that the pair will have to digest the Fed meeting results first, as the dollar is also vulnerable, despite the widely expected rate hike in the US.