The dollar maintains good demand and is growing against its main competitors for the fifth session in a row. The euro is under pressure in anticipation of the ECB meeting. Its volatility is increasing as it is expected that on Thursday Draghi will announce the postpone of the first rate hike as it is expected that Draghi will announce on Thursday to postpone the first rate increase for many years to a later date.
Meanwhile, the dollar index against a basket of six currencies rose to a two-week high. Dollar traders managed to overcome the resistance at the level of 96.75 but the activity of buyers is moderate. This means that a rollback to the previous minimum of 96.70 may be accompanied by an increase in the activity of sellers. The bullish forecast takes into account a further rise to 97.05.
On Wednesday, market participants will focus on the data on the trade balance of goods and services in the United States. It is expected that the deficit in December amounted to $ 57.9 billion. In addition, the Fed's Beige Book will be made public and a statement by the regulator John Williams will take place. However, the saturation of the news background from America and the eurozone today will be weak. It is probably not worth waiting for the emergence of powerful price movements.
Note that on the four-hour chart, the EUR/USD currency pair is being traded within the downward channel. Now the lines are in a position favorable for sales, however, soon they will reach the oversold zone. Therefore, the potential for reducing the pair may be limited.
Interestingly, there will be a reduction potential in the EUR/JPY pair after the ECB meeting on Thursday. That is if the rally in the global stock market and risky assets, in general, has come to an end and the European regulator will firmly stop at the "dovish" position. The recent reversal was the first step for traders who play short but the further perspective remains dim. A confirmation of the depreciation could be a move below 126.00 after the ECB meeting.
The material has been provided by InstaForex Company - www.instaforex.com