ECB on Watch

EURUSD is on watch today as traders brace for the latest ECB rate meeting. A further .25% cut has been fully priced in ahead of the meeting and has done little to stop the recent rally in EUR. With that in mind, the ECB delivering said rate cut today is unlikely to do much to drive any corrective action in EURUSD given the broader focus on US tariffs and the wider market impact.

USD Flows

USD flows around US/Japan trade negotiations are likely to be the bigger driver for the pair which should remain supported if we see fresh selling in USD. Any subsequent rise in USD, however, could put pressure on EURUSD given the recent rally we’ve seen and the crowded long position in EUR, making it vulnerable to a long squeeze.

ECB Guidance

Given that a cut is widely expected today, focus will be on the bank’s forward guidance. If Lagarde signals that further easing is expected, this could lead to some short-term profit taking on EUR longs ahead of the Easter weekend. On the other hand, the ECB might well follow the BOC’s suit in simply acknowledging the confusion and uncertainty around tariffs, refraining from committing to any forward guidance against that backdrop which should see EURUSD remaining supported, especially if fresh USD weakness materialises.

Technical Views

EURUSD

The rally in EURUSD has seen the market breaking out above the 1.1209 level but stalling for now ahead of 1.15. With momentum studies bullish, focus remains on further upside while price holds above 1.1209 with 1.1669 the higher target to look to.