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EUR/USD Levels to Watch ahead of ECB Meeting

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The common currency found strong support at the 1.2438 level and rebounded higher versus the dollar on Friday’s session. The pair is currently trading slightly below the psychological level of 1.2500 ahead of Thursday’s ECB policy meeting and Friday’s NFP report. Over the last couple of days the pair has moved aggressively lower pushing through some significant support levels including the 1.2600 and most recently the 1.2500.

The long-term picture is continuing to look bearish since the 50-period SMA remains below the 200-period SMA on the 4-hour chart as well as on the daily chart. In addition, both of the moving averages are trading above the price, adding to the whole negative picture of the pair. Therefore, with the above in mind I would expect the selling pressure to continue and the pair to test the psychological level of 1.2400 and then the 1.2350 level. Technical studies support this notion since the MACD remains below its trigger n a bearish territory and the Stochastic is moving below 20. However, I expect the pair to move in a range between the 1.2430 – 1.2550 until the big news come in.

On the other hand, if the pair pushes higher above the 1.2500 level, then it should find resistance around the 1.2600, which includes the 50-period moving average on the 4-hour chart. On Thursday is the ECB policy meeting, while on Friday we have the US Unemployment Rate and Nonfarm Payrolls and we expect the EURUSD pair to release high volatility.

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