Euro Edges Up Against Dollar Ahead of ECB Rate Decision

Key Moments

ECB Meeting in Focus as Euro Firms

The EUR/USD pair is trading modestly higher around 1.1550 during the Asian session on Thursday, with the Euro (EUR) gaining ground ahead of the European Central Bank’s monetary policy decision scheduled for 12:15 GMT.

Market participants expect the ECB to increase its Deposit Facility Rate by 25 basis points to 2.25% in response to mounting inflation pressures tied to elevated energy prices. This anticipated move would represent the central bank’s first policy adjustment after leaving rates unchanged for the last eight policy meetings.

Recent comments from several ECB officials have highlighted the need for timely action, pointing to upside risks to inflation amid the ongoing energy supply crisis. Investors will closely follow ECB President Christine Lagarde’s remarks for clues on whether policymakers see potential “second-round” inflation effects across the Eurozone economy.

Dollar Moves on Geopolitical Concerns

On the U.S. side, the Dollar is trimming part of its earlier decline as market sentiment is rattled by worries that the ceasefire between Iran and the United States could break down after a series of attacks. At the time of writing, the US Dollar Index (DXY) is down 0.11%, trading near 99.97.

EUR/USD Technical Overview

EUR/USD is marginally higher around 1.1550 at press time, but the broader technical backdrop remains negative. The pair has broken down from a Symmetrical Triangle pattern, and price is holding below the downward-sloping 20-period Exponential Moving Average (EMA), currently at 1.1603.

Momentum indicators reinforce the bearish bias. The Relative Strength Index (RSI) sits below 40.00, signaling renewed selling interest while still staying away from oversold territory.

Key Technical Levels

On the upside, the 20-period EMA near 1.1603 is the first notable resistance. Above that, the previously rising trend support line, now acting as resistance, comes in at 1.1623. A more substantial barrier is seen at the descending trend line around 1.1707.

On the downside, a sustained move below the June 8 low near 1.1500 could open the way for a decline toward the March 16 low at 1.1411.

ECB Deposit Facility Rate – Indicator Snapshot

The rate on the deposit facility is one of the European Central Bank’s three main policy rates. It is the interest rate that banks receive when they place funds with the ECB and is announced at each of the central bank’s eight scheduled meetings per year.