What are the possible results from ECB's meeting and how it will affect EUR/USD

The euro may be confined to a 1.1823-1.2070 range Thursday if Draghi remains in line with market expectations. He’s seen likely to acknowledge the need for a change to the ECB’s QE program when the current plan ends due to a robust economy, while keeping verbal intervention on the euro more or less in line with previous commentary.

In case inflation projections come substantially lower and Draghi keeps silent on any tapering hints, the euro may close below its 21-DMA, currently 1.1844, for the first time in more than two weeks.

A specific reference to current market pricing with regard to the euro might see a move toward 1.1700 handle as that could pose a threat to a change in the QE plan overall.

Announcement of taper decision, or details on how the Governing Council looks to proceed January onward, while keeping jawboning at low levels, may see fresh cycle highs.

The most positive scenario for the common currency is if ECB announce tapering right away. That will strengthen EUR and probably will push EUR/USD above 1.2100.

Bids at 1.1850-70 and 1.1780-00, Offers at 1.1970-80, 1.2000-20 and 1.2050
Stops and stop entries above 1.2070 and 1.2100
Expiries:
1.1765-70 (EU499m), 1.1950 (EU729m), 1.2000 (EU920m)
1.1930 (EU2.2b) on Sept. 11

Support
1.1850-52, the lows on Sept. 1-2
1.1844, 21-DMA
1.1774, Aug. 25 low
1.1662, Aug. 17 low, 23.6% Fibonacci retracement of 2017 rally

Resistance
1.1980, Sept. 1 high
1.2070, Aug. 29 high
1.2167, 50% retreat of drop since May 2014

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

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