EUR/USD: two way business defining key support and resistance

Currently, EUR/USD is trading at 1.1234, down -0.37% on the day, having posted a daily high at 1.1283 and low at 1.1204.

EUR/USD been good two way business on the 1.12 handle today. Initially, the EUR slipped sharply in response to reports that the ECB's inflation forecasted projections for 2017, ‘18 and ’19 will be lower at 1.5% for each of those years and lower than previous estimates of 1.7%.

EUR: Bad for exports? - Rabobank 

"Recent EUR strength has dampened domestic inflation expectations, we have previously noted, but the revisions reflect lower energy price forecasts going forward," explained analysts at Scotiabank, adding, " With inflation still expected to be some distance away from the ECB’s 2% goal, market expectations of a more hawkish tilt to tomorrow’s proceedings which might have been a prelude the first stages of policy normalization look misguided – which is reflected in the EUR’s sharp drop back to the low 1.12 area." All eyes are on Comey and the ECB tomorrow and the upside and downside moves offer key support and resistances for tomorrow's events.

EUR/USD levels

On a break higher, EUR/USD expected to struggle at 1.1300 where the November 2016 highs are. A break of the 1.12 handle to the downside, 1.1180 and 1.1160 are supports. Analysts at Commerzbank argue that the pair will remain bid while above the near-term uptrend at 1.1075. "Above 1.1300, the market has potential to reach the highs from mid 2016 circa 1.1429 and the two-year resistance line at 1.1474, however, we believe it will struggle here from a longer term perspective. We note the 78.6% retracement lies at 1.1343."