After a brief jump above 1.13, EURUSD turned lower on Wednesday following three days of gains and finished at daily lows around 1.1220. The pair volatility rose ahead of today’s ECB meeting as traders are nervously awaiting fresh signals from the central bank.
Some market participants expect the regulator to announce new stimulus, citing the fact that the ECB has been missing its inflation goal. There are also fears that the monetary authorities will revise down their economic forecasts due to rising risks from the ongoing trade wars. If so, the common currency could get under additional selling pressure and reverse some of the recent gains.
On the other hand, the potential downside momentum could be limited by a broader dollar weakness as traders continue to price in a rate cut by the Fed this year, especially amid mixed economic signals in the US.
Technically, EURUSD could lose the 1.12 figure with the initial bearish target at 1.1170. Once below, the pair may challenge the .1130 area.