EUR/USD – Bearish developments ahead of the European Central Bank meeting

<p><a href="https://api.addthis.com/oexchange/0.8/forward/facebook/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fforex%2Feur%2Feur-usd-bearish-developments-ahead-of-the-european-central-bank-meeting%2Fcerlam&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/facebook.png" border="0" alt="Facebook" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/twitter/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fforex%2Feur%2Feur-usd-bearish-developments-ahead-of-the-european-central-bank-meeting%2Fcerlam&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/twitter.png" border="0" alt="Twitter" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/email/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fforex%2Feur%2Feur-usd-bearish-developments-ahead-of-the-european-central-bank-meeting%2Fcerlam&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/email.png" border="0" alt="Email" /></a></p><p>The ECB meeting on Thursday is not likely to be as straightforward as many have seemed over the last year.</p>
<p>Even before we get to the new economic forecasts and what that means for monetary policy over the remainder of the year, there isn&#8217;t much of a consensus in the markets around what the decision on interest rates will be tomorrow.</p>
<p>Markets are pricing in a little more than a 60% chance of another rate hike &#8211; probably the final one &#8211; and almost a 40% chance of a pause, with around a 70% chance that one will still follow at one of the upcoming meetings.</p>
<p><strong>ECB Interest Rate Probability</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability.png" target="_blank" rel="noopener"><img loading="lazy" class="aligncenter wp-image-807537" src="https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability-1024×473.png" alt="" width="621" height="287" srcset="https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability-1024×473.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability-300×139.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability-768×355.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability-1536×710.png 1536w, https://www.marketpulse.com/wp-content/uploads/2023/09/ECB-Probability.png 1874w" sizes="(max-width: 621px) 100vw, 621px" /></a></p>
<p>Source &#8211; Refinitiv Eikon</p>
<p><strong>How are markets positioned?</strong></p>
<p>Obviously, with every currency pair, both components have to be taken into consideration but it&#8217;s interesting that EURUSD slipped below the 200/233-day simple moving average band a couple of weeks ago and has neither recovered or accelerated lower.</p>
<p><strong>EURUSD Daily</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16.png" target="_blank" rel="noopener"><img loading="lazy" class="aligncenter wp-image-807543" src="https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16-1024×507.png" alt="" width="620" height="307" srcset="https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16-1024×507.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16-300×149.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16-768×380.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16-1536×761.png 1536w, https://www.marketpulse.com/wp-content/uploads/2023/09/EURUSD_2023-09-13_16-18-16.png 1835w" sizes="(max-width: 620px) 100vw, 620px" /></a></p>
<p>Source &#8211; OANDA on Trading View</p>
<p>Perhaps this is a result of some apprehension ahead of the ECB meeting &#8211; and today&#8217;s US inflation report which triggered some initial volatility but didn&#8217;t ultimately swing the pair one way or another &#8211; or some slightly dovish positioning in case the ECB opts for its first pause?</p>
<p>That should become clearer tomorrow but with the pair already seeing some resistance around the prior lows &#8211; 1.0765 &#8211; a dovish outcome could see the pair accelerate lower. A significant move (initial volatility can produce big swings that don&#8217;t turn out to be significant) below 1.07 and the most recent lows would be very interesting and may suggest that dovish, and bearish, outcome has occurred.</p>