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The euro settled near a three-month low against the dollar before the European Central Bank meeting on Thursday, which highlights about President Mario Draghi’s decision to indicate the bank to taper its bond purchase program.              

The currency remained flat at 0.1 percent to $1.0962, posting below the three-month low of $1.0952 during the London session. In essence, the July 25 decline below that low would suggest the euro to its lowest level since the Brexit referendum results on June 24.     

Additionally, any changes in ECB’s asset purchase program is not expected until December. However, market participants await for confirmation from Draghi relative to the recent speculation that the bank could begin pointing out its bond purchases.       

Given that the euro could be poised amidst European Central Bank’s decision in monetary policy, speculations grew about Draghi and his colleagues’ support in becoming independent from both lawmakers and markets by means of cutting down its €80bn-a-month quantitative easing programme.   

Hence, investors were left with expectations that the biggest surprise would be ECB’s unrelenting dovishness, which could also expose the common currency to some technicalities relative to its dollar exchange rate.       

It is essential to note that the euro’s recent jump after the UK’s Brexit vote implies that the euro/dollar was lifted on such occasions around $1.0950.   

ECB Monetary Policy in Focus

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Among the highlights on Thursday is the euro with the European Central Bank monetary policy scheduled announcement.

As the EUR/USD pair has been dragged on Brexit’s aftermath, market players are making their hopes up that the euro will find support on the ECB after the pair posted declines near a 2-month low, which settled at 1.0955 at the close of Wednesday’s session.    

Evidently, many investors are trading with caution with the move as the 2-year German – U.S. yield spread posted lower this month and is now surging, citing it would give the currency a lift.

Moreover, there hasn’t been market-moving Eurozone or U.S. release anticipated for this week. Analysts had anticipated that for the euro to strengthen, ECB President Draghi should pertain that he’s confident enough with the monetary policy’s current level.    

Current Stance of EUR/USD Pair

The chart below illustrates the EUR/USD pair’s stance amid growing speculations over the European Central Bank President Draghi’s decision on the monetary policy level.

The pair moved in a bearish tone and is expected to decline further until Draghi made a decision on monetary policy issue. The price actions are continuing a downward movement at resistance 1.10488, nearly touching the support level of 1.09508 in today’s session.  

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Conclusion

Given a significant decline on the currency pair, we conclude that the price movement suggests a breakout or a false one, but it is expected that it will hit between the same level of support and resistance until Draghi’s decision on monetary policy.

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