24.01.201910:00 Forex Analysis & Reviews: EUR / USD: European currency movement scenarios after the European Central Bank meeting

The euro continued to trade in the side channel in tandem with the US dollar, and the pound rose on the basis of trading on Wednesday, January 23.

The lack of important statistics and today's meeting of the European Central Bank, probably makes traders take a waiting position. At today's meeting, the European regulator is expected to leave interest rates unchanged. However, the focus will be shifted to the press conference of the ECB President, at which Mario Draghi will outline the prospects for future monetary policy. It will be important that Mario Draghi's views change or not.

If the president of the ECB declares that a weaker economy will affect monetary policy in the future, the euro is likely to decline against a number of world currencies, especially when paired with the US dollar. The breakthrough of a large support level of 1.1340 will indicate a return to the market of large sellers whose goal will be the annual minima of 1.1300 and 1.1230.

If the head of the European Central Bank does not indicate the prevalence of negative risks to economic growth and classifies current problems as tactical and political situations, the demand for the euro may increase. The breakthrough of the large resistance level of 1.1410 will be a signal to return risky assets to the market, which will lead to the demolition of a number of stop orders above this range and the update of the highs of 1.11450 and 1.1530.

As for the US dollar, there has already been the talk of a likely slowdown in economic growth in the first quarter of this year due to the fact that the work of the US government has not resumed. This situation in the future will negatively affect the quotations of the US dollar against a number of world currencies. Kevin Hassett, chairman of the White House's Council of Economic Consultants, said yesterday that the US economy would not grow in the first quarter of 2019 due to the government's shutdown. He noted that there is a tendency of weak economic growth in the 1st quarter of each year, but this year the pace may be reduced to zero.

Data from the Federal Reserve Bank of Richmond yesterday did not greatly affect the US dollar. According to the report, the composite production index in January 2019, although it remained at a negative level, was -2 points against -8 points in December 2018. Let me remind you that only positive value of the index indicates an increase in activity in the manufacturing sector. Economists had expected the index value in December to be -4 points.

The report on a small recovery in consumer confidence in the eurozone allowed euro buyers to return to the market for a while. According to the data, the preliminary index of consumer confidence in the eurozone in January of this year was -7.9 points against -8.3 points in December last year.

The Australian dollar collapsed against the US dollar, despite the fact that the Australian labor market in December 2018 was in fairly good shape. According to published data from the Australian Bureau of Statistics, the unemployment rate in December fell to 5.0% versus 5.1% in November. Economists had expected the unemployment rate to remain unchanged.

The number of jobs increased by 21,600, while the share of the economically active population in December decreased to 65.6% against 65.7% in November.

As for the technical picture of the AUD / USD pair, a breakthrough of the large support level in the area of 0.7100 may lead to a more prolonged downward trend with the exit to the lows of 0.7070 and 0.7040. The upward correction in the trading instrument will be limited by the resistance of 0.7140.