EUR/USD – Stuck between 5-DMA and 50-DMA

EUR/USD appears stuck in the narrow range in the Asian session marked by 5-DMA and 50-DMA levels of 1.1161 and 1.1137 levels as investors wait on the sidelines ahead of ECB rate decision due this week.

ECB may extend maturity of its QE program

Markets expect European Central Bank (ECB) to extend the maturity of its QE program from March 2017 to September 2017. The bank is not seen moving rates this time. Moreover, experts believe the ECB too wants the Fed to do the heavy lifting as the negative rate strategy is not yielding desired results.

The currency pair began on a weak note, given the signs of fresh political unrest across Eurozone. Spain is now without government for almost eight months, while Germany’s Angela Merkel suffered defeat in regional elections. Meanwhile, Italy is heading towards a critical referendum which as per experts puts EU membership at risk.

EUR/USD Technical Levels

Acceptance above 5-DMA level of 1.1161 could yield a move higher to 1.1209 (100-DMA). Breach of the moving average resistance would expose 1.1252 (Sep 2 high). On the other hand, a breakdown of support at 1.1126 (200-DMA) would shift risk in favor of a drop below 1.11 and slide towards 1.1046 (Aug 5 low).