EUR/USD Declines on Reduced Demand as Markets Await ECB Decision

The Euro began losing traction in European trading on Monday, building on the initial warning from Friday’s daily candle, which featured a long upper shadow formed after a strong upside rejection.

The initial signal of the two-day recovery stalling was reinforced by a double-top formation on the hourly chart at 1.0858.

Fresh weakness needs to break through the pivotal support at 1.0825 (20-day moving average) to enhance downside prospects.

Daily technical indicators are mixed: the 14-day momentum is declining, yet moving averages remain in a bullish setup. The near-term bias is expected to stay bullish as long as the price remains above the 20-day moving average, with a larger bullish trend in place above the daily cloud top and the 200-day moving average (1.0791/85).

A weekly long-legged Doji candle also adds to the uncertain near-term outlook.

Fundamentals are anticipated to play a significant role this week, with markets focusing on EU PMI data, US labor sector reports, and the key event of the week—the ECB policy meeting, widely expected to result in the first rate cut.

Markets will also closely watch the ECB’s comments and economic projections to gain more insight into the central bank’s future monetary policy actions.

Res: 1.0858; 1.0882; 1.0895; 1.0942
Sup: 1.0825; 1.0810; 1.0785; 1.0748