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Good morning traders.

The eurusd continued its grind lower yesterday in another uneventful day for the pair. Until the US ISM services data was released at 4.00 CET the pair had moved within a 20 pip range all day. We did have some semi decent PMI data out of the eurozone – but it was not enough to stem its downward spiral.

We are at 1.1298 as I write this morning and the pair looks to be setting up for a push lower on an expected dovish ECB tomorrow. The expectation for the ECB is that Draghi will announce revised forecasts (lower) for CPIs and GDP and introduce a new LTRO (long term refinancing operation) to facilitate bank lending.

We already know that no rate changes were to be considered until after this summer and can assume with some confidence that this is now more likely to be next year subsequent to the weakening economic picture from the EU.

Whether Draghi makes this clear tomorrow will be important as we have to bear in mind that he is coming up to the end of his tenure as ECB President and what he says now will directly affect his successor. In which case he will most likely be careful what he says regarding forward guidance so as not to tie his successors hands too much. However, he can´t dodge the reality of the situation. Germany appears to be losing its impetus and as the engine of the whole EU will have a massive effect on its performance outlook.

We should also note the headlines coming out of Italy which are stridently anti EU adding to the blocks political worries. Oh and yeah… we also have this Brexit issue which is coming to a climax!

Whichever way you cut it, the eurozone has plenty to consider and what the ECB says and does tomorrow could be the catalyst to push us out of this persistent range. If I were a betting man (lol) I´d expect lower prices. But we´ll bide our time and wait and see.

For today there is nothing on the data slate so we can probably expect another quite day unless we get any headlines to inject any life into the pair.

With regard to yesterdays model performance we had a run into S1 at the 1.13 Big Fig and into the top edge of Zone 2 support. If you bought S1 you would probably have ended up a loser so I will count that as a -13. However buying S2 enabled us to mitigate this loss so I will score yesterday as even.

The Daily Chart

The downside levels remain at around 1.1260 on the daily close and 1.1234 the wick low. Below here we have the 1.12 Big Fig and the 1.1190 ish 61.8 Fib of the major swing. If we dig lower we can reasonably assume that the pair wants to test 2017 levels into 1.11 and lower. 1.0800 would make a decent downside target. Whether this is on the cards in reality is impossible to predict at this stage, and as you know, I am not really into predictions.

The Hourly Chart

For today and tomorrow I suggest you tread carefully until after the ECB. I have marked up the zones which are likely to attract price and or get some reaction but I think scalping is the better way to engage for today.

NB: I will post a quick update tomorrow and then won´t be back at my desk until the 18th March.

Have a good day amigos and probably better to keep your powder dry!

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Mark Wogan

Hi. I started my investing / trading career in 2000 and since 2011 I have been trading on a full time basis.

My focus here will be the currencies and in particular the EurUsd pair and I will post my charts on a daily basis marking up the levels I´m interested in and comment on the bigger picture context and anything else I´ll be watching out for during the day.

I also do a little coaching on a one to one basis so if you´re interested in learning how to trade just give me a shout and we can have a quick chat.

https://www.markwogan.com

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