.Although the EUR/USD pair eased to 1.1435 in the early European session, it easily rose back towards its 14-month peak that it set last Wednesday at 1.1490. As of writing, the pair is trading at 1.1480, up 0.1%, or 10 pips, on the day.
Despite the recovery, the pair is having a tough time gathering momentum as investors refrain from taking heavy positions in the absence of significant macro data releases. The only noteworthy data on Monday came from the Federal Reserve Bank of New York, which showed that the Manufacturing Index dropped to 9.8 in July, missing the market expectation of 15.
Tomorrow’s economic docket will feature ZEW Survey results from Germany and the EU, which are both expected to retreat in July. However, ahead of the ECB meeting on Thursday, investors might continue to refrain from taking large positions, not allowing the pair making a decisive break above the 1.15 handle. In a recent report, Rabobank analysts argued that it doesn’t seem likely that the ECB will formally change their guidance at this week’s meeting as the inflation hasn’t yet met meet any of the ECB’s self-imposed criteria.
In case the pair gains traction on a hawkish ECB surprise, it could break above the 1.15 handle on its way to 1.1535 (May 2, 2016, high) and 1.1615 (May 3, 2016, high). On the downside, supports could be seen at 1.1390 (20-DMA), 1.1290/1.1300 (former resistance area) and 1.1200 (psychological level).