EURUSD and DXY Key Levels Ahead of Thursday’s ECB

The EURUSD and DXY are testing critical levels ahead of Thursday’s European Central Bank (ECB) rate decision and press conference.

Watch today’s video for the key levels and scenarios to watch!

The US dollar broke a significant support on Monday as the EURUSD broke out from its 2021 descending trend line.

After trending higher since the start of 2024, Monday’s DXY break below channel support at 104.50 represents a potentially significant turning point for the USD.

However, the key word is “potentially”.

How the euro reacts to Thursday’s European Central Bank (ECB) rate decision and statement will be a critical factor for the dollar.

It also wouldn’t be the first time we’ve seen the DXY set a bear trap in recent months.

There was a bear trap at the end of 2023 at 101.90 that caused me to get bullish on the dollar on January 2nd.

Then there was the fakeout below 103.00 in March that triggered a 3.3% rally from the dollar index.

So, is this time different, or more of the same?

Time will tell, but levels like 1.0860 on EURUSD could offer clues about the dollar’s intent.

Currently, EURUSD is holding above 1.0860 following Monday’s breakout.

If the euro can hold that area as support and follow through on the back of Thursday’s ECB, it would add further downward pressure to the DXY.

On the flip side, a daily close below 1.0860 from the EURUSD following Thursday’s events could hint at yet another bear trap from the DXY.

In other words, EURUSD 1.0860 is the level to watch, not just for trading the euro, but all major currency pairs.

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