EURUSD could slump 280 pips following tomorrow's ECB meeting

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The U.S. consumer price figures were not enough to trigger a slide in EURUSD, nor did they lead to a rebound. Instead, the market is trading sideways as we await tomorrow's ECB rate meeting. The ECB is expected to cut rates, with the possibility of signaling a 50-basis-point cut in upcoming meetings due to weak economic growth and inflation at target.

From a technical standpoint, the price has formed an inverse head-and-shoulders pattern, which might fail. The pattern would invalidate and trigger if the price falls below the right shoulder, currently at 1.0462. If this level breaks, the price could drop by the same distance as the projected rise from the pattern, roughly 280 pips, targeting 1.0181. Trading in smaller chunks is advisable unless the market moves quickly toward the target.

What's your view? Could this play out, or do you expect a false breakdown?


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