Well, it has been an exciting day on the markets. Heavy participation has been the norm across the forex. There is no way to sugar coat it — the USD has taken an absolute beating. As we enter the home stretch of the trading day, losses against the Euro and Japanese yen are being extended.

There is possible relief in sight for the Greenback. Tonight’s economic calendar is full of events that may bring USD backers out of hiding:

Country                             Event

Japan                                Foreign Investment (Jan.)

Germany                           IFO Reports (Jan.)

Eurozone                          GFK Consumer Confidence (Feb.), ECB Deposit Rate

Canada                              Retail Sales (Nov.)

Coming into today’s session, many of the majors were slow and in a prolonged rotation. The overnight news out of Davos was the catalyst for several directional moves.

In Thursday’s pre-market hours, the ECB Deposit Rate announcement has the potential to shake up the forex even more. The ECB is projected to hold rates steady at -0.4%. I agree with the consensus.

Volatility will be heightened immediately after the ECB release. Have your stops down and leverage under control!

EUR/USD Technical Outlook

In a live market update from yesterday, I outlined a scalping plan for the EUR/USD. Depending upon your broker, the trade may have been either a success or a loss. The sell entry of 1.2319 was tested at 1.2318 before an immediate retracement. If you got filled on a spike in the Bid/Ask spread, it was a winner. If not, the second time price approached this level the bullish breakout was in full swing.

The obvious battleground in the EUR/USD is 1.2400. This area is receiving heavy two-way action as buyers and sellers duke it out. Tonight’s ECB release will be the deciding factor, either continuing the bullish break or prompting a retracement.

Overview: Sometimes technical analysis is easy. The EUR/USD is trending higher, with a key psychological level acting as resistance. In the shadow of the coming ECB release, I will be firmly on the sidelines observing the action.