The lead-up to tomorrow’s ECB Interest Rate Decision hasn’t been kind to the EUR/USD. Rates have plunged from Tuesday’s close, falling more than 50 pips as of 11:30 AM EST. Given the bearish price action, it appears as though the markets are anticipating an exceedingly dovish ECB.

Thursday is going to be a key forex session for the EUR/USD. Three primary market movers are scheduled: Germany’s Consumer Price Index (August), the ECB Deposit Rate Decision, and U.S. Core CPI (August). By tomorrow at this time, we may be looking at a very different EUR/USD.

EUR/USD: Technical Outlook

At the moment, a bearish bias is appropriate for the EUR/USD. Rates are beneath daily support and trending south of the 1.1000 psyche level.

If the plunge continues ahead of the ECB statements, these key support levels may come into play:

• Support(1): 78% Retracement, 1.0960
• Support(2): Lower Bollinger Band, 1.0958
• Support(3): Swing Low, 1.0926

Bottom Line: Converging indicators are a good thing as they strengthen an area of potential support or resistance. For the EUR/USD, the area around the 1.0950 handle has two technicals coming together. While certainly not fool-proof, the 78% Retracement and Lower Bollinger Band are set up to deliver at least a bounce in price action.

Until elected, I will have buy orders in queue from 1.0963. With an initial stop at 1.0944, this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.