ECB Nuances Eyed

$1.1800 has capped EUR/USD overnight, with the rate dealing a handful of pips shy of the figure ahead of London hours, little changed on the day. A reminder that the overnight session was hampered by a Japanese holiday, which sapped liquidity from Asia-Pac dealing (EUR/USD has operated in a 13-pip range since the NY close).

• To recap, the broader risk-positive theme weighed on the USD during Wednesday's NY session, allowing EUR/USD to make a couple of brief and limited showings above $1.1800.
• Our technical analyst suggests that the EUR/USD outlook remains bearish despite the recovery lows on Wednesday. With the imminent formation of a death cross (50- breaking below the 200-DMA), the focus remains lower. Yesterday's trough now provides the initial support point ($1.1752), although bearish focus is on the March 31 low ($1.1704) which forms key support. Initial firm resistance is seen at the July 15 high ($1.1851).
• The latest ECB decision headlines the broader global docket on Thursday. The earlier-than-expected publication of the strategy review has transformed today's ECB meeting from a placeholder to a live event. Any material changes in policy are still likely to be on hold until September (or possibly December), but changes to the forward guidance and additional communication around the strategy review implications could be market moving. Clarification of the new buzzwords "forceful" and "persistent", as well as the extent to which inflation deviations from target will be tolerated, are likely to be a focus during the press conference (click to read our full preview of the event)
• In terms of nearby FX options expiries to be aware of come the 10AM NY cut, we highlight the following: EUR/USD: $1.1650-60 (EUR562mn), $1.1710 (EUR1.1bn), $1.1800-15 (EUR1.1bn), $1.1935 (EUR1.1bn)