EURUSD has been trending lower on its short-term time frame, with its lower highs and lower lows connected by a descending channel. Price is currently testing the resistance and could be due for a drop back to the support levels soon.

If the top of the channel keeps gains in check, EURUSD could dip to the bottom of the channel close to the .9850 minor psychological mark or the mid-channel area of interest around .9925. This happens to line up with the 100 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is below the 200 SMA to suggest that the path of least resistance is to the downside. In other words, resistance is more likely to hold than to break.

Stochastic is also pointing down after reaching the overbought area, suggesting that selling pressure is about to pick up. RSI appears ready to move south as well, so price could follow suit. Both oscillators have plenty of room to head lower before reflecting exhaustion among sellers.

The ECB rate decision is coming up today and could mean a lot of volatility for euro pairs in the next trading sessions. The central bank is expected to hike rates by an unprecedented 0.75% in order to keep surging inflation in control.

With that, a lower interest rate hike of 0.50% or a dovish one accompanied by cautious remarks might mean downside for the shared currency. The ECB has a tendency to do “too little, too late” when it comes to adjusting monetary policy.

Later on, Fed Chairperson Powell has a speech coming up and is expected to reiterate the central bank’s pledge to curb price pressures. More hawkish remarks could bring more upside for the dollar, along with safe-haven flows that have been in play for the most part of the week.