Ahead of the ECB announcement, markets are largely pricing in a cautious stance from the regulator, while still maintaining expectations of policy tightening toward the end of the year.

In the short term, the ECB's impact on the EUR/USD currency pair may be limited unless a significant surprise occurs. A clearly hawkish stance, reinforcing expectations of a rate hike in June, could support the euro (EUR) by shifting short-term interest rate differentials in its favor. Conversely, a more cautious stance or dovish rhetoric could put pressure on the single currency, especially if concerns about economic growth dominate the discussion.

At present, market pricing reflects expectations of at least two rate hikes this year. According to Danske Bank, around 65 basis points of cumulative tightening are priced in by year-end, with the first hike expected in June. ING notes that markets are firmly aligned with a June rate hike scenario despite the ECB's cautious tone. Therefore, an important factor for traders will be how clearly ECB President Christine Lagarde signals the likelihood of such a move. Any signs of stronger second-round inflation effects could reinforce arguments for tighter monetary policy, which would support the euro.

However, external factors continue to play a decisive role. Oil prices, geopolitical conditions, and global risk sentiment remain the main drivers of EUR/USD dynamics. Therefore, if the ECB does not significantly alter market expectations, the pair may continue to be driven by broader macroeconomic factors rather than policy decisions alone.

The Relative Strength Index (RSI) has eased slightly to around 50, indicating weakening upward momentum after the recent recovery, but it has not yet moved into negative territory, leaving bulls still in play.

Resistance is located at the confluence of the 100-day SMA around 1.1710 and the 9- and 14-day EMAs. Support lies at the 200-day SMA, with additional support slightly above the 50-day SMA.

A break below this level would lead to a deeper correction and weaken the current bullish scenario.