The EURUSD currency pair will come under the scanner next week as the European Central Bank is expected to hold its monetary policy meeting.

While no changes are expected from the central bank, the ECB is widely expected to address the issue on the exchange rate’s appreciation.

Recently, officials at the ECB came down strongly on the euro’s exchange rate.

The vice-president of the ECB, Vitor Constancio recently commented about the strength of the euro’s exchange rate calling it unjustifable compared to the fundamentals.

This has sparked speculation that the European Central Bank could possibly talk down the euro.

The EURUSD sits at a critical juncture.

Price action suggests that the euro is trading at a key monthly resistance level of 1.230 – 1.2230 region.

This level is important as it previously served as a key support level helping the euro to rebound higher.

As a result, the retest of this level from the downside indicates that the current rally could be losing steam.

In the medium term, we see that the support for the EURUSD comes in at 1.1241.

A correction to this level also coincides with the 61.8% retracement level from the lows of 1.0340 from January 2017 and the current highs at 1.2322. As a resut, the bias to the downside is strong.

While the EURUSD could be seen hovering near this region, the outcome of the ECB’s meeting will be crucial.

If the central bank maintains a balanced tone, it could potentially keep the euro ranging sideways.

However, hawkish talk could potentially send the EURUSD closing above 1.2300 which would shift the bias to the upside in the medium term.