Not that long ago global investors thought that the risks to the Euro before the meeting outweighed the negative side, because they assumed, that the currency could strengthen based on the expectations of the hawkish result of the meeting, while the tone of decisions and conferences may be less aggressive or result in "sale the facts" behaviour. Nevertheless, the next few days brought stabilization, if not even cooling the demand for EUR, which made investors' attitude return into balance. But the rebound of the EUR/USD after the yesterday's Fed's decision prompts to conclude, that the market is again setting up on a hawkish ECB message. There is a potential for a positive reaction to the decision of the ECB regardless of whether the traders will know the specific details of extending the QE, or the decision will be postponed until July and today we will have to rely on Draghi's suggestions. In the latter case, a lot will depend on how optimistic Draghi will be about the prospects of accelerating the recovery in the Eurozone and return of inflation to the target levels while reducing the importance of internal risks (like uncertainty in Italy, deterioration in economic data, etc.) and external (like US trade policy and tariffs tax ). However, if the ECB shows that it remains at a previously set exchange rate, it may offer investors confidence in building expectations of a progressive normalization of monetary policy, which will be an important pillar of the long-term EUR power.
Let's now take a look at the EUR/USD technical picture at the H4 timeframe, before the ECB interest rate decision was made. The price has bounced higher after the Fed interest rate hike yesterday and now the market is approaching the swing high at the level of 1.1839. An interest rate hike by ECB or Draghi hawkish remarks will make EUR/USD to rally way higher than this level. In this case, the first target would be at the level of 1.1994 (practically round number 1.2000), but in that case, I think it might get extended even to the level of 1.2068 easily. If, however, the ECB will leave the rate unchanged or the Draghi remarks will not be as hawkish as expected, the EUR/USD will likely test the 38% Fibo at 1.1852 and stop there to consolidate the gains.