The EUR/USD has pushed through March 30 highs, rallying before the ECB announces its monetary policy decision. While the 50 basis point cut analyst expect is likely, investors will be more interested in what Claude Trichet has to say about the ECB's potential use of quantitative easing.

Trichet will likely say the ECB doesn't need to cut the benchmark rate further. However, this is what the ECB has said after each of their other rate reductions.

As a result of investor apprehension, the EUR/USD is showing limited gains as compared to other major Dollar pairs such as the GBP/USD and AUD/USD. Nevertheless, the EUR/USD will likely follow its positive correlation with U. S. equities.

Therefore, if the S&P futures can manage to blow through 2009 highs, the EUR/USD should eagerly follow suit. However, if Claude Trichet indicates the ECB intends to use quantitative easing to loosen EU credit markets, we could witness a sharp reversal in the EUR/USD.

The EUR/USD still has to contend with our 2nd tier uptrend line as it reaches an inflection point with our medium-term downtrend line.

Therefore, we expect high volatility throughout the rest of today's trading session. If the EUR/USD can climb above both of the aforementioned trend lines, expect a sharp movement upwards.

Fundamentally, we find supports of 1.3334, 1.3291, 1.3253, and 1.3205. To the topside, we see resistances of 1.3366, 1.3409, 1.3442, 1.3476 and 1.3505. The 1.35 area serves as a psychological barrier with 1.30 acting as a heavily-weighted psychological cushion. The EUR/USD is currently exchanging at 1.3352.

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