Yesterday morning, there were rumors that the ECB might decide to scale back its QE program faster. Such speculation gave optimism to the euro. In practice, the optimism faded after the regulator unveiled its policy decisions.
In fact, the ECB maintained all settings of its monetary policy unchanged. Moreover, it did not clear up its agenda for further policy moves. In December 2021, the central bank decided that it would buy assets worth €40 billion in April, scaling down its asset purchases to €30 billion in May and to €20 billion in June.
The regulator did not specify what would happen in July. Yesterday, Christine Lagarde stated that the QE program would be adjusted in Q3 2022 to current economic conditions. In other words, the regulator has not decided yet whether it would extend its stimulus program or not.
Evidently, raising interest rates is out of the question for the time being. No wonder EUR/USD instantly reversed downwards, and the US dollar proceeded with its advance across the board. The bullish trend of the greenback that began in the late spring-early summer of 2021 is still underway. Judging by fundamentals, the uptrend is set to go on for a long time.
Today the currency market will trade quietly because European and American markets are closed on Good Friday. The US dollar will extend its growth next week.
EUR/USD traded with high volatility yesterday due to speculative interest. As a result, the currency pair slumped by almost 140 pips and broke support at 1.0800. The price printed a lower low of the medium-term downtrend and made a technical retracement.
In shorter time frames (M30 and H1), the RSI technical instrument climbed to critical levels in the overbought zone. This triggered a technical retracement. The RSI crossed a 50-period moving average downwards on the 4-hour chart. It signals high interest in opening short positions.
The H4 Alligator again signals a downward cycle because moving averages are pointed downwards.
Outlook And Trading Tips
If EUR/USD settles below support at 1.0800 on the 4-hour chart, traders will increase short positions. The selling pressure will prolong the bearish trend. Until then, the currency pair could trade sideways at around 1.0800.
Complex indicator analysis generates a sell signal for intraday trading and the short and medium-term on the back of the overall downtrend.