Hello, dear colleagues!
As expected the day before, the speech of ECB President Christine Lagarde did not bring anything good to the single European currency.
The main interest rate, as expected, was kept at zero, and this did not cause any significant fluctuations in the euro exchange rate. But after the start of the press conference of the head of the European Central Bank, the market revived, and the single currency came under selling pressure.
The ECB's Governing Council has decided that rates will remain at their current levels or below until inflation approaches the regulator's forecast target of 2%.
Monthly asset purchases (APP) of 20 billion euros will continue for as long as necessary, and this program will end shortly before rates start to rise.
You understand that this will not happen very soon, and therefore such comments by the ECB became, in my opinion, the main reason for the sale of the single European currency.
In her speech, Christine Lagarde noted that production remains at a low level and slows down the region's economy. Lagarde was more optimistic about employment. The head of the ECB again said that her office will closely monitor inflation and, as necessary, will use all tools to maintain economic stability. At the same time, Lagarde added that the risks are shifted downwards and are not so clearly expressed.
In general, Christine Lagarde's speech can be described as "moderately dovish", however, the market decided not to tempt fate and resume selling the single European currency.
Daily
As expected, the main scenario in yesterday's trading for the euro-dollar was a downward one. As a result of the decline, the pair exited the Ichimoku indicator cloud and ended the session on January 23 at 1.1053. Moreover, strong support was broken in the area of 1.1070 and the green support line was 1.0879-1.0981. The pair even probed another horizontal support level of 1.1040, but rebounded from this mark and finished yesterday, as already noted, at 1.1053.
What can I say? Based on the daily chart, the downward trend is likely to continue. I believe that today the quote will fall below 1.1040 and even test the strength of the iconic technical and psychological level of 1.1000. Let's see what kind of picture is observed in smaller time intervals.
H4
I think I won't surprise anyone if I express my personal opinion that the main trading idea for EUR/USD is sales. As seen on the four-hour chart, a good option for opening short positions on the euro will be to go up to the area of 1.1107-1.1117, where 50 MA, 233 EMA, and 89 EMA are located. It is characteristic that the horizontal resistance level of 1.1117 passes above. Both the indicated moves and the resistance level can become a serious obstacle when trying to start a corrective recovery for EUR/USD. But for some reason, we are not sure that we will see such a rise and the market will allow us to open short positions from the selected zone.
If you look at earlier and aggressive sales, you can try them after the pair rises to the level of 1.1075. I will not give any recommendations on purchases today. However, those who want to buy euros can try to do it from the price zone of 1.1040-1.0990.
For those who are going to trade EUR/USD today, it is not superfluous to look at the economic calendar. You can find something interesting there. For example, the performance of the same Christine Lagarde, which is scheduled for 11:30 (London time). I don't think the head of the ECB will say anything new and important, but nonetheless.
For this, I wish you a good day and a successful profitable trade!
The material has been provided by InstaForex Company - www.instaforex.com