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Until yesterday, the last time the European Central Bank raised the refinancing rate was in July 2011. That was exactly eleven years ago. So there is nothing surprising in the fact that as soon as it was announced that all interest rates were raised by 50 basis points, the single European currency immediately jumped. But it returned to its original position almost immediately, and began to show a downward trend. The ECB was able to surprise everyone greatly. And quite unpleasant. The fact is that, coupled with an increase in the refinancing rate, the launch of the TPI program was announced, which can be deciphered as a Transitional Protective Instrument. In fact, this is another quantitative easing program. It is aimed at supporting the countries of the euro area in the face of rising interest rates. The fact is that the increase in rates will lead to an increase in the yield of government bonds. So borrowing will become more expensive, and the level of public debt is extremely high. Many countries may well be unable to service their debts. This alone simply cancels out any effect from higher interest rates. But what is most important is that the parameters of this program are not known. No timing, no volume. Simply put, the ECB can print as much money as it wants. That opens the way not just to parity, but also to lower values.
Refinancing rate (Europe):
The EURUSD currency pair only locally showed speculative interest during the announcement of the results of the ECB meeting and the press conference. The scale of fluctuations was about 100 points. As a result, the current momentum led to forming a short-term flat within the boundaries of 1.0150/1.0270.
The technical instrument RSI H4 is moving in the upper area of the 50/70 indicator, which indicates a residual signal of a corrective move. RSI D1 has come close to the 50 middle line, which corresponds to the usual correction.
The MA moving lines on the Alligator H1 indicator have many intersections with each other, which indicates a flat. Alligator H4 is in the process of decelerating the upward cycle. Alligator D1 ignores local price rules. There is no intertwining between the MA sliding lines.
Expectations and prospects
In this situation, the current range focuses all the attention of traders on itself. For this reason, the most appropriate trading tactic is considered to be the method of breaking through one or another flat border.
We concretize the above into trading signals:
Long positions on the currency pair are taken into account after keeping the price above the value of 1.0280 in a four-hour period.
Short positions should be considered after keeping the price below 1.115 in a four-hour period.
Complex indicator analysis has a variable signal in the short-term and intraday periods due to the flat. Technical instruments in the medium term give a sell signal due to a downward trend.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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