Relevance up to 22:00 2022-07-25 UTC–4
Early in the European session, EUR/USD is trading at 1.0186. After having reached the high at 1.0272 on July 20, the pair is now bouncing above the 21 SMA with a positive outlook for the next few hours.
In the next few hours, the European Central Bank will announce its monetary policy decision. The central bank is likely to raise the key interest rate by 25 basis points in July, although earlier in the week investors and market participants pointed to a possible increase of 50 basis points.
In case the European central bank increases 0.50% in the interest rate, it could be a positive sign for the euro and the price could reach 4/8 Murray at 1.0253 and could even reach the 200 EMA at around 1.0341.
From a technical point of view, EUR/USD is showing signs of overbought and could extend its decline if it consolidates below the 21 SMA located at 1.0172.
According to the 4-hour chart, we can see that the euro maintains an uptrend channel and is being supported by the 21 SMA which offers a positive outlook. As long as it continues to trade above this level, the Euro is likely to resume its uptrend and it could reach the area of 1.0253 and even 1.0341 (200 EMA).
On the contrary, in case a strong bearish movement occurs and the pair consolidates on the 4-hour chart below 1.0160, it could be a clear signal that the technical bounce has ended and the main downtrend could resume and this could reach parity again around 2/8 Murray at 1.0009.
The eagle indicator is showing signs of an overbought market. Any bullish move while trading below the 200 EMA could be considered an opportunity to sell.
Our trading plan for the next few hours is to buy EUR/USD only if it trades above the 21 SMA. On the contrary, in case the euro weakens, we could decide to sell if it consolidates below 1.060 with targets at 1.0100 and 1.0009.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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