ECB Stands Pat On Its Ultra-Loose Policy
InstaForex Group | Apr 15, 2022 04:49AM ET
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.
h2 Outlook And Trading Tips/h2If 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.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.