A brief glimpse at the trading chart of the euro is enough to understand what decision was taken by the European Central Bank. The key rate was hiked by 50 basis points. However, the most important fact is that during the press conference, Christine Lagarde said that at the following meeting, the regulator would raise the benchmark rate by the same magnitude. What is more, the ECB will keep the key interest rate at high levels as long as needed.
In other words, the ECB will raise the benchmark rate to 3.5% and then, it will start considering the monetary policy loosening. Meanwhile, the Federal Reserve supposes that it is unreasonable to cut the key rate until 2024.
It means that the European regulator will be the first to start lowering the benchmark rate. This is enough to allow the US dollar to change its trend to an upward one.
However, today, the greenback is likely to decline amid the US Labor Department report. Thus, the US unemployment rate may climb to 3.6% from 3.5%. Although it is an insignificant rise, it points to the deterioration of the labor market condition.
What is more, 190 thousand new jobs could be created in the non-farm sector. However, judging by demographics and economic activity it is not enough. That is why the unemployment rate will continue to rise.
On the trading chart, we see that speculative activity surged amid a strong news flow. As a result, the euro/dollar pair dropped by more than 130 pips below 1.0900.
A sharp change in the price may lead to oversold conditions in the short-term periods. This, in turn, may cause a slowdown in the downward inertial movement, thus spurring a technical rebound. However, speculators may ignore technical signals. In this case, the price settlement below 1.0850 may cause a deeper drop to 1.0800.
Meanwhile, the pound/dollar pair broke the lower limit of the sideways channel of 1.2300/1.2440 amid the BoE meeting results. As a result, the volume of short positions increased, thus spurring an inertial movement.
If the downward cycle remains intact, the pound sterling may slide to 1.2150. After that, the volume of short positions may slump amid oversold conditions.
The alternative scenario will become possible if the price hits the area of 1.2150/1.2200, where bulls and bears will fight for control over the market.

00:00 Introductory speech
00:3 ECB raised the interest rate
01:06 Slight weakening of the dollar, the reasons
01:43 EUR/USD
02:26 GBP/USD
03:11 Conclusion

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