The situation with inflation in Europe, or rather its complete absence, are worse than ever. Consumer prices have been falling for five consecutive months, while the rate of deflation is -0.3% over the past four months. Ergo, it's looking more and more like a real disaster. It is not surprising that shortly the single European currency began to decline before the publication of the data. But the most interesting thing will happen today. After all, in such a situation, the European Central Bank has no choice but to further ease monetary policy, in the hope that this will finally lead to the long-awaited increase in inflation. However, during its previous meeting, which was the last one last year, the European Central Bank has already expanded its quantitative easing program. And it is unlikely that such measures will be taken during two consecutive meetings. There is a high chance that the European Central Bank will delay this for a while, limiting itself to statements about the intention to further expand the quantitative easing program, planning this step for the end of winter, or the middle of spring. But even this will be enough for the single European currency to go down at a new speed. Furthermore, its decline was rather limited yesterday. Market participants clearly kept in mind the meeting of the board of the European Central Bank today. The single European currency itself, nearing the close of trading, has begun to gradually grow, recouping some of its losses. This is very similar to how the market goes in the opposite direction from the important news, in the run-up to its release. In any case, the expectations are extremely negative, since it is quite obvious that the European Central Bank has no other choice, at least within the current paradigm. In other words, the European regulator should either continue to soften monetary policy, or radically change its approach to its implementation. The second option seems fantastic, since a sharp change of course, in the short term, will lead to disastrous consequences. And despite countless statements, the European Central Bank is still more concerned about the immediate problems than about the long-term consequences.
Since the beginning of the trading week, the EUR/USD currency pair has been following the trajectory of a pullback from the local low of December 9 - 1.2059, where sellers recently found a foothold. It was possible to develop an upward move only to the range of 1.2130/1.2170, where another slowdown occurred.
The market dynamics is slightly above average, which indicates speculative interest in the market.
Based on the current position of the quote, it can be seen that the quote shows an upward interest, but as before it is at the levels of the range of 1.2130/1.2170, which may affect the volume of long positions.
Considering the trading chart in general terms, the daily period, it is worth noting that the quote, like before, follows the direction of the medium-term upward trend.
We can assume that if the natural basis associated with the range of 1.2130/1.2170 again plays as a resistance, we can get a round of downward interest, which will lead us to the values of 1.2060-1.2000.
An alternative scenario will be considered if the price holds above 1.2180 for a four-hour period.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments signal a purchase relative to the minute and hour periods, due to price fluctuations at the range levels.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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