The Bank of England behaved extremely passively for a long time, and was even extremely reluctant to make any statements. Not to take any proactive steps. In fact, it dutifully followed the European Central Bank and the Federal Reserve. Just silently. And if it did make any decisions, it did so only after certain gestures from the largest central banks. This went on for several years. But yesterday the BoE came up with an unexpected surprise, not only announcing its plans to tighten monetary policy, but even outlining the timing of the refinancing rate hike. The first increase, to 0.25%, will take place next May. In December, it will be increased to 0.50%. Nobody expected such a thing from the British central bank. Investors, however, took this news with optimism, and the pound began to grow rapidly, pulling the single European currency along with it. Which, however, showed a much more modest scale of growth.
Refinancing rate (UK):
US reports have strengthened the euro. It turned out to be a failure. The number of initial applications for unemployment benefits, instead of decreasing by 25,000, increased by 16,000. The situation with repeated appeals is even worse, since their number increased by 131,000, although they were expected to decrease by 164,000. So it is not surprising that the dollar continued to lose its positions. The dollar stopped weakening only in the late afternoon. Nevertheless, the situation does not fundamentally change, since the Fed announced an incredibly large-scale tightening of monetary policy. Yes, it is also quite fast. So yesterday's weakening of the dollar should be regarded rather as a local correction, after which a return to the trend for its strengthening is inevitable.
Number of repeated applications for unemployment benefits (United States):
During the previous day, the EURUSD currency pair managed to fully restore the euro rate relative to the downward momentum of September 22. Despite the local upward interest, the downward trend is still considered the main direction in the market relative to the quarterly period.
A strong price change in a short period of time caused the euro to be overbought in the market. This signal was confirmed on the RSI technical instrument, where the indicator jumped above 70 points locally.
Expectations and prospects:
The 1.1750 price level serves as a resistance on the way of the bulls, relative to which there was a stagnation in the range of 15 points. It can be assumed that keeping the price below 1.1725 will increase the bears' chances of returning the quote to the pivot point at 1.1700.
If speculative interest resumes, and the quote manages to settle above the value of 1.1760, prolongation of the correction towards 1.1785-1.1800 is not ruled out.
Complex indicator analysis has a variable signal based on the short-term period due to slowdown. Technical instruments on the intraday period signal to buy, due to the upward momentum of the previous day.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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