In general, the euro significantly dropped yesterday, but this did not happen quite as predicted. For the most part, the market nearly stood still all day long, and movements were extremely small. But that all changed with Philip R. Lane's speech, a member of the executive board of the European Central Bank. In fact, he delivered a keynote speech, in which he paid special attention to inflation. And as you know, Europe has been in a situation of deflation for the second month, that is, a decline in consumer prices. Lane noted that low inflation over a long period of time carries incredibly high risks for the economy, and the ECB needs to use all possible tools to solve this problem. In particular, we are talking about expanding the volume of the economic stimulus program due to the coronavirus pandemic. At the same time, the program itself is expected to be extended until the end of 2022. Simply put, Lane bluntly announced a massive increase in the quantitative easing program, which is simply something else.
At the same time, the euro should have started to fallen earlier, when data on the number of open vacancies in the United States were published. But instead, the single currency even attempted to grow. This was due to the fact that the number of these same vacancies decreased from 6,697,000 to 6,493,000.The whole trick is that it was expected to grow from 6,618,000 to 6,685,000. Of course, the previous data was revised upwards, but this does not change anything, since the number of open vacancies has decreased anyway. This is quite significant. So there is a risk that the pace of labor market recovery will significantly slow down.
Job Openings (United States):
It is noteworthy that the strongest movement was observed a couple of hours after Lane's speech. This may be due to the fact that stop losses were affected, which led to a sharp spike. From this it follows a simple conclusion that investors will now seriously think about their future plans. So it is most likely that there will be some stagnation in the market today. The minutes of the Federal Reserve meeting will be published today. However, it is published quite late. Moreover, investors will not find anything new in it. The Fed is pretty clear about its plans and intentions. And they compare favorably with what the ECB plans to do.
The euro/dollar currency pair managed to show high activity yesterday after the 1.1800 level was worked out as a resistance. There was an impulsive downward move in the market, where high speculative interest is visible, which led to a partial recovery relative to the corrective move.
If we proceed from the quote's current location, we can see a low-range price fluctuation within the value of 1.1735, which may signal a slowdown stage relative to the momentum of the previous day.
Acceleration is recorded relative to market dynamics, which has a positive effect on the clock component of the market.
Looking at the trading chart in general terms (daily period), you can see a corrective move with a scale of more than 180 points, which caused the quote to return to the boundaries of the previously passed flat of 1.1700/1.1900.
We can assume that the current stagnation will locally restrain sellers, but if the price settles below 1.1720, the price level of support 1.1690/1.1700 may be at risk.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments on the minute and hour periods indicate a signal to sell due to a rapid downward movement. The day period has a neutral signal.
