Since Boris Johnson and Ursula von der Leyen have agreed that negotiations will last until Sunday, the issue of the UK-EU trade agreement will not be discussed in the EU summit starting today. Instead, the focus will be on the upcoming European Central Bank's board meeting, where, in light of the obvious deterioration of the epidemiological situation in Europe, due to which Germany has already announced tougher quarantine measures, the question of economic recovery is becoming more rhetorical. Consequently, the ECB has practically no choice but to expand its economic stimulus program, but the trick is that the program is another variation of quantitative easing, and its expansion will lead to exactly the same effect as lowering interest rates. Therefore, if the ECB announces any expansion in the program today, the euro will noticeably decline.
At the moment, the EUR / USD pair is in a partial correction from local high 1.2177, where, following from the recent fluctuations, it may seem that the quote is in a sideways channel.
The overbought factor of the European currency also remains at a high level, which leaves a chance for further correctional movement.
In addition, the market dynamics yesterday include a local acceleration in favor of increasing the volume of short positions.
Thus, in the daily chart, a medium-term upward trend can be seen, where, relative to the current quote, there was a fluctuation at the very top.
With this, it can be assumed that the overbought status of the euro will lead to a consistent corrective movement, the primary level of which will be 1.2000.
Meanwhile, an alternative scenario is a longer sideways fluctuation, where the levels 1.2070 / 1.2170 may appear as boundaries.
Indicator analysis also show that the technical instruments in the minute and hourly time frames signal SELL.