The growth of the single European currency on Monday was associated with reports in the U.S. media regarding the increase in the interest rate of the European Central Bank. Allegedly, a number of fairly large market participants are demanding that the regulator raise interest rates four times by the end of this year. But this topic turned out to be a banal stuffing, since it did not receive further development, and it was quickly forgotten. Due to this, the single European currency returned to the same values on Monday, with which the trading week began.
On Tuesday, the situation looked somewhat different. There was no information background in principle. Of course, data on the lending market in the UK were published, and after the opening of the American trading session, the open vacancies in the United States. And of course, I would like to associate the impressive growth of the single European currency with these publications. That's just all this growth happened between these events. At the time of the publication of these data, the market simply stood still. It turns out that we are talking exclusively about the speculative component of this movement.
A sharp increase in speculative hype is associated with the upcoming transition to payment for Russian gas in rubles. Moreover, officials of European states continue to declare the impossibility, and even the inadmissibility of such a transition. In response, the Russian Federation officially announced the termination of gas supplies, in case Europe refuses to pay in rubles. The transition itself should happen already on April 1. So the market is in a state of complete uncertainty, which is a favorable condition for speculative attacks.
True, you can try to link yesterday's behavior of the single European currency with the negotiations between Ukraine and Russia, which resulted in the announcement of the withdrawal of part of the Russian troops from Kyiv. And if that's the case, then all European currencies should have grown. The trouble is that the pound, of course, also grew, but then returned to its original position. It is this difference in behavior that makes it impossible to connect what happened with the negotiations.
The EURUSD currency pair showed strong upward interest after a long stagnation in the 1.0960/1.1050 range. As a result of the short, the euro strengthened by more than 150 points, eventually hitting a local maximum on March 17 at 1.1137.
The RSI technical instrument jumped to the overbought zone in a four-hour period due to speculation, which coincides with the touch of the local maximum of 1.1137.
The Alligator indicator in H4 has completed the stage of intertwining between the MA lines in an upward direction. This was caused by a sharp change in the euro exchange rate.
There is a downward trend on the trading chart of the daily period, in the structure of which a corrective move first appeared from the support level of 1.0800, and later – a flat.
Expectations and prospects:
In this situation, the local maximum at 1.1137 plays the role of resistance, which temporarily put pressure on buyers in the form of a technical pullback. In order for the upward cycle to be prolonged to new price levels, the quote needs to stay above the value of 1.1180 in a four-hour period. This step will lead to further formation of a corrective move from the pivot point 1.0800. At the same time, the natural basis of the past, associated with the 1.1120/1.1180 area, may well put pressure on long positions. In this case, a slowdown in the upward cycle is possible, followed by a weakening of the euro, following the example of a price rebound on March 17.
Complex indicator analysis gives a buy signal in the short-term and intraday periods due to the price approaching the local maximum of the correction cycle. Indicators in the medium term have a sell signal due to the medium-term downward trend.