FX.co ★ EUR/USD review on December 20

EUR/USD, H4 chart.

What's going on and what to do?

Euro behaved rather paradoxically last week. It rose before and after the Fed policy meeting, which was very surprising. Most likely, the reason was the rally in pound, which occurred after the Bank of England announced a rate hike. The European Central Bank, on the other hand, only said it is preparing to curtail programs that support economic growth, despite inflation being a key problem in the area. The indicator is already at 5%, well above the target of the central bank.

With regards to the Fed, tapering will speed up, with bond purchases reducing to $ 30 billion each month. This will make the program complete by April instead of June as previously planned. Wall Street analysts commented that the Fed seems to be preparing at least three rate hikes throughout 2022.

What happened next to the euro? It fell sharply at the close of the week, almost to the weekly low of the H4 chart.

Technically, the trend is down, but the price still needs to move to 1.1220 - 1.1230.

What can be done?

Buy euro at the current prices, then set stop loss at 1.1220, expecting downward reversal.

Traders could also place a sell stop order at 1.1220 and stop loss at 1.1265.