FX.co ★ Trading plan for EUR/USD and GBP/USD on April 19, 2022

For two days, the single European currency stood still due to the long weekend in Europe. So there is nothing surprising in the almost complete absence of any activity. Nevertheless, there was practically no doubt that after the opening of trading, the euro would continue to go down. The results of the recent meeting of the ECB Governing Council clearly disappointed investors. After all, despite the rapid growth of inflation, the European regulator continues to pursue the same monetary policy, actually doing nothing. It is not even clear how long the quantitative easing program will last. While the Federal Reserve announced the largest increase in interest rates in several decades.

Yesterday, the pound showed a fairly noticeable decline, which began even before the opening of the American trading session. At first glance, this is quite strange, since the euro actually stood still and there was no news from the UK that could somehow affect the mood of market participants. However, following the meeting of the ECB Governing Council on Thursday, the single European currency was actively declining, while the pound maintained relative stability. So, the decline may be the late reaction of the British currency. Note that due to its scale, the euro inevitably pulls other currencies along with it.

But investors have another reason for massive sales of both the euro and the pound. Unfortunately, it lies in a slightly different plane than monetary policy or macroeconomic statistics. A couple of days ago, the world media began to actively talk about the upcoming large-scale offensive of the armed forces of the Russian Federation in the Donbas. And it started late last night. At least that's what the Western media say about it. We are referring to a new round of escalation of the conflict. That is, the risks on the European continent have increased dramatically. It is clear that this will promote risk aversion, so the euro and the pound will inevitably continue to lose their positions.

The EURUSD currency pair overcame the support level of 1.0800 after a short stagnation. This led to a signal of prolongation of the medium-term downward trend. Stable price retention below the passed level increases the sellers' chances of a subsequent decline in the euro exchange rate in the direction of the 2020 minimum.

The GBPUSD currency pair has again returned the quote to the psychological level of 1.3000, which indicates a high interest of traders in short positions. A signal about the prolongation of the downward cycle will come from the market at the moment when the price is kept below the 1.2950 mark. Until then, the market will remain bumpy.