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euro remained afloat after the January meeting of the ECB



DATE OF PUBLICATION: 2021-01-21 21: 09: 20 The European Central Bank, which held its first meeting this year, did not break the northern trend of the eur / usd pair. Buyers still feel very confident looking towards the 22nd figure. Following the January meeting, traders were able to test the 1.2150 price barrier (Tenkan-sen line on the daily chart), but could not reach the resistance level 1.2200 (the middle line of the Bollinger Bands indicator, coinciding with the Kijun-sen line on the same timeframe) … Whereas for the development of an upward movement by buyers, it is vital to overcome this resistance level, since in this case the pair, firstly, will be between the middle and upper lines of the Bollinger Bands indicator on D1, and secondly, the Ichimoku indicator will form a bullish signal “Parade of lines »In which all indicator lines will be below the price. In this case, from a technical point of view, the path to the next major resistance level – 1.2330 (upper line of the Bollinger Bands) will be open. Therefore, longs can be opened either at “short distances” (up to 1.2200), or after overcoming this target. On the eve of the January meeting of the ECB, the final data on the growth of European inflation in December were published. The final estimate completely coincided with the preliminary one – the general consumer price index remained at the level of -0.3%, the core inflation index – at the level of 0.2%. The release itself was ignored by traders, as it came out at the level of forecasts. However, it served as a reminder that the coronavirus crisis continues to negatively impact the eurozone economy. Given the general mood, market participants did not expect to hear any optimistic notes from Christine Lagarde today. Nevertheless, they sounded. Although pessimism generally prevailed, traders focused on the positive aspects of her rhetoric, in particular Lagarde attributed the recent vaccination process to a favorable factor. At the same time, she noted that the period of the pandemic could last until the spring of 2022 – therefore, the European regulator intends to “actively be present” at least until March next year. As for Brexit, here, according to the head of the Central Bank, the parties were able to avoid the “onset of a crisis situation” that would have been layered on all other problems. In other words, Christine Lagarde made it clear that the long-awaited “light at the end of the tunnel” did appear. therefore the December forecast for the current year is “still valid”. In this context, she also noted that the incoming data “confirms the previous baseline scenario of the ECB.” Thus, the European regulator kept the parameters of monetary policy unchanged and did not revise its forecasts, even despite the protracted lockdowns in key European Union countries. For example, in Germany, the lockdown was extended until at least February 14, while the quarantine restrictions were tightened. Shops (with the exception of grocery and pharmacies) are still closed in the country, schools, kindergartens, hairdressers, beauty salons and gyms, as well as cinemas, museums and theaters are closed. In addition, Berlin decided to direct employers to seek opportunities to expand teleworking. Other European countries (in particular France, Spain, Belgium, Italy) have extended and / or tightened curfews, and Portugal, Ireland and the Netherlands have significantly tightened quarantine restrictions. Nevertheless, the European Central Bank, judging by the rhetoric of Christine Lagarde, “Relies on vaccination”. At the same time, the head of the ECB admits that it will take time to achieve mass immunity, therefore, downside risks for economic growth this year still prevail, although they have become “less obvious”. In other words, the European Central Bank on the one hand does not expect any economic breakthrough in the foreseeable future. But on the other hand, the regulator made it clear that with the start of vaccination, the countdown to the end of the pandemic began. Therefore, there is no talk of expanding the incentive program now. Let me remind you that at the December meeting, the members of the European regulator decided to increase the volume of the asset purchase program by 500 billion euros (that is, a total of 1 trillion 850 billion euros). At today’s meeting, the head of the ECB made it clear that at the moment there is no need to take additional steps in this direction. On the eve of the January meeting, many analysts warned that the head of the Central Bank may be concerned about the negative impact of the high euro rate on the already low inflation. Lagarde really touched on this issue today, saying that the regulator will “track changes in the exchange rate.” But the market, as expected, ignored this remark. It is worth recalling here that similar risks were sounded on the eve of the December meeting. Whereas Lagarde, during her press conference, stressed that the Central Bank does not set the target rate for the euro, so it will not artificially lower its value. At the same time, she then also voiced the phrase that the ECB would monitor the situation related to the rate of the single currency. The market similarly ignored this remark. Summarizing what has been said, we can conclude that the January meeting was predictably “through”. The European Central Bank left all monetary policy parameters unchanged and did not change the wording of the accompanying statement. However, the subsequent rhetoric of Christine Lagarde was not as pessimistic as investors expected. This fact helped eur / usd buyers not only stay afloat, but also test the resistance level of 1.2150. However, the northern impulse faded rather quickly, which is why the pair’s bulls were unable to test the main resistance level of 1.2200 (the daily high was fixed at 1.2173). As soon as the upward dynamics began to fade, buyers began to fix profits, “giving way” to the sellers of the pair. But the bears were only able to slow down the price growth, while the overall advantage remained with the eur / usd bulls – especially against the background of the weakening dollar. All this suggests that longs can be opened from current positions for a “short distance” – up to 1.2200. Or wait until this target is overcome in order to enter purchases with the main target of 1.2330. Material provided by InstaForex – www.instaforex.com Source – InstaForex

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