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Hello!
Yesterday, full of important events, met expectations of increased volatility and investor activity in the foreign exchange market. In principle, this is mainly the case at such important and significant events as the Fed's decision on the rate with the subsequent press conference of the head of this department.
But let's start in order. Data on the US consumer price index in annual and monthly terms came out better than expected, but market participants ignored them. Everyone was waiting for the publication of updated forecasts for the US economy and the speech of Federal Reserve Chairman Jerome Powell. The US dollar, as they say, fell under the distribution. Investors considered the forecasts for the US economy unconvincing, and Jerome Powell's speech was too soft.
Indeed, the chief US banker has made it clear that next year the refinancing rate level will remain and may even be reduced. I do not think that this was any revelation for investors, it was hardly possible to count on a more "hawkish" tone of the head of the Federal Reserve. Again, I am inclined to believe that technical factors played a major role in such a sharp rise in EUR/USD.
Daily
The persistence of the euro bulls was eventually rewarded. Against the background of yesterday's most important events, the pair broke through the strong technical zone of 1.1080-1.1115. It is not known yet whether this breakdown is true. Following the Fed, which kept the rate in the range of 1.5%-1.75%, the European Central Bank (ECB) will pick up the baton today. There are also no changes expected, most likely, the rate will remain at zero. The main attention of market participants will be drawn to the press conference of ECB President Christine Lagarde. As you know, this is a fairly experienced monetary policymaker.
I do not think that Lagarde's speech will be painted in "hawkish" shades, the speech of the head of the ECB will likely be moderately "dovish". Here, much will depend on the details.
Regarding the technical picture of the euro/dollar, the market seems to have made its choice, and it is in the direction of the north. Could they change their minds and turn south? Quite. This happened more than once. False breakdown, collecting stops, after which a change of direction.
Nevertheless, the most likely scenario is the continuation of growth. If this happens, the quote will head to the price zone of 1.1175-1.1190, where there are strong resistance level and 233 exponential moving average. If you define more distant targets, it is the area of 1.1225.
In the alternative downward trend scenario, there is a high probability of a pullback to the resistance of 1.1115 broken the day before. And with this development, the moment of truth will come for the pair. Returning to this level and closing below will indicate that the breakdown of this mark was false, after which we can reasonably expect a subsequent downward movement.
H4
Although the previous candle "Doji" with good reason can be perceived as a reversal, the pair is trying to continue the rise. If the closing price of the current candle is above 1.1145, a signal will appear about the further intentions of the euro/dollar to strengthen. The bearish model of the current candle signals a correction to yesterday's strong growth. However, a reversal is not excluded, this can also be.
Quite a difficult situation to enter the market. Buying EUR/USD is the priority, however, it is not necessary to open long positions on highs, and even under the resistance of 1.1145. And that's an understatement. But the pullback to the broken resistance levels of 1.1116 and 1.1110, as well as to the black broken upper border of the descending channel, can be considered to open purchases.
Sales in the case of a corresponding candlestick signal can be planned under 1.1145, and above after rising to a strong resistance zone of 1.1175-1.1180.
At the moment, such thoughts are on the main currency pair of the market. However, do not forget about the ECB meeting and Christine Lagarde's press conference. These events can make significant adjustments in the course of trading!
Good luck!
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