EUR/USD – Can Expect Volatility After ECB Monetary Policy

My FX List
March 17, 2023
EURUSD - Can expect volatility after ECB monetary policy

Table of Contents

Bearish View

  • Take Profit: 1.0450
  • Stop Loss : 1.0600
  • Timeline: 1 day

Bullish View

  • Buy stop : 1.0590
  • Take Profit: 1.0700
  • Stop Loss : 1.0450

The pair price apparently dropped to the lowest level since 27th Feb. The latest developments that happened for the EU were ECB’s monetary policy by which there will be an interest rate hike of 50 bps. The President of ECB, Christine Legarde stated that they couldn’t see any significant improvement in the underlying inflation. Legarde also took time to address the concerns about the Banking sector, as she said that the European Banking sector is much stronger than how it was in the year 2008.

Several economists estimated that the ECB may go for a 0.25 rate hike only but looks like the prevailing inflation pressured them to go for a higher rate hike. For the US we did see the stock market taking a crash along with the major indices like Dow Jones and NASDAQ falling. The bond market was also experiencing a decline which affected the pair price too.

On the charts, we saw the pair price forming a small double-top pattern earlier which also coincided with the Murrey Math lines at 1.0753. We then saw the price moving to key support following a strong bearish breakout. During its retreat, the 25-period and 50-period EMAs along with Ichimoku Cloud were crossed by the pair. There was also a small bearish flag pattern formed with which we can expect a further drop in prices. But can expect a lot of volatility as a response to the ECB policy.

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