Today, on April 14th, the common European currency is down against the US Dollar. The European currency lost 0,27% of its value against its American counterpart. Today's European trading session started with a bearish gap (1,3879 - 1,3858). The currency pair is currently trading around 1,3851.
On Saturday, April 12th, Mario Draghi, President of the ECB, conducted a press conference within the scope of the spring summits of the World Bank and the IMF.
Market Leader found out the details and consequences of the press conference. In particular, Mr. Draghi told the audience about the dangers of a stronger common currency against the US Dollar. The strengthening forces the ECB to reconsider its monetary policy. The central bank's efforts are aimed at preventing the rate of inflation from falling further down.
Further quantitative easing is expected to cap the rally seen in the market of EURUSD and to make the common currency lose a bit of its value, thereby supporting higher inflation in the eurozone and stimulating European economies. He also underlined that there was no deflation in the eurozone at that point.
Meanwhile, several web sources (with reference to The Financial Times) report that the ECB is ready to set negative deposit interest rates. Such steps were previously made by the central banks of Sweden and Denmark . Still, the results of such efforts are controversial.
EURUSD: Tech Analysis by Masterforex-V Academy
Some trading experts working for Masterforex-V Academy analyzed the EURUSD chart in order to outline the near-term prospects of the currency pair as well as the most likely scenarios.
The D1 chart of EURUSD indicates a long-term rally started on June 9th 2013. This rally still holds true. Since November 7th, the price has been moving within the scope of an MF sloping channel (green line). Later on, the rally accelerated from 1,3477 and was suspended around 1,3966. These high and low are marked with red lines.
The chart retraced from the high but an upswing is likely to take place in the near future Moreover, this upswing may break above the local high to hit 1,4000.
The rally up to 1,4000 is probable if:
The ECB fails to continue its QE program.
The Fed keeps purchasing bonds, thereby making the US Dollar decline against other major including the common currency.
The eurozone's balance of payments reaches a surplus.
However, if the ECB continues purchasing bods while the Fed keeps tapering its QE program and ultimately completes it, the Euro will definitely start losing value against the US Dollar.
If to consider the H4 chart of EURUSD, we can see that the rally accelerated on April 4th after the US Nonfarm Payrolls report came out worse than expected, thereby disappointing the market. Still, after Draghi's press conference on Saturday, the price made a bearish gap (as shown below, market with grey lines).
If the common currency keeps retracing, the price may well reach 1,3772 or even 1,3732 and then 1,3673. This scenario is marked with a red arrow.
Alternatively, if the rally resumes within the scope of the long-term uptrend, the price is very likely to pin through 1,3858 and 1,3879 with a further rally up to 1,3905. Once the level of resistance is broken, the next targets will be around 1,3933, 1,3966 and even 1,400. This scenario is marked with a green arrow.
