So, the ECB rate cut by the expected 0.25% has passed. The euro reacted calmly to the news, even slightly increasing its resistance of 1.0905. Christine Lagarde, describing the prospects of the economy in optimistic tones, noted, however, that the next action of the Central Bank is beyond the horizon of forecasts.
Nevertheless, the discrepancy with the Fed’s rate has increased to 1.25%, and the US economy looks stronger, with the Treasury actively attracting debt through government bonds, so the markets will still feel this pressure, and the euro will decline.
Today, this confrontation remains uncertain. In the eurozone, GDP for the 1st quarter may show an increase of 0.3%, and in the United States, the non-agricultural sector may show an increase of 186 thousand in May against 175 thousand in April.
A qualitative change in the market is likely next week when investors compare the balance of the economies. A divergence has been formed on the daily chart of the single currency. This is already a signal and the first sign of a reversal. We will find out on Monday morning whether the divergence will withstand the pressure of speculators.
On the four-hour chart, the price looks well fixed above the indicator lines, especially after yesterday’s testing of the balance line by the lower shadow, which threw the price up. But the Marlin oscillator is in no hurry to grow and lies on the horizon above the neutral zero line.
The euro’s fall will become confident after overcoming the support of the Kruzenshtern line (1.0860). The goal is 1.0788. Fixing the price above 1.0905 may be false, even if the target of 1.0964 is formally opened – it is possible to form a double divergence on a daily scale.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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