EURUSD potential dip in strength following ECB 75bps hike


The EURUSD daily is positioned favourably in its upper channel, between the blue and red bands. Moreover, the red Bollinger bands are diverging (green ellipses). This expansion suggests that volatility is increasing. It will be regarded as bullish if this is true and the EURUSD maintains its current channel.

The hourly stochastic has crossed positively (bottom black ellipse). If the EMAs follow (top black ellipse), short-term traders may align with the longer-term daily. A bullish momentum will be present if the stochastic reaches the 80+ levels.

This analysis follows a 75bps hike by the ECB today - its third for 2022. It also, in effect, announced that it was scaling back support for European banks by altering the terms for its targeted longer-term refinancing operations (TLLROs). In addition, quantitative tightening will be discussed in December,and will consider inflation, measures already taken, and the transmission lag.

The ECB confirmed that its current hiking cycle is not over.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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