Yesterday, the euro showed notable growth, although the reason for it is not apparent. The single European currency was rising throughout the entire European session, while during the US trading hours, the market was almost flat.
The statement by Germany's Chancellor Olaf Scholz that there will be no ban on energy imports from Russia supported the euro/dollar pair. On Monday, there was much speculation in the US media over the 5th package of EU sanctions, which included an embargo on crude supply from Russia.
US President Joe Biden said yesterday that he expected to tighten sanctions against Russia during his visit to Europe. After this statement, the euro slowed down its pace of growth. So, there are still risks for the European economy.
Olaf Scholz cautioned that anti-Russian sanctions hurt Europe as well. This may be a sign that Germany, the largest country of the European Union, is not going to continue tightening the sanctions against Russia.
The situation is the following: Germany refuses to impose new sanctions while the US intends to do the opposite. So, a lot will depend on Joe Biden’s visit to Brussels. Until then, the market is likely to stay flat in anticipation of new drivers.
Technical Outlook
After shortly holding below the level of 1.1000, EUR/USD started a pullback. This helped the euro partially recover its losses, although the bearish sentiment still prevails in the market.
The RSI is moving along the middle line on the 4-hour chart, which is a sign of a flat movement. On the D1 chart, the RSI is holding in the lower area of the indicator at 30/50, confirming that traders prefer to open short positions.
The moving averages of the Alligator Indicator on H4 intersect, which serves as another confirmation of a sideways movement. On the D1 time frame, the Alligator Indicator suggests a downtrend in the medium term, while its moving averages do not cross.
The main focus now is on the consolidation of the price in the range of 1.1010/1.1045, where high speculative activity is observed. A breakout of either of the boundaries of the sideways channel is likely to cause new price fluctuations.
Trading signals
- It is possible to open long positions on the pair when the price settles above the level of 1.1050, with the target at 1.1070–1.1100.
- Short positions can be considered after the quote consolidates below 1.1000, with the target at 1.0960–1.0900.
Comprehensive indicator analysis gives mixed signals on the short-term and intraday time frames due to the flat movement. In the medium term, indicators show a sell signal due to the downtrend.
