All the sanctions imposed by the western countries banned business activity and froze funds on accounts. However, the suspension of operations with gold and foreign exchange reserves of the Bank of Russia caused grave concerns among investors. Yesterday, Europe did something that shocked investors worldwide. Thus, German authorities seized a massive yacht belonging to billionaire Alisher Usmanov.
The key reason was that the billionaire is on the black list. In the world, there are a lot of wealthy people who purchase both assets and property in Europe. This means that they keep a part of their fortune in Western Europe, thus supporting the EU’s economy.
Now, everyone knows that local authorities may seize property or funds only because they disapprove of their owners’ behavior. Against this background, Europe will likely face a massive outflow of capital. The pound sterling has already benefited from the situation, showing a considerable rise.
It was evident that conflict in Ukraine is leading to capital outflow. However, it is likely to be relatively moderate and even short-lived. It is possible to stop the process. Meanwhile, decisions taken by the EU authorities are only deteriorating the situation. Thus, in the long term, forecasts for both the euro and European economies are gloomy.
The euro/dollar pair hit a new local low of the downtrend. As a result, the pair continued falling, approaching the psychological level of 1.1000 (1.0950/1.1000/1.1150). On the four-hour and daily charts, the RSI technical indicator is hovering in the lower area of 30/50. This proves traders’ interest in short positions.
Meanwhile, the Alligator’s moving averages on the four-hour and daily charts point to a downtrend. Moving averages are not intersecting each other. On the daily chart, we see that the mid-term downtrend became longer.
Outlook
The euro/dollar pair has slackened its downward movement. The psychological level is acting as support. This may lead to a decline in short positions, thus preventing the pair from a deeper drop. Notably, positions on the US dollar are much more attractive in the mid-term.
That is why a short-lived stagnation or a pullback may cause a change in the market sentiment. This may allow the pair to break the level of 1.1000. In terms of the complex indicator analysis, we see that technical indicators are signaling short opportunities on the short-term, intraday, and mid-term periods due to a downward movement.
