The ECB will more than likely get what it wants, allowing traders to sell the Euro on the basis that they will almost certainly be far less hawkish than the Federal Reserve.
The euro rose against the US dollar on Monday, gaining just over 8/10 percent. Additionally, the Euro broke above the psychologically and structurally important 1.12 handle, which was previously a major low. At this point, it looks like we are trying to get back into the consolidation zone we were in before, and the fact that the US Dollar Index has shown a bit of exhaustion further confirms that this pair should continue to rally a bit. little.
The candlestick is very impressive, but ultimately it is still a bullish candlestick in the middle of a larger downtrend. As long as that’s the case, it makes sense to just sit on the sidelines and wait for an opportunity to start shorting again. It’s a market that’s been in a downtrend for some time, and with the European Central Bank far from trying to tighten monetary policy, it’s a bit difficult to see the euro improving sustainably against the dollar. green that makes the Federal Reserve tighten. monetary policy throughout 2022.
That doesn’t mean they can’t change course, and we have an ECB meeting this week. However, nothing is expected to happen in the short term, and it’s a bit rich to think that the European Central Bank would step in and shock the market. The last thing they want is to see the euro go up fast enough. After all, although the European Union is starting to get a bit stronger, it still has to rely on export markets, and if the euro itself gets too strong, it can significantly reduce those selling opportunities.
We have been in a currency war for several years. It is essentially a “race to the bottom” by central banks around the world to depreciate their own currencies. It’s about the ability to get other economies to buy your goods and kick-start your own economy. Unfortunately, this puts traders in a situation where they are trying to figure out what is “less bad” when it comes to all of these markets. In this spirit, the ECB will more than likely get what it wants, allowing traders to sell the Euro on the basis that they will almost certainly be far less hawkish than the Federal Reserve.