Today we had the opportunity to listen to a speech by the President of the European Central Bank, Ms Lagarde. The ECB President reaffirmed her hawkish stance today and pointed to the need for further interest rate rises in the euro area. Among other things, we heard: “Inflation is slowing down a bit, but it is far from saying that it has peaked. There may be a need to raise rates into restrictive territory”.  Despite the announcement of further rate rises, the market did not care too much and the euro lost ground to the dollar in the afternoon.

EURUSD at June levels

The euro-US dollar pair had been moving in a downtrend since early 2021. At the end of September this year, the rate had dropped to 0.9560. The daily candle of 28 September established a multi-year low, but the day ended on a positive note and a bullish engulfing formation emerged. Since then, the euro has started an upward correction. Today, the price reached 1.05, the levels last seen at the end of June this year.

EURUSD D1 – today’s bullish engulfing may be a signal for declines

On the daily chart, we note that today’s candle has a long upper wick and can be classified as a downward pin bar and at the same time as an engulfing candle, forming a bearish engulfing. The MACD oscillator has entered a downward phase and a bearish divergence has appeared.

An ‘evening star’ formation foreshadows a downtrend?

EURUSD H4 – Evening star formation and bearish divergence suggest declines

On the H4 chart, too, there are signals that the EURUSD could complete the upward correction and return to declines even below parity. The pattern that the four-hour candles have formed is called – ‘evening star’ – and is usually a signal for declines. Here, too, the MACD is falling, creating a bearish divergence.

Unrest in China strengthens the dollar

A factor that could have an impact on further weakening of the EUR is the unrest in China. Protesters against Covid restrictions and censorship have appeared in many cities. The symbol of the protest is the blank A4 sheets of paper the protesters are waving. Usually when there is global uncertainty and risk appetite falls – the dollar is eagerly bought.

I invite you to my 2 live sessions, I will say more about this and few other instruments.


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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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