So even after the much anticipated ECB rate announcement and Draghi’s speech was over, the Euro still finds it hard to rally. Well, it must be the comments and the forward guidance from ECB that is preventing the supposed rally as many thought it would happen today. First off, inflation forecast for the next three years has been downgraded. 2018 inflation is expected to be at 1.3% with 2019 inflation at 1.9%. This year’s inflation though has been revised lower to 1.5% from the stellar 1.8% mentioned in March. Growth on the other side is expected to rise as all concerns that prevented the ECB from becoming overwhelmingly positive is now well balanced despite the current low oil prices. Draghi went on to mention that rates-OCR at -0.40%, Refinancing rate at 0.00% and Marginal Lending rate will remain at 0.25% for an extended period of time with little chance of being cut further as prospects of future growth is on the cards all across the Eurozone. This should be positive for the Euro but unexpectedly, the charts are indicating otherwise.
The daily chart is bearish with a bear divergence forming as shown by the stochastics winding down lower. Also check out that resistance trend line which has not being broken through in the last two occasions. This combination of bear signals shows that the path of least resistance is to the downside and trading should be as follows unless there is a break and close above 1.5280.
Stop Loss: 1.5280
Take Profit: 1.48-Level of support
Have a good trading day