A trend change is at hand for the euro-dollar after the European Central Bank exceeded the market's easing expectations last week by imposing a negative interest rate on banks for their deposits and cutting its main interest rate from 0.25 percent to 0.15 percent.
Chart patterns are not infallible – they're used to identify the balance of probability of one possible result compared with another. In late May, the euro-dollar chart showed a steady uptrend with a well-defined uptrend line. However, this uptrend line was broken as the market anticipated ECB policy easing.
The bullish analysis we compiled in May was not confirmed by market activity. The break below the uptrend line was the critical signal and we adjusted our analysis accordingly. This week we update the chart analysis.
There are two significant features on the weekly chart: trend line A and historical support near $1.34.