EUR/USD Forex Signal: Brace for Elevated Volatility Ahead of ECB

The EUR/USD price formed a small double-top pattern at 1.0753, which coincided with the ultimate resistance of the Murrey Math Lines. 

Bearish view

  • Sell the EUR/USD pair and set a take-profit at 1.0450.
  • Add a stop-loss at 1.0600.
  • Timeline: 1 day.

Bullish view

  • Set a buy-stop at 1.0590 and a take-profit at 1.0700.
  • Add a stop-loss at 1.0450.

The EUR/USD nosedived to the lowest point since February 27 as investors rushed to the safety of the US dollar. It fell to a low of 1.0518, which was much lower than this week’s high of 1.0760 as American and European bond yields plunged. The focus now shifts to the upcoming European Central Bank (ECB) decision.

ECB decision as bond yields slip

The ECB will conclude its two-day monetary policy meeting on Thursday. It will be a closely watched meeting that will have a significant impact on the financial market. For one, the bank will need to balance between its fight against inflation with the need to ensure financial stability.

The financial market remained under pressure on Wednesday as concerns about Credit Suisse remained. This happened after the company’s biggest investor ruled out providing more liquidity to the embattled company. As a result, its stock plunged by more than 24% as credit default swaps (CDS) warned that the company could actually collapse. Other European bank stocks like Deutsche Bank, Societe Generale, and ING also plunged.

Therefore, some analysts believe that the ECB will take a cautious tune by hiking interest rates by 0.25% instead of the 0.50% that it had guided before. This is even after the bloc’s inflation remains stubbornly high. Data published on Wednesday showed that the French CPI rose by 6.3% in February. In Sweden, inflation rose to 12%.

The EUR/USD also reacted to the performance across other assets. Stocks plunged, with the Dow Jones falling by over 500 points and the Nasdaq erasing 120 points. More action was in the bond market, where the 10-year yield fell to 3.4% while the 2-year dropped to 3.7%. Crude oil plunged to $66 (WTI) and $72 (Brent), the lowest point since 2021.

Therefore, the upcoming American data like building permits, housing starts, and Philadelphia Fed manufacturing PMI will have a minimal impact on the EUR to USD exchange rate.

EUR/USD technical analysis

The EUR/USD price formed a small double-top pattern at 1.0753, which coincided with the ultimate resistance of the Murrey Math Lines. It then made a strong bearish breakout and moved close to the ultimate support. As it retreated, it crossed the 25-period and 50-period exponential moving averages (EMA) and the Ichimoku cloud.

It is now forming a small bearish flag pattern, signaling that the pair will likely continue falling as sellers target the support at 1.0470, which is the oversold point. Still, I suspect that the pair will show heightened volatility ahead and after the ECB decision.


Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube,, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.