21.07.202217:27 Forex Analysis & Reviews: EUR/USD erasing today's gains after ECB shock

The EUR/USD pair was trading at 1.0182 at the time of writing. In the short term, it has registered sharp movements in both directions around the ECB announcements. Technically, the price action signaled that the upside movement could be over and that the rate could come back down.

As you already know from my analyses, the EUR/USD pair rallied only because the Dollar Index was in a corrective phase. You knew from my previous analysis that the ECB meeting is seen as a high-impact event and it could bring sharp movements today. As you already know, the European Central Bank increased the Main Refinancing Rate from 0.00% to 0.50% above 0.25% expected. Further rate hikes are likely to follow in the next monetary policy meeting.

On the other hand, the US reported worse than expected data. The Unemployment Claims, Philly Fed Manufacturing Index, and the CB Leading Index reported poor data.

EUR/USD Range Pattern!

As you can see on the H1 chart, the rate is trapped between 1.0269 and 1.0155. It could continue to move sideways in the short term before escaping from this pattern. Having dropped below the uptrend line, EUR/USD signaled that the leg higher ended.

Still, only a new lower low could activate a downside reversal in the short term. The 1.0173 - 1.0155 is seen as a strong obstacle after registering only false breakdowns.

EUR/USD Outlook!

A new lower low, making a valid breakdown below 1.0155 could activate more declines and could bring selling opportunities with a potential downside obstacle at the pivot point of 1.0070.