Last Thursday, the ECB announced it would maintain its deposit rate at 2%, marking the sixth consecutive policy meeting without a rate change, a decision that met analyst expectations. The official announcement detailed the deposit facility rate at 2%, matching both forecasts and previous values. Similarly, the marginal lending facility rate was held at 2.4%, and the main refinancing operations rate remained at 2.15%, both in line with predictions and prior figures. While the ECB kept rates steady at its latest policy meeting, its accompanying statement adopted a notably more hawkish tone. The bank acknowledged that the conflict in the Middle East has significantly heightened uncertainty surrounding the Eurozone's economic outlook, posing upside risks to inflation and downside risks to growth. The ECB's updated quarterly economic projections indicated a faster rise in inflation and a slowdown in economic growth compared to previous forecasts. Further scenario analysis suggested that sustained disruptions to oil and gas supplies would lead to inflation exceeding baseline predictions and growth falling short, both scenarios complicating the policy response. Consequently, traders have scaled back their expectations for ECB rate hikes, now anticipating an increase of 61 basis points by year-end.

In the 1D timeframe, EURUSD shows the Bollinger Bands widening downwards, with moving averages diverging lower, indicating the overall downtrend remains intact. While the MACD's downward momentum is diminishing and the MACD line and signal line are persisting below the zero line, an upcoming golden cross suggests a probable rebound towards key psychological levels and the middle Bollinger Band, around 1.16 and 1.165 respectively. The RSI at 42 signifies prevailing pessimistic market sentiment, implying that while the downtrend hasn't reversed, a bounce-back is imminent. In the 4H timeframe, the Bollinger Bands are narrowing, moving averages are flattening, and the MACD's MACD line and signal line have crossed back above the zero line, with decreasing bearish energy. This suggests a return to bullish territory, with the rebound likely to continue. The RSI reading of 50 indicates a neutral, wait-and-see market sentiment. As long as the price does not establish a new low, the trend is poised to shift from bearish to bullish. The recommended short-term strategy is to prioritize buying on dips.

Trading Direction: Buy

Entry Price: 1.15

Target Price: 1.18

Stop Loss: 1.13

Support: 1.15, 1.14, 1.13

Resistance: 1.17, 1.18, 1.21