We should acknowledge the fact that we clearly underestimated the dollar's overbought condition, which prevented it from rising further. For instance, eurozone industrial production fell 2.2% year-on-year. Moreover, US inflation accelerated 3.7% after climbing 3.2% in July, surpassing even the boldest forecasts. The dollar should have spiked after such reports but the market generally stood still. Until the existing imbalances are corrected, there is no prospect of growth. And apparently, the results of today's European Central Bank Governing Council meeting will be the reason for this very correction. The interest rate is almost certainly going to be raised from 4.25% to 4.50%. After that, the market will gradually begin to prepare for the upcoming Federal Open Market Committee meeting next week.
The EUR/USD pair is in the process of pulling back from the 1.0650/1.0680 area. This movement has not led to crucial changes, and the pullback has turned into a flat phase over time, indicating pressure from sellers.
On the four-hour chart, the RSI is hovering at around the average level of 50. This signal confirms the flat.
On the same time frame, the Alligator's MAs are intersecting each other, corresponding to the stagnant phase.
Outlook
The pair is fluctuating around the 1.0700/1.0770 range with speculators keeping close tabs on the borders of the sideways channel. Once the price goes beyond the borders of the trading range, it means that the balance of trading forces will shift in a particular direction. The bullish scenario suggests that the pair will move to the level of 1.0800, which will increase the volume of long positions. The bearish scenario will come into play in case the price updates the current low.
In terms of the complex indicator analysis, we see that in the short-term and intraday periods, technical indicators provide a mixed signal as the pair remains stagnant.
