€/$ volatility at its enhanced level, ECB on verge of keeping a check

The widely held perception that the Federal Reserve will be hiking interest rates this year at a time with the ECB is following an extremely accommodative policy is behind the sharp drop in the value of EUR/USD since the middle of last year and this expectation remains in place. So it seems like the dynamic behind the downtrend in EUR/USD remains intact.

At his press conference earlier this month, ECB President Draghi refused to entertain speculation that the ECB could cut back its asset purchase programme earlier than previously indicated on the back of the improvement in Euro zone economic data. The realization that growth in the US slowed in the first part of this year at a time when Euro zone growth has been strengthening has thrown fresh light on the debate regarding the outlook for relative interest rate differentials.

Over the past month the pair has shown a huge range from 1.0531 to 1.1052. This period has also seen the downtrend that has dominated the currency pair since July 2014 and began to show signs of stalling, while volatility has remained at a sharp pace.

Although we hang on to the view that USD strength will remain a key theme of 2015, recent activity underpins our view that the pace of further USD gains versus the Euro. This year will be noticeably slower relative to the pace set in the initial months of this year.

Technical watch:

And in our view, as shown in daily chart the pair '1.1035/1.11' resistance area would have to be cleared before there was clear evidence of a reversal in EUR/USD.  1.0529 is acted as strong support on downside. RSI and CCI indicators are evidencing negative divergence which is not in line with price curve while fast stochastic is set to cross over above 75 levels.
Even though we tend to suggest an upward directional opinion, series of momentous news is hindering opportunities for Euro to bounce back. So for intraday traders it is safer to adopt wait & watch strategy in order to get better clarity. However on every rise in price, short entry following a bearish price action reversal the next touch of 1.0900. Place the stop loss 1 pip above the swing high. Adjust the stop loss to break even once the trade is 20 pips in profit. Take away half of the position as earnings when the trade is 20 pips in profit and leave the leftovers as house money of the position to ride.