The European Central Bank did an excellent job of communicating its intentions to the market, judging by the muted response to Thursday's meeting, with EUR/USD recording an inside day by trading a tighter range than on Wednesday.
The ECB remains focussed on the economic recovery and COVID-19 vaccine rollout in Europe, combined with the global impact of the coronavirus nL1N2QB0AJ.
The meeting followed U.S. Federal Reserve Chair Jerome Powell's cautious Jackson Hole speech on Aug 27, which suggested he is in no rush to change policy settingsnL1N2PY1FI.
Thus unless there is a dramatic event that alters the outlook, the choppy EUR/USD consolidation seen since early July can certainly extend. Counter-trading the range edges or identifying opportunities within the range should be more profitable than looking for trending moves.
The range edges are the 1.1664 August low, with the 1.1673 lower 21-day Bollinger band above, and the double daily July-September top at 1.1909, with the upper 21-day Bollinger band below at 1.1904.
EUR/USD often swings between the upper and lower Bollinger bands during periods without a strong trend, pivoting around the 21-day moving average.
There was a topside swing in July, a downside one in August and another jump in August-September.
A sustained break of 1.1786, 50% of the August-September rise, and the 1.1788 21-DMA would target the 1.1673 lower band.
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