The recent ECB comments regarding the further interest rate hike has left a lot of the traders confused. The period of easy EUR/USD gains has just ended and market participants are returning to the tactical field survey. On the one hand, the market remains convinced that it is right and believes that the ECB will end the QE in September, and then soon pass interest rate hikes. However, the central bank itself does not want the EUR to quickly reflect those expectations (which may be met), because excessive appreciation will dismiss this scenario if it harms the inflation areas. The ECB confirmed with various channels yesterday that there will be no change in the message at the next week's meeting. Regarding the dovishness of President Draghi, it might not be surprised if in the statement ECB will dissipate any optimism about the economic situation in order to the fears of the strength of the euro and to extinguish the rally of the currency. The medium-term portfolio capital continues to prefer EUR appreciation, but now it may wait for a move back to 1.2100 zones. Daytraders, however, have a shorter investment horizon and after an unsuccessful attempt to break the price over 1.23, they may now be tempted to reverse their position. Another cautious comment of ECB members and new "leaks" or rumors are not out of the question, so it will be better to prepare for more increased volatility and more price swings.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has hit the level of 1.2321 and pulled-back with three 120 pips swings. It looks like it is being traded inside of a descending channel, just above the technical support at the level of 1.2193. If the channel resistance will hold, the next technical support is seen at the level of 1.2150.