4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 58.4010
The EUR/USD currency pair continued to trade very calmly on Monday, July 12. There were no important events planned for the first trading day of the week. Moreover, the trading last Friday was again held in the calmest direction. Thus, traders did not need to work out the movement of last Friday, and there was also nothing to react to during Monday. Therefore, if at this time 3 out of 5 trading days ends with a volatility of 50 points, then the volatility of 50 points yesterday is fully justified. In principle, nothing interesting is happening in the European Union and the United States at all now. Important macroeconomic statistics are published quite rarely. There are few important fundamental topics right now. Therefore, we believe that it is especially important now to take into account the global fundamental factors that we have been talking about recently, as well as the global technical factor. Recall that according to the global fundamental factor, the US currency should continue its decline over the past year and a half, as the money supply in the US continues to inflate due to the actions of the Fed and the US government. As for the global technical factor, on the 24-hour timeframe, the pair continues to be in a downward correction, which takes the form of three waves – a classic correction structure. Thus, the euro/dollar pair may fall within the framework of this correction to the 17th level. However, the downward movement may end earlier. Anyway, we do not expect a strong downward movement from the current levels. The maximum is 100-150 points. Therefore, in any case, we expect a resumption of the growth of the euro/dollar pair. What can prevent this?
In principle, there is only one factor. An early end to the crisis around the world, as well as the completion of incentive programs in the United States. The longer the US economy is artificially signed by the Fed and the Ministry of Finance, the more the dollar may eventually devalue. We have already said that the States benefit from the cheapest dollar possible since the huge public debt that they have now (about $ 30 trillion) is much easier to service when the dollar is "cheap". Thus, it is in the interests of the United States that the US currency continues to become cheaper as much as possible. Of course, not all of this 30 trillion is the debt that you should worry about. Recall that the US government owes a certain part of the money to itself. The Fed or various US government funds. Such a system is due to the non-state form of functioning of the Federal Reserve System. In America, the central bank is like an independent structure that is not even subject to the president. Therefore, the US government can "borrow" money from its central bank. And the Fed can freely buy back any debts of the American government since it is where the printing press is located. Such is the system. Thus, we want to say that as long as the crisis persists, hundreds of billions and trillions of dollars will continue to be printed in the United States, which will continue to put pressure on the US currency.
Unfortunately, the latest news around the world makes market participants and everyone thinks very hard. The problem is that in the last few weeks, in some countries of the world where there are already vaccines and there are no problems with vaccination, there has been an increase in cases of "coronavirus". The most striking examples are the United Kingdom and Spain. Britain is generally a separate case. The country occupies one of the first places in the world in terms of the rate of vaccination of the population, but at the same time, 30-40 thousand cases of the disease are recorded daily in the last week. And if anyone does not remember, at the peak of the third "wave" of the epidemic in the UK, 68 thousand were recorded per day. Now that more than 60% of the population has received two doses of the vaccine in the country, the incidence rate is only half lower than the peak of the third "wave". At the same time, people get sick and die, even those who have been vaccinated. Nevertheless, this phenomenon takes place and makes you think how effective are vaccines against each new strain of "coronavirus" in general? Over the past year, we have already heard about at least five strains. Theoretically, the virus can constantly change and mutate. If the existing vaccines show poor effectiveness in the fight against all strains, then humanity will continue to get sick, and the economy of the whole world and each country will suffer. On Monday, US Treasury Secretary Janet Yellen said that she was seriously concerned about the spread of new mutations and strains of the "coronavirus" around the world. From her point of view, new strains can become a serious threat to global economic recovery. "We are very concerned about the delta strain and others that may arise and jeopardize the growth of the economy," Yellen said after the G-20 meeting. The former head of the Federal Reserve also recalled that the victory over the "coronavirus" in one country is not a sufficient condition for economic recovery in this country. In the modern world, all economies are closely connected. Therefore, it is impossible to fully restore the American economy if the epidemic persists in the European Union and quarantine is in effect.
Thus, we expect that the upward trend for the euro/dollar pair will resume right now or after another weak round of downward movement to the 17th level. At the moment, the price has already been fixed above the moving average line, which is the minimum necessary condition to consider trading for an increase. Both linear regression channels are directed downwards and display the direction of movement of the last weeks. Nevertheless, even with such introductory data, the euro can safely rise in price to 20-21 levels.
The volatility of the euro/dollar currency pair as of July 13 is 66 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1793 and 1.1925. A reversal of the Heiken Ashi indicator upwards will signal a possible resumption of the upward movement.
Nearest support levels:
S1 – 1.1841
S2 – 1.1780
S3 – 1.1719
Nearest resistance levels:
R1 – 1.1902
R2 – 1.1963
R3 – 1.2024
Trading recommendations:
The EUR/USD pair has overcome the moving average and will try to continue its upward movement. Thus, today it is recommended to open long positions with targets of 1.1902 and 1.1925 after the Heiken Ashi indicator turns up. It is recommended to open sell orders now no earlier than fixing the price below the moving average line with targets of 1.1793 and 1.1780.
