4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 8.5684
The EUR/USD currency pair on Friday, January 22, doubled above the moving average line. Thus, we can conclude that now the growth of the euro currency is not strained, however, the volatility has decreased slightly. Throughout Friday, the euro/dollar pair passed "as much as" 38 points. And this is although there were several macroeconomic publications on this day. However, let's return to the "technique" for now, as traders continue to ignore the "foundation" and "macroeconomics". In recent weeks, it was the US currency that became more expensive. And, from our point of view, this is logical. The growth of the euro currency in recent months was illogical. Now, when the euro is heavily overbought and the dollar is oversold, the movement that should have started a long time ago has begun. Thus, we expect the pair to consolidate below the moving average line and continue its downward movement. Of course, we must not forget that in the last two or three months, there were no fundamental reasons for the strengthening of the euro currency. Thus, if the markets have been buying the euro and selling the dollar all this time, then they can do it again in January 2021, and in February. But we still try to rely on logic in the analysis, so we expect a downward movement.
Last week, several important speeches took place at once, which allowed us to understand what to expect from the ECB and the Fed in the near future. Nothing. Therefore, market participants were again forced to focus their attention on not the most important topics. One such topic is the impeachment of Donald Trump. Although Trump himself has already left his post, this does not mean that he has left big politics. This does not mean that in 2024 he will not return or will not try to return. This does not mean that his children or relatives will not also try to build a bright political career in the future. With the same success as their most famous relative. Thus, the second impeachment, which was announced to Trump by Congress is an attempt to remove Trump from top politics once and for all. And it looks like it will also fail. At least on Monday, it became known that Republican senators opposed the impeachment of Trump. This was stated by Senator Marco Rubio, who believes that impeachment is complete stupidity and will cause more harm than good to the States. "The trial is stupid. We already have a fire burning in our country, and the court is tantamount to adding gasoline to this fire," Rubio said. Republican Senator Tom Cotton generally said that the Senate does not have the right to impeach Trump after he has already left the post of president. However, no one doubted from the very beginning that impeachment is an initiative exclusively of the Democrats. The very essence of impeachment implies the removal of the president from his duties. If the president is already gone, why would he be impeached? The reason "to prevent his return in the future" no longer applies to the impeachment procedure. This is already an election issue. If in 2024 the people of America vote for Trump and he becomes president again, it will be an honest expression of will. Previously, there was a hope that the Republicans themselves would want to protect themselves from Trump's future desires to become president again, but it seems that it is not destined to come true.
Meanwhile, Joe Biden's plan to save America from the "coronavirus" may fail or undergo major changes. Recall that Joe Biden, before becoming president, said that he was going to allocate $ 1.9 trillion to fight the consequences of the pandemic. This stimulus package included funds for business support, support for the unemployed, social security payments for all Americans, and vaccination. However, as it became known on Monday, not everyone in the Senate and Congress fully supports this package. It became known that American politicians consider the right step to support small businesses and low-income Americans, as well as the unemployed. Naturally, no one also doubts the need for additional funding for the fight against the "coronavirus". But at the same time, they believe that a lot of money will have to be allocated to those who frankly do not need them, that is, rich Americans. Thus, this plan can be changed more than once.
And this new stimulus package could have quite a negative impact on the US dollar. If Congress agrees to allocate almost $ 2 trillion more, it would mean that this amount will be added to the $ 4 trillion that has already been poured into the economy in 2020. Maybe it was in these 4 trillion that the reason for the strongest fall in the US currency was hidden? One way or another, 2 trillion means that they will again be created out of thin air. Naturally, in this case, inflation can seriously accelerate, and the supply of the US currency will grow, and the dollar will sink. Thus, if this package is agreed upon, the US dollar will receive new grounds for falling. The truth is for a gradual decline. Thus, until this plan is agreed and approved by the US currency, the sellers of the euro/dollar pair need to hurry. The dollar has struggled to gain three cents at the start of the year, and it is not known when it will be able to do so again. On the other hand, even Donald Trump said that the US needs a "cheap" dollar. Maybe the rejection of "lockdowns" and injections of trillions of dollars from the air is part of a plan to reduce the exchange rate of the US currency? In this case, we should expect that the US dollar will resume its decline in 2021.
The volatility of the euro/dollar currency pair as of January 26 is 66 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.2076 and 1.2208. A reversal of the Heiken Ashi indicator to the top can signal a new round of upward movement.
Nearest support levels:
S1 – 1.2146
S2 – 1.2085
S3 – 1.2024
Nearest resistance levels:
R1 – 1.2207
R2 – 1.2268
R3 – 1.2329
Trading Recommendations:
The EUR/USD pair has consolidated back below the moving average. Thus, today it is recommended to stay in short positions with targets of 1.2085 and 1.2024 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders if the pair is fixed back above the moving average with a target of 1.2207.
