Forex Analysis & Reviews: 04.09.2019 - EUR/USD. September 3rd....

04.09.2019 12:26 AM

EUR/USD. September 3rd. Results of the day. ISM business activity index gave the euro a little rest from its fall

4-hour timeframe

Amplitude of the last 5 days (high-low): 30p - 25p - 51p - 98p - 39p.

Average volatility over the past 5 days: 49p (average).

The EUR/USD currency pair began to adjust during the US trading session on the second trading day of the week on September 3. The beginning of the correction completely coincided with the publication of business activity indices in the manufacturing sector of America, each of which could be better than it turned out in the end. The less significant Markit index even exceeded the forecast value and left the "red zone" below 50.0, amounting to 50.3 in August. But, unfortunately, the more important ISM index turned out to be much worse than the expectations of traders and fell into the "red zone", which indicates a decline, reaching 49.1 with a forecast of 51.0. It was the ISM index that disappointed the bears, who began to simply reduce their dollar position, which led to a slight strengthening of the euro. At the moment, the euro has managed to rise in price by 30 points, which is very little compared to the losses that the EU currency suffered only in recent days. More interesting news from the United States and the European Union has not been received today. Speech by Christine Lagarde to the EU Committee on Economic and Monetary Affairs will take place on September 4, and not today, as previously reported.

Since the European currency, with a grief in half, has begun an upward correction, I propose to reflect on the prospects for this correction. To do this, we will have to pay attention to the calendar of macroeconomic events for the next two to three days. As it turns out, there is plenty of news this week. Here are the total values of business activity indices in the service sector and composite indices for the EU and the US, retail sales in the European Union, a speech by Christine Lagarde, a report on the level of employment in the private sector, ADP, EU GDP for the second quarter, NonFarm Payrolls, changes in wages and unemployment in America, as well as a performance by Jerome Powell. Thus, if all this package of macroeconomic statistics and the speeches of the first EU and the US will not be in favor of a single currency, then this week traders can very often change their direction of trade, which can cause multidirectional movements. Multidirectional movements will remove the phrase "only sell" from the mood of traders and could contribute to the euro currency's further restoration. Although in a longer term than three days perspective, the euro's position remains unenviable due to the ECB's plans for a large-scale easing of monetary policy and a whole bunch of stimulus measures that Mario Draghi and later Christine Lagarde want to apply. However, this week we can still expect the euro to recover.

From a technical point of view, the euro/dollar pair has a corrective goal – the Kijun-sen line. Further recovery will depend on the ability and strength of the bulls to overcome the critical line.

Trading recommendations:

EUR/USD started the long-awaited correction. Thus, it is recommended to wait for the correction to be completed, for example, the rebound from the Kijun-sen line, and the resumption of sales of euro while aiming for 1,0912, not forgetting the fundamental background that may interfere with this week unconditional strengthening of the euro.

In addition to the technical picture, fundamental data and the time of their release should also be considered.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.