4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -60.0603
The EUR/USD currency pair predictably began a round of upward movement on Monday. After the quotes fell by 100 points on Friday, a small pullback was required. However, it is also not yet possible to say that the downward movement is over. The euro/dollar pair has consolidated below the moving average line, so the trend has changed downward. Of course, the current downward movement looks like a normal correction. We see a monthly upward trend in the illustration, so the correction against it should be proportionate. Therefore, to build it, you need to fix the quotes below the moving average on Friday. Thus, after a slight upward movement of the quotes, we expect a resumption of the pair's decline with the goals of the Murray levels of "4/8" and "3/8", that is, up to the 19th level. As for the more global outlook for the pair, we still believe that the pair will continue to grow in 2021 - the depreciation of the US dollar. Especially if Joe Biden and company continue to pour trillions of dollars into the American economy. This topic has been raised many times, but unfortunately (or fortunately), it is now having the greatest impact on the foreign exchange market. Thus, we could write that at this time, it is essential to monitor the yield of US 10-year treasuries or the actions and rhetoric of the Fed, but all this is not important or not too important right now. Of course, any fundamental or macroeconomic event can be followed by a market reaction. But we still remember Friday, when the last Nonfarm Payrolls report was released in the United States. When the market responded to the strong numbers by simply going ahead of schedule for the weekend. The volatility was 40 points. Thus, if the markets allow themselves to ignore really important reports, we can only conclude that they continue to be more impressed by more "global fundamentals." And this is not the rhetoric of Jerome Powell, who repeats the same thing from time to time, and the markets manage to be disappointed that he did not meet their expectations and did not say anything new. There is nothing to say about the European Union right now because nothing but banal statistics comes out there. The Economic Recovery Fund is already reminiscent of the Brexit process, which was delayed when the EU economy needs help. Of course, there are smart people in the European Commission and the European Parliament. They are doing everything that depends on them to start the formation and distribution of the fund as soon as possible. However, with the most optimistic estimates, the EU will begin to assist EU countries this summer. There is also nothing to write about vaccination now. The process continues. In general, now, as before, there is a "global factor" of inflating the money supply in the United States, the technical factor, and everything else. Everything else has almost no effect on the movement of the euro/dollar pair.
In recent articles, we have also put on the agenda the factor of the speed of recovery of the American economy compared to the European one. We performed the simplest calculations, which showed that the American economy in the first quarter of 2021 overtook the European one if we consider the absolute values of recovery after the disastrous start of 2020. At the moment, the US economy has recovered more strongly after the crisis than the European one. Thus, theoretically, it will continue to break away from the European one since the United States does not spare money for incentives. However, in Europe, there are much more problems and obstacles with this. However, from our perspective, the factor of printing dollars by tons and trucks remains stronger. And in 2021, the deferred demand of Americans, who have accumulated about $ 1.5 trillion during the pandemic, may begin to be realized. This money will also flow into the economy. Thus, at this time, we do not see any new factors that can change anything for the euro/dollar pair.
There will be almost no important statistics this week. And the statistics that are still planned in the United States and the European Union can pass by market participants. It seems that this week is scheduled for the publication of the ISM business activity indices in the manufacturing and services sectors in the US, the ADP report, Powell's speech, Christine Lagarde's speech, Nonfarm Payrolls, and the US unemployment rate. Let's go through all these events and reports in more detail. The ADP report on changes in the number of employees in the private sector has not caused any reaction from traders for a long time. Business activity indices in the United States are very high, so changes of 1-2 points in any direction are unlikely to cause a reaction. The speeches of Jerome Powell and Christine Lagarde are unlikely to give any new information to the markets since both functionaries have been repeating the same thing over and over again in recent months. There is only hope for Nonfarm Payrolls and the unemployment rate in the States, which will be published on Friday. But, as we have already said, this data can easily be ignored. Thus, there is a high probability that none of these events will find a reaction from market participants at all. The week can be extremely technical. However, this does not mean that the pair will stand in one place, but at the same time, the volatility may decrease.
The volatility of the euro/dollar currency pair as of May 4 is 68 points and is characterized as "average." Thus, we expect the pair to move today between the levels of 1.1992 and 1.2128. The reversal of the Heiken Ashi indicator back down will signal the resumption of the downward movement.
Nearest support levels:
S1 – 1.2024
S2 – 1.1963
S3 – 1.1902
Nearest resistance levels:
R1 – 1.2085
R2 – 1.2146
R3 – 1.2207
Trading recommendations:
The EUR/USD pair has consolidated below the moving average, so the trend has changed downward. Thus, today it is recommended to open new short positions with the targets of 1.2004 and 1.1992 in the event of a price rebound from the moving average line. It is recommended to consider buy orders if the pair is fixed above the moving average with a target of 1.2128.
