According to the complex analysis, we can see that the price consolidated at the level of 1.1300. On March 10, the pair fell to the new low of 1.1275. However, it failed to consolidate at the level and the quote retraced to 1.1300 on the following day. Anyway, the downward trend is still possible.
The price rebounded by 34%, which was not enough for a trend change. In fact, the price is still falling. The gap of the new week's start serves as a kind of mirror level. A signal about a trend change should be expected after the price consolidates lower than 1.1180, and the quotes are likely to rebound after the price reaches 1.1080.
At the same time, speculative activity prevails on the market and the price is reluctant to follow the principles of technical and fundamental analysis. Recommendation of the last week for the pair is still valid.
As for volatility, we can see that the price has been rising for 10 trading days, in line with speculators' expectation. The price is growing on a daily basis. The dynamics of the euro-dollar pair is stronger compared to any other trading instrument. Yesterday, the daily average gained 2.55% while the dynamics of the day exceeded the indicator by 71%.
Volatility details: Monday - 152 pips; Tuesday - 118 pips; Wednesday - 92 pips; Thursday - 125 pips; Monday - 155 pips; Tuesday - 183 pips; Wednesday -115 pips. The daily average to the volatility dynamics - 67 pips (see volatility table at the end of the article).
Yesterday, the price was falling. The quote reached the level of 1.1300 at the beginning of the European session. Then, the price dropped again on the New York session. The quote broke through the level of 1.1300 and the low of 1.1275 as of March 10, reaching the level of 1.1251.
As I mentioned in the previous review, traders were opening deals at the levels of 1.1275-1.1366. The level of 1.1275 was the low as of March 10 and 1.1366 was the high as of March 11. When the pair broke through the low of 1.275, traders started opening Short positions.
According to the daily chart, we can see that the downward trend continued. However, the price was trying to reverse and rebound.
On the news front, the US inflation rate slowed to 2.3% from 2.5%.
The market did not pay attention to statistics data as the ECB's upcoming meeting put pressure on market participants.
In terms of general information background, we can see the consequences of the coronavirus spread across the world. Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization, declared the coronavirus situation a pandemic due to the increase in cases on a daily basis. Following the WHO's announcement and weak statistics from Italy, US President Donald Trump suspended all air travel from the UE for 30 days starting on March 13. Moreover, the world's regulators have to lower interest rate amid the coronavirus pandemic. On March 12, The Bank of England eased its bank rate by 50 basis points to 0.25%. At the same time, Christine Lagarde, President of the European Central Bank, spoke about possible economic shocks during a conference call with EU leaders, if the EU did not take urgent measures to combat the spread of the coronavirus. Apart from that, Lagarde also mentioned the financial crisis of 2008, however, in terms of the current virtus situation.
I noticed an interesting consistency as of interest rates. Everything started when the Fed lowered interest rates by 0.5%. However, before doing so, Jerome Powell had spoken about the negative impact of the coronavirus. The same thing happened with the BoE. The governor spoke about possible threat of the coronavirus for the UK economy. In a while, the bank unexpectedly eased bank rate. As I mentioned earlier, Christine Lagarde was also talking about the virus. Now, you can draw your own conclusion. The ECB is likely to lower rates.
As for the economic calendar, jobless claims data in the US is going to be released later today. The claims are expected to fall by 4 thousand. The first-time claims are likely to increase by 2 thousand while secondary claims - to drop by 6 thousand.
The most important event of the day is the ECB's policy meeting. The euro can either skyrocket or plunge due to the possible discount rate cut.
As you can see the market is likely to react on the external background and the ECB's actions, not paying attention to other factors.
Further development
Analyzing the current trade chart, we can see that the price is fluctuating near the 1.1300 level. This is where the quote has already shown a speculative surge. The price is likely to stay within the levels of 1.1255-1.366 until the breaking point. At the moment, eminent sources, such as Bloomberg, are likely to release information which can cause the fluctuation of the price. It is better to monitor news feeds, in order to stay informed of everything that happens, as well as filter information.
The amount of speculative operations is very high, and volatility continues to grow.
Analysing every minute of the given time span, we can see that, for the first time, the price increased by more than 60 pip at 03:00-03:30 am. Later, the quote consolidated near 1.1300.
Speculators expect the price to jump today. The price is likely to stay within the levels of 1.1255/1.1366 until the ECB's policy meeting.
The price movement is likely to depend on the ECB's decision. If interest rates are cut, the price is expected to skyrocket to the level of 1.1080. Later, the price can pull back. If interest rates remain flat, the price is likely to plummet to the level of 1.1500 or more. If the bank maintains interest rate but eases deposit rate, the price can rise steadily.
There is still enough time before the meeting starts.The price is expected to break through 1.1255-1.1366. Closer to the meeting, it is better to follow the fluctuation, as you are likely to have more suitable opportunities to open deals.
Trading recommendations based on the above mentioned information:
- You can open duy deals, if the price consolidates higher than 1.1370 with the prospect of rising to 1.1400-1.1440-1.1500
- It is better to open your sell deals if the price consolidated at the level of 1.1250 with the prospect of falling to 1.1200-1.1180-1.1080-1.1000.
Indicator analysis
Analyzing a different timeframe sector, we see that indicators on minute segments signal that it is better to open buy deals due to price fluctuations within the 1.1300 level. According to hourly segments, it is better to open sell deals. Daytime intervals indicate the inertial upward trend.
Due to the strong external background and the ECB's meeting, indicators can be irrelevant.
Volatility per week/ volatility measurement: month; quarter; year
Volatility measurement reflects the average daily fluctuation based on month/quarter /year.
(On March 12, volatility was formed taking into account the time of publication of the article)
The current time volatility is 79 pips, which already exceeds the average daily indicator by 17%. It is likely to assume that due to the existing background and the ECB's meeting, volatility is likely to continue growing.
Key levels
Resistance levels: 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support levels: 1.1300; 1.1180; 1.1080**; 1.1000***; 1.0950**;1.0850**; 1.0775*; 1.0700; 1.0500***; 1.0350**; 1.0000***.
* Periodic level
** Range level
***Psychological level
***** The article is based on the principle of conducting a transaction with daily adjustment
