4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - downward.
CCI: -173.3454
The fourth trading day of the week again passed in fairly quiet trading, although no important macroeconomic reports and events were planned for this day. Moreover, many topics have recently been frankly "extinguished", so market participants, without fundamental support, do not know how to trade them in the medium term. One of the most interesting and important topics for the European Union now remains the issue of providing a package of assistance to the countries and economic sectors most affected by the "coronavirus crisis". We will remind that earlier there were several offers, starting from "coronabonds", ending with the current offer for 750 billion euros. In fact, all these proposals are either loans of the required amount on the financial markets with further repayment over several decades by all EU member states or raising funds from the contributions of each EU country with further redistribution of funds. However, one way or another, some countries will have to pay for the recovery (as well as miscalculations, lack of savings and budget violations) of others. This is the main stumbling block. "Northern" countries, which are famous for their economic discipline and economy, are not going to give grants to "southern" countries, which are considered spenders. It is one thing when it comes to providing loans, even if they are free, however, it is another thing when you are offered to give away tens of billions of euros for nothing. This whole situation is very similar to an emergency high-rise building, where some residents can't pay for repairs, so everyone else who can must pay twice as much. Naturally, the wealthier and more economical ones are protesting and are not going to simply finance the "southerners", and even on a gratuitous basis. This is the main topic at tomorrow's EU summit, which will be held in a video format. For our part, we would like to say that, as for such an important event, the media and press are currently paying very little attention to it. In fact, there is no information about tomorrow's summit and possible solutions. There are no new comments from Angela Merkel, or Emmanuel Macron, or Ursula von der Leyen, or representatives of the "Northern" countries. Thus, we believe that tomorrow we will simply discuss the proposed plan for the formation of a recovery fund. No important decisions will be made, so the negotiation process will be delayed, like the negotiations between Brussels and London on Brexit. Accordingly, we would not expect any important information from the summit tomorrow.
Meanwhile, a new point of conflict between China and the United States has emerged (or rather "surfaced"). Donald Trump signed an executive order that would impose sanctions on China for violating the rights of Uighurs. It is expected that those people and organizations that are involved in the persecution of the Uighur people will fall under the sanctions. The sanctions involve freezing the assets of all those involved in the persecution, as well as a ban on entering the United States. Well, China, in turn, immediately replied that "this law is a gross interference in the internal affairs of the country". Actually, nothing new. Washington imposes sanctions, threatens, accuses, and China fights back with the phrase "gross interference in the internal affairs of the country" and shows a strong protest.
In addition, it is reported that US Secretary of State Mike Pompeo held a virtually secret meeting with the Chinese Foreign Minister in Hawaii. No details were given, however, the meeting was allegedly initiated by China amid a significant deterioration in relations between the two countries, which have the largest economies in the world. However, according to other information, the meeting lasted more than 7 hours, and no progress was made in the negotiations. The parties just set out a list of demands and claims against each other and that's it... However, in addition to all the contentious issues between Beijing and Washington, some experts insist that America is now trying to warn China by all means available to it against an even more unacceptable act – interference in the 2020 presidential election. Naturally, most of all, Donald Trump himself does not want this, because, in his opinion, China favors Joe Biden, and Joe Biden has never hidden his sympathy for China. Thus, Trump fears that Beijing may support its main competitor, which will reduce the chances of winning the election by another ten percent.
Thus, in the opinion of many experts, relations between China and the United States may heat up even more in the next six months against the backdrop of exclusively presidential elections. However, they are already at a fairly "hot" point.
During the past day, only one significant report was published in the United States, and none in the European Union at all. Therefore, in principle, quite weak volatility during the day is quite understandable. The number of primary applications for unemployment benefits increased by 1.5 million, although forecasts predicted a maximum of +1.3 million, and the total number of secondary applications for benefits was 20.5 million, although forecasts predicted no more than 20. Thus, the situation with unemployment in the US remains quite difficult and once again I would like to ask the US Bureau of Statistics how, according to their version, unemployment managed to fall in May?
On the last trading day of the week in the United States and the European Union, no macroeconomic publications or events are planned at all. Thus, volatility on the last trading day of the week may be low, unless the markets are stirred up by some unexpected information.
From a technical point of view, the euro/dollar pair continues to adjust against the upward trend that has been maintained in the past two weeks. In general, the bears continue to push the pair slowly down, so there are also quite high chances of forming a new downward trend. The technical picture on the lower time frames also implies a continuation of the downward movement, at least to the level of 1.1171. At the same time, it should be noted that the downward movement is certainly weak, which is clearly not enough for one of the channels of linear regression to begin to turn down.
The average volatility of the euro/dollar currency pair as of June 19 is 108 points. Thus, the value of the indicator is still characterized as "high", thanks to the last two weeks. We expect the pair to move between the levels of 1.1062 and 1.1278 today. A reversal of the Heiken Ashi indicator upward will signal a new round of upward correction.
Nearest support levels:
S1 – 1.1108
S2 – 1.0986
S3 – 1.0864
Nearest resistance levels:
R1 – 1.1230
R2 – 1.1353
R3 – 1.1475
Trading recommendations:
The EUR/USD pair continues its downward movement. Thus, at this time, sell orders with the goals of 1.1108 and 1.1062 remain relevant until the Heiken Ashi indicator turns up. It is recommended to return to buying the pair not before fixing the price above the moving target of 1.1347 and 1.1475.
