The EUR/USD pair continues to move at the conditional peak of the corrective course set by the market at the beginning of the trading week from the local low of 1.1612. Approaching the resistance level of 1.1755 consecutively led to the fact that the corrective course slowed down. It was replaced by an amplitude of 1.1700/1.1755, and the quote has been moving within it for more than 60 hours.
If we proceed from the principle of accumulation, then stagnation at the peak of the correction may well serve as a catalyst for trade forces, which will lead to new market surges. This is where the fun begins: if you start from the breakdown of the lower limit of the side channel 1.1700/1.1810/1.1910, then the sell signal will be visible. At the same time, the escalation of the information background with the arrival of autumn is out of control, and this can lead to a complete immersion in the emotional environment, that is, price fluctuations will be focused solely on speculation.
Thus, I think it is incorrect to say that the market will have exclusively downward interest in the future for several months, although this movement is indicated by a lot of technical and fundamental elements of analysis.
Analyzing yesterday's fifteen-minute TF, you can see a series of local surges in the period 9: 00-15:30 UTC+00, but at the same time, the quote focuses on a narrow amplitude, which signals the accumulation process.
In terms of daily dynamics, we have the lowest indicator for 9 trading days – 52 points, which is 34% below the average level of volatility. Fixing a low dynamics indicator confirms the fact of accumulation once again, which as a result, will lead to an early acceleration in the market.
As discussed in the previous analytical review, traders continue to consider the surge in activity relative to the specified amplitude, but with an error margin of 1.1685/1.1775.
Looking at the trading chart in general terms (daily period), we can see a corrective move which rested on the Fibo level of 38.2, which is just intertwined with the area of interaction of trading forces of 1.1755/1.1775.
Yesterday's news background contained data on Europe's unemployment rate, where growth was confirmed, but not as predicted from 7.9% to 8.2%, but from 8.0% to 8.1%. The indicators came out slightly better, but the scale of unemployment is still high. At the same time, they published data on producer prices in the EU, where the rate of decline slowed down from -3.1% to -2.5%. Nevertheless, the decline remains a decline, although the indicators have improved slightly.
The market reaction at the time of the publication of data on the EU indirectly favors the Eurocurrency.
In the afternoon, weekly data on claims for unemployment benefits in the United States will be published, where the volume is expected to decline.
Initial applications can be reduced from 873,000 to 837,000, while reorders can be reduced from 12,747,000 to 11,767,000.
The recovery in the labor market is positive, but the US still has high unemployment.
In terms of the information background, we have yesterday's statement by European Commission's head, Ursula von der Leyen, who informed us that the EU is sending a letter to the UK with official notification of the breach of obligations under the Brexit agreement, which could be the first step in the legal process. Technically, the EUR did not react so strongly to the news unlike the GBP, but this may become a cumulative action before the acceleration.
At the same time, it was reported that US President Donald Trump, along with Melania Trump, were infected with the coronavirus.
In terms of the economic calendar, we have preliminary data on inflation in Europe today, where the rate of decline in consumer prices is expected to rise from -0.2% to -0.3%, which will negatively affect the Euro if confirmed.
EU Inflation - 9:00 UTC+00
In the afternoon, a report by the United States Department of Labor will be published. If the labor market continues to confidently recover, then it will inevitably pull the entire economy of the country with it. Expectations from the report are quite optimistic, and so, the unemployment rate could drop from 8.4% to 8.3%, and 915,00 new jobs could be created outside agriculture. All this points precisely to the gradual stabilization of the economic situation and the possible strengthening of the value of the American dollar.
United States Department of Labor Report - 12:30 UTC+00
The upcoming trading week is pretty modest in terms of statistics, the only thing that can be highlighted are retail sales in the EU, Fed's minute and weekly claims for benefits in the US. The main driver for speculators will be the information background related to the following topics: COVID-19 (restrictive measures), Brexit, and US presidential elections.
[All time zones indicated below are Universal Time]
Monday, October 5
EU 9:00 - Volume of retail sales in August
USA 14:00 - ISM index of business activity in the services sector in September
Tuesday, October 6
USA 14:00 - JOLTS Open Jobs in August
Wednesday, October 7
USA 18:00 - Minutes of the FOMC meeting
Thursday, October 8
USA 12:30 - Claims for unemployment benefits
Further development
Analyzing the current trading chart, you can see that the quote continues to be within the range of 1.1700/1.1755, where active downward interest was observed during the Asian session. Considering the information and news background, we can assume that there is a higher chance of a breakdown of the lower limit compared to the breakdown of the upper line. Therefore, we consider short positions if price consolidates below 1.1685, with the prospect of moving towards 1.1650-1.1600.
An alternative scenario considers speculative manipulation, where if the price consolidates above 1.1775, a movement may occur in the direction of the average level of 1.1810.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on minute intervals signal a sell due to the quote's movement below the amplitude, while the hourly TF has a variable buy/sell signal. The daily TF, in turn, signals a sell due to the scale of the September decline.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(October 2 was built taking into account the publication time of the article)
The volatility of the current time is 54 points, which is already larger than yesterday's dynamics. We can assume that due to the information and news background, the current day's activity will exceed the average volatility indicator.
Key levels
Resistance zones: 1.1755 *; 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support zones: 1.1700 1.1650 *; 1.1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***.
* Periodic level
** Range level
*** Psychological level
