4-hour timeframe
Amplitude of the last 5 days (high-low): 70p - 30p - 25p - 51p - 98p.
Average volatility over the past 5 days: 55p (average).
In the morning review on the euro currency, we wrote that there are no visible obstacles for traders to continue selling the European currency after a disappointing Friday. Macroeconomic reports that were released today in Germany and the European Union, as expected, did not provide any support for the euro. The index of business activity in the industrial sector of Germany in August fell even stronger (!!!), amounting to 43.5 with the forecast and previous value of 43.6. The situation in the European Union is slightly better, business activity in the manufacturing sector did not change in August and amounted to 47.0, which is fully consistent with forecasts. In the morning, we talked about the fact that even if these indices were higher than forecasted values, then traders would still refuse to buy euros. There are currently too many reasons against the long positions in the euro/dollar pair. And so it turned out in practice. Disappointing business activity may result in an even greater slowdown in the EU economy the future, in an even greater reduction in industrial production, which will negatively affect inflation, the labor market, and GDP. Thus, forecasts for the main macroeconomic indicators remain negative, and the speeches by Christine Lagarde and Mario Draghi about the need to stimulate the EU economy look, of course, ambiguous, but fully correspond to the truth.
By the way, Christine Lagarde will make a new speech tomorrow morning, this time before the EU Committee on Economic and Monetary Affairs. Thus, it is quite possible to expect a new portion of "encouraging and optimistic" information that will cause new sales of the euro. It is unlikely that in two days the rhetoric of Lagarde will change. But the more interesting question now is: will Mario Draghi reduce the rate and mitigate the monetary policy after Friday's announcement of the ECB's future actions after changing its head? It is no secret that Mario Draghi also believes that the threats of trade wars, the global recession and the weak state of inflation in the EU are grounds for easing monetary policy. Many analysts agreed that in the last two months of his reign, Draghi is implementing all the instruments of monetary policy available to him to stop the recession in the European Union. Now this moment is in question. Surely Christine Lagarde and Mario Draghi had a conversation with each other, and most likely not alone. Perhaps Lagarde asked Draghi not to radically change the monetary policy, as she has her own thoughts on this subject and her own methods of dealing with the new economic crisis. Thus, Mario Draghi may not make fundamental changes in the ECB's policy in September and October. Unfortunately, this news is still not positive for the euro currency. The best that awaits the euro is the completion of the fall against the dollar, temporary. The best option is technical growth, which is by no means based on fundamental factors.
The technical picture shows the absence of any signs of the beginning of an upward correction, and the MACD indicator may soon begin to discharge, since it is at its lowest position.
Trading recommendations:
The EUR/USD pair continues its uncorrected downward movement. Thus, now it is still recommended that the EUR/USD pair be sold with a target of 1.0912. It is clear that there is no question of any purchases now. Buy positions can be considered no lower than the level of 1.1050.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
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.
