4-hour timeframe
Amplitude of the last 5 days (high-low): 25p - 51p - 98p - 39p - 53p.
Average volatility over the past 5 days: 53p (average).
On Wednesday, September 4, the EUR/USD currency pair consolidated above the critical Kijun-sen line and as a whole continues the upward movement, which is now characterized precisely as a movement, and not as a correction. The first and most anticipated event of the day was a speech by Christine Lagarde to the Committee on Economic and Monetary Affairs of the European Parliament. Many traders feared that Lagarde's rhetoric would be similar to her speech last Friday, which brought the euro down. However, this time the fears were in vain. Christine Lagarde only stated that inflation in the EU will remain significantly below the target level in the near future, the eurozone economy may face new difficulties, and also said that it approves the actions of the ECB's board of governors, which maintain an accommodative monetary policy. Also, the future head of the ECB urged not to exert strong pressure on innovative tools, such as cryptocurrencies, in order to protect consumers as much as possible. In general, an interesting performance, but this time Lagarde did not report anything interesting, so traders ignored her performance.
But macroeconomic reports from the eurozone unexpectedly supported the euro. The Markit services business activity index exceeded the forecast value of 53.5, while the composite index in August was 51.9, which is also better than market expectations.In addition, retail sales in the European Union turned out to be better than analysts expected in July - an increase of 2.2% instead of 2.0% y/y previously forecasted. In monthly terms, the indicator still showed a decline of 0.6%. Nevertheless, on the whole, the package of today's statistics can be characterized as positive for the euro, so it is not surprising that its growth continued today. As usual, the main question is how long will the strengthening of the European currency last this time? It is no secret that in the long run, an openly downward trend persists. The overall fundamental background also remains extremely negative for the euro. It was only in the last two days that at first the US statistics disappointed, and then the European pleased. In addition, the impossibility of a constant fall of one currency (the euro in our case) and the banal sell-off of the euro/dollar pair with the bears' desire to take part of the profit on short deals and we get the current correction. But the general situation has not changed. Moreover, tomorrow an important ISM index for the US services sector will be released, and after tomorrow GDP for the second quarter of the eurozone and NonFarm Payrolls in the United States, and Jerome Powell will make a statement to complete the week. With such a fundamental background, it is unlikely that a clear strengthening of the euro can be expected.
The technical picture of the pair shows the willingness of the bulls to continue to gradually build up their positions. However, when the information that is negative for the euro is available to the traders, the bulls will immediately stop the attack and leave the market, and the euro will rush down again. Therefore, for buyers the pair is very important the next two days, strong macroeconomic statistics from overseas should not come.
Trading recommendations:
The EUR/USD pair continues the long-awaited correction. Thus, now long formally even long positions with goals 1.1076 and 1.1113, but small lots have become formally relevant. Tomorrow and the day after tomorrow it is recommended not to lose sight of all the important news, as the forex market could return to selling the euro/dollar currency pair.
In addition to the technical picture, fundamental data and the time of their release should also be considered.
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.
Chinkou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
