The EUR/USD currency pair did not show anything special in terms of movement on Monday. As we said in previous articles, business activity indices did not provoke a market reaction and, strictly speaking, they should not have done so. In addition, on Monday, the pair was unable to continue the correction, which began with such difficulty on Friday. The price has not once again started a powerful upward movement, which means that the downward trend has not yet been completed. Recall that quite often at the final stage of the trend, the pair turns sharply in the opposite direction and moves very quickly. This is usually how new trends start. When the market is located for hours, days, and weeks near its local, 5-year, and 20-year lows and regularly updates them, it is unlikely that we are talking about the end of the trend. Thus, the fall may well continue this week, especially considering that the Fed on Wednesday is likely to announce a 0.5% increase in the key rate. And maybe also about the beginning of the QT program ("quantitative tightening").
The technical picture is now quite simple because all trend indicators are directed downwards. At this time, there is not a single sign of the beginning of an upward movement. For two weekends, no important news was received from Ukraine either. More precisely, it is better to say that there were no resonant messages. In recent weeks, Kyiv has become one of the most desirable cities for world leaders to visit. Everyone who supports Ukraine considers it a matter of honor to visit the Ukrainian capital and hold personal talks with Vladimir Zelensky. Boris Johnson started this relay, the day before yesterday the speaker of the US Congress Nancy Pelosi came to Kyiv for a visit. Moreover, in Lviv, residents in one of the cafes found Angelina Jolie, who also decided to visit Ukraine during such difficult times for her. Thus, all the news concerns new visits of high-ranking officials and just famous people to Ukraine. As well as the ever-expanding flow of modern weapons from all partner countries of Ukraine. According to military experts, Ukraine is quite capable of turning the course of this conflict in its favor with NATO weapons and equipment and completely reconquering its lands back. However, this scenario implies that this conflict will drag on for many years.
Hungary vetoes the oil embargo.
In the last few weeks, the issue of the introduction of an oil and gas embargo on Russia by the European Union has been increasingly actively discussed. Yesterday, it became known that the only EU country that opposes such a decision is Hungary, which, in principle, openly supports the Russian Federation, although it opposes various "special operations". Hungarian Prime Minister Viktor Orban believes that the interests of Hungary itself, not Ukraine, should be paramount for Hungary, so the country is very reluctant to support any sanctions against Russia, and also does not participate in helping Ukraine. We certainly do not condemn or welcome such a decision by Hungary, we are only stating a fact.
Nevertheless, there is reason to assume that the opinion of Hungary, to put it mildly, will not be taken into account. Yes, to impose an embargo, the approval of all 27 member countries of the bloc is required. However, if you remember, in the first year of the pandemic, "Eurobonds" were actively discussed in the European Union, which meant loans for the governments of all countries. However, since the financial situation due to the pandemic and the crisis was not a failure in all EU countries, then, for example, Germany or Austria did not want to take on other people's debts. After all, the meaning of Eurobonds was that all countries assumed debt obligations, and the funds received were distributed among those who needed financial assistance the most. However, in the end, the European Union came to a common opinion and a package of economic assistance was approved. Therefore, most likely, it will be the same now. Viktor Orban will quickly explain that the essence of the European Union is in principle "one for all and all for one." And if necessary, there are always political levers of influence on negligent leaders. Therefore, we believe that even if Germany agreed to the embargo, Hungary absolutely will not be an obstacle to its introduction.
The average volatility of the euro/dollar currency pair over the last 5 trading days as of May 3 is 102 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.0404 and 1.0608. The upward reversal of the Heiken Ashi indicator will signal a new round of upward correction.
Nearest support levels:
S1 – 1.0498
S2 – 1.0376S3 – 1.0254
Nearest resistance levels:
R1 – 1.0620
R2 – 1.0742
R3 – 1.0864
Trading recommendations:
The EUR/USD pair is trying to resume the downtrend. Thus, now you should stay in short positions with targets of 1.0404 and 1.0376 until the Heiken Ashi indicator turns up. Long positions should be opened with a target of 1.0742 if the price is fixed above the moving average line.
Explanations of the illustrations:
Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
