According to the comprehensive analysis, we can see a V-shaped reversal patter that proves a 100% recovery of the quote.
The trading week is coming to an end and it is time to sum up all the analyses. Let's take a look at the euro/dollar pair. According to the chart, the pair hit the support level of 1.1180 and moved to the area of 1.1300/1.1350. After that, buyers lost momentum and sellers opened a lot of deals. As a result, the quote returned to the level of 1.1180.
We can see a V-shaped reversal. It means that the downtrend which began on June 11 near the levels of 1.1440/1.1500 is still in force. Thus, the price may fall even deeper.
According to the alternative scenario, the pair may fluctuate within the levels of 1.1180//1.1300//1.1500. The prediction is based on the fact that the market trend has changed. Besides, the pair will hardly resume the downtrend that occurred on March 10 as there is no proper emotional influence on the market. As a result, the pair may fluctuate within a new range that will prevent it from both a fall and a rise.
Analyzing the previous trading day, we can see that a number of short deals was opened at the beginning of the European session. The quote managed to reach the level of 1.1180 (1.1190). After that, it rolled back towards 1.1231 and got stuck within the levels of 1.1210/1.1230.
The market volatility was the lowest in the last 12 days. Moreover, it was 19% below the average daily reading. The current dynamic points to the accumulation that may result in the significant market acceleration.
As it is said in the previous review, traders were working on the recovery process from the value of 1.1280. The primary target should have been the level of 1.1180.
The above-mentioned alternative scenario can be proved by the fact that in 2015-2016, the price was hovering within these levels.
Yesterday, the US disclosed its GDP data for the first quarter. The US economy contracted by 5% while the preliminary estimates showed a drop of 4.8%.
I think that markets were not surprised and the data was already priced in.
At the same time, the US published quite positive figures on its durable goods orders. The indicator jumped by 15.8% in May while analysts had predicted a rise of 8.5%. It is the most significant rise since July of 2014.
However, the US labor market situation is really alarming. The number of the first-time claims declined to 1,480,000 from 1,540,000. Economists had expected a drop to 1,380,000. The number of the continuous claims exceeded the forecast. The indicator decreased to 19,522,000 from 20,289,000.
The ECB disclosed its monetary policy meeting minutes. According to the document, its council members debated the pros and cons of its monetary policy. The ECB said there was "broad agreement" that the "negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability".
Notable, the envelope for the pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion.
Today, traders are focused on the US personal spending and income. However, such data never has significant influence on the market.
Besides, Christine Lagarde, the president of the European Central Bank, believes that the world has passed the worst of the coronavirus crisis.
During the online Northern Light Summit Christine Lagarde said: "We probably have passed the lowest point and I say that with some trepidation because of course there could be a second wave."
She also noted that the economic recovery will be gradual.
Early next week all eyes will be turned to the eurozone inflation data. Economists do not expect any improvements. Then, there will be a flow of information from the US, including ADP reports, the US Labor Department report, and the FOMC meeting minutes.
The most important events of the next week:
Monday, June 29
US - Pending Home Sales
Tuesday, June 30
EU – Consumer Price Index, June (Flash)
US – S&P/Case-Shiller 20 City, April
Wednesday, July 1
EU – Manufacturing PMI (June)
US – ADP Non-Farm Employment Change (June)
US – ISM Manufacturing PMI (June)
US – FOMC Meeting Minutes
Thursday, July 2
EU – Unemployment Rate (May)
EU – Producer Price Index (May)
US – Labor Department reports
- Non-Farm Employment Change
- Unemployment rate
- Average hourly earnings
US – Unemployment Claims
Friday, July 3
US – Independence Day
According to the chart, the price is hovering within the levels of 1.1205/1.1240. It can be considered as accumulation ahead of a jump in activity. To resume the downtrend, the pair should consolidate below 1.1165.
According to the alternative scenario, the pair may fluctuate within the levels of 1.1180//1.1300//1.1500.
It is quite possible that accumulation near 1.1205/1.1240 will soon come to an end.
Thus, buy deals could be opened above 1.1240 with the targeted level at 1.1260.
Sell deals could be initiated below 1.1205 with the target at 1.1170-1.1180. The main deals could be opened when the price consolidates below 1.1165 on a four-hour chart.
Indicator analysis
Indicators of technical instruments on an hourly and daily chart point to selling.
The volatility for the week / Measurement of volatility: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuation calculated for a month / quarter / year.
At the moment, volatility is on the 34-point level, which is 60% lower than the average daily value. It can be assumed that as soon as the accumulation is completed, there will be acceleration that may lead to an increase in volatility.
Key levels
Resistance levels: 1.1300; 1.1440/1.1500; 1.1650*; 1.1720**; 1.1850**; 1.2100
Support levels: 1.1180; 1.1080**; 1.1000***; 1.0850**;1.0775*; 1.0650 (1.0636); 1.0500***; 1.0350**; 1.0000***.
* Periodic level
* * Range level
***Psychological level
