4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -50.7060
The EUR/USD currency pair was trading very calmly again on Tuesday, June 15. Although everything looks as if the movements are very active in the illustration, in reality, the volatility was again minimal (about 40 points). The last five trading days out of six ended with a volatility of no more than 52 points, which is very small even for the euro/dollar pair, which is traditionally weakly volatile. Obviously, with such market activity, it isn't easy to expect a high profit. The pair may not be in one place (there is still a descending channel on the hourly timeframe), but it spends most of the time in a minimal range. However, it is still impossible to talk about a flat now, as the decline in recent days slightly changes the entire technical picture, and now at least it is clear that the pair has started to correct. Thus, the price may now remain in a very logical corrective movement for some time, which has been brewing for several months. Recall that from March 31 to May 25 (almost two months), the quotes increased by 560 points, almost without correction. Thus, the EUR/USD pair is quite capable of passing another 100 points down, although, with the current rate of movement, this may take another couple of weeks.
Nevertheless, the US dollar is finally getting more expensive, and this is the main thing. However, this growth is again minimal, and most of the factors that led the European currency so high remain relevant.
Consequently, the euro can resume growth at any time. And we still expect a new fall in the US currency. We should consider that the pair can not constantly move in the same direction, even if all the global factors say precisely this. Yes, the US authorities and the Fed continue to pour trillions of dollars into their economy, but this does not mean that the dollar will fall non-stop. Thus, we currently expect a correction, after which the upward trend will resume.
The pair's quotes were fixed below the moving average line in technical terms, and the lower channel of the linear regression turned down, which indicates a possible trend change to a downward one. However, keeping in mind the fundamental global factors, we believe that the lower channel now signals a corrective movement. The older one continues to be directed upward.
It should also be noted that on Tuesday (as on Monday), the price was in a corrective movement after Friday's fall. And there was a drop in quotes in the second half of the day, interrupted by a weak report on retail trade in the United States. However, macroeconomic statistics still have a very indirect impact on the movement of the pair. Yes, the local reaction of the markets is present, and at this time, traders react to various reports much more often than a couple of months ago. Overall, however, the US currency has struggled to gain in value over the past month, although its economy is recovering at a much faster pace than the European one. And in the long term, the US dollar continues to fall. This trend began more than a year ago, and during this time, the US currency has depreciated by 1,500 points if we take the current exchange rate of the pair as the endpoint of the trend.
What can help the US currency show stronger growth? From our point of view, nothing until the end of 2021. Of course, the dollar's rise may also be technical. For example, within the next wave, quotes may fall to their previous local lows near the level of 1.1700. However, if we talk about a fundamentally good movement, then now the dollar still has nothing to count on. The pace of recovery of the US economy is not too much interesting to traders, as the dollar is under serious pressure due to high inflation in the US, as well as due to the immeasurable inflation of the money supply, thanks to the actions of the Fed to stimulate the economy. Also, the US currency can not find support from the market due to the lack of soothing sayings from the Fed representatives, who continue to say that the economy is recovering unevenly and has not fully recovered. Therefore, it is still too early to remove the incentives. The Fed also points out that the state of the labor market is far from pre-pandemic levels. Another 5-10 million Americans are still out of work, although they had one before the pandemic. Thus, it seems that until the full recovery of the labor market and its approach to maximum employment, it does not make much sense to talk about curtailing the quantitative stimulus program, under which at least $ 120 billion a month is spent on bonds purchases.
Thus, the general conclusion we can draw is as follows. In the long term, the US dollar will continue to fall. In the medium term, a correction has begun, which theoretically can lower the pair even to the level of $ 1.17, which is 400 points below the current rate. Given that the pair has been declining by 170 points for a month since the last local high, it may take 2.5 months to pass another 400 points. In the short term, we have the weakest downward trend. Even on the hourly time frame, it is visible that the trend is extremely weak and almost borders on the concept of "flat." There are no fundamental topics that could strongly impact the currency pair's movement right now. Macroeconomic statistics have only a local effect on the exchange rate.
The volatility of the euro/dollar currency pair as of June 16 is 57 points and is characterized as "average." Thus, we expect the pair to move today between the levels of 1.2068 and 1.2182. The upward reversal of the Heiken Ashi indicator signals a new round of upward movement within the weakest downward trend.
Nearest support levels:
S1 – 1.2115
S2 – 1.2085
S3 – 1.2054
Nearest resistance levels:
R1 – 1.2146
R2 – 1.2177
R3 – 1.2207
Trading recommendations:
The EUR/USD pair has started a new round of upward movement. Thus, today it is recommended to open new short positions with a target of 1.2085 if the Heiken Ashi indicator turns down. It is recommended to open buy orders after the Heiken Ashi indicator turns up with the targets of 1.2177 and 1.2182. The pair continues to be in a flat, which should be considered when opening any positions. We also give recommendations for trading on lower timeframes.
