It is safe to say that the information background was extremely rich in scandalous news yesterday. Here you have a continuation of the epic with Brexit, and a new attempt by the Democrats to impeach Donald Trump. Messages from both sides of the Atlantic were flooded with all the news feeds, overshadowing absolutely everything else that was going on in the world. And when such hype occurs, the markets are in a fever. Moreover, both news backgrounds are purely negative, both for the UK and the United States.
Everything is quite simple in theory. Since everything is so sad in the United States, the dollar should have become cheaper. However, not everything is simple. After all, its growth in relation to the pound is quite understandable, since things are even worse in the United Kingdom itself. But here the growth of the dollar against the single European currency, does not fit into this scheme. But if we look at data on sales of new homes in the United States, which showed growth not by 3.5%, but by 7.1%, then much becomes clear. Investors were so overwhelmed by the information background that at some point they had already stopped paying attention to it. Moreover, to some extent, the incoming news offset each other. So to say, the result is zero. Everywhere is bad and scary. So, investors gave preference to the real state of affairs in the economy, which immediately affected the value of the dollar.
New Home Sales (USA):
Of course, the information background will not go anywhere today. It even get stronger. But following the example of yesterday, investors will ignore it. Moreover, today the final data on the United States GDP for the second quarter are published, which should confirm the fact of a slowdown in economic growth from 2.7% to 2.3%. Although everyone has long been ready for this, since this is what preliminary data showed, a statement of fact will lead to the resumption of talk about an approaching recession. The argument will be just a slowdown in economic growth, which indicates a similar development. In this regard, the hysteria surrounding another attempt to impeach Donald Trump will only increase the negative impact on the dollar. However, one should not exclude the possibility of a complete triumph of the incumbent president of the United States, in the form of a complete failure of the Democrats, to even raise the issue of impeachment for consideration by Congress. In this case, investors are clearly more likely to buy dollars than sell.
GDP growth rate (USA):
The EUR/USD pair was no longer able to show restrained market interest and the previous day was reflected as an impulse - inertial move, returning the quote to the area of the main support point of 1.0926. Considering what is happening in general terms, we see that the recent correctional move is one step away from closure, but it is too early to say that the three-week holding oscillation has fallen into existence. It is worth waiting for a clear consolidation of the price below 1.0926, while maintaining the inertial motion.
It is likely to assume that it will be extremely volatile today, due to the massive information and news background, where I do not exclude the possibility that movement will be either up or down, depending on the incoming information. If we consider the downward course, it is better to wait for a clear consolidation of prices below 1.0926, before laying down further trading operations.
Concretizing all of the above into trading signals:
• Long positions, can be considered as local bursts in case of a move higher than 1.0970.
• We consider short positions in case of price consolidation lower than 1.0926, while maintaining the inertial speed.
From the point of view of a comprehensive indicator analysis, we see that against the backdrop of a recent surge in quotations, indicators at all the main time intervals signal a further downward trend. In case of spontaneous jumps amid the flow of information, indicator analysis will temporarily cease to be relevant.