EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair continued the sluggish growth process in the direction of the correction level of 127.2% (1.1024), which is located in the upper area of the downward trend channel. It is in this area that I expect a reversal of the euro/dollar pair in favor of the latter and the resumption of the fall in the direction of the first Fibo level of 161.8% (1.0918), and then in the direction of 200.0% (1.0802). Today, the divergence is not observed in any indicator. The rebound of the pair quotes from the upper line of the channel will work in favor of the American currency.
Since the calendar of economic events in the United States and the European Union on Monday was empty, the only thing that traders could pay attention to was a speech by Fed President Jerome Powell. A lot has already been said about Powell's Friday performance, much more than Powell told traders. The nature of the Fed President's speech on Monday in Salt Lake City was similar to Friday. Powell did not say anything interesting or important about monetary policy, but he reiterated that the Fed does not depend on political influence, hinting at the constant criticism of Donald Trump. I believe that Jerome Powell is frankly deceitful when he declares the independence of the Fed. By law – yes, the Federal Reserve is not subject to direct orders of the President of the United States. However, it should be understood that both the Fed and the president are on board the same ship. And if there is a hole in the case, then everyone has to patch it. That is exactly what is happening now. The Fed declares its independence, but is forced to lower the key rate to reduce the negative impact of the trade war with China, at least to somehow suspend the growth of the dollar against its main competitors, as well as to support the US economy, which, although not in recession, but certain signs of its slowdown are already observed. Thus, it may not be by direct order, but Powell follows the instructions of Donald Trump since the Fed has no particular choice. The Monetary Committee cannot stand aside, observing how the US economy needs incentive measures and point a finger at Trump, saying that it is his fault, even if the US President himself deals with the problems that he created.
Tonight, there will be another performance by Jerome Powell, which is likely to be the same in content as the previous two. That is, probably, traders will not hear anything new either in comparison with the speeches on Friday and Monday or in comparison with earlier speeches. And if so, then you should not expect any special changes in the euro/dollar exchange rate. Apart from Powell's speech, no interesting economic reports are scheduled for today.
What to expect today from the euro/dollar currency pair?
On October 7, traders continue to move the euro/dollar pair to the key zone – near the upper line of the downward channel and the level of 127.2%. It is in this area that the fate of the pair will be decided shortly. Powell did not report anything interesting to traders on Monday, so traders were deprived of an information background that would allow them to actively trade yesterday. Today, the information background will be poor in events again.
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair today with a target of 1.0802 if a new close is made below the level of 1.0918. A stop-loss order above the level of 1.0927.
It will be possible to buy the pair after closing above the downward trend channel and above the correction level of 127.2% with a target of 1.1106.