4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - down.
The moving average (20; smoothed) - up.
CCI: 69.0000
The EUR/USD currency pair failed to overcome the moving average line the first time, rebounded from it and can now resume the upward movement, which still does not look too justified from a fundamental point of view. Even without knowing the whole essence of yesterday's FOMC protocol, it is safe to assume that nothing interesting was contained in it as we assumed the day before. This can be seen simply from the reaction of traders or rather from its absence. Thus, the minimum volatility for the euro/dollar currency pair remains, and traders and analysts are gradually approaching the more interesting part of the week for which at least some macroeconomic events are planned.
Yesterday, we drew the attention of traders to the fact that if there is no fundamentally new and interesting (or at least unexpected) information in the protocol, then there will be no reaction. In most cases, the protocol simply repeats all the decisions and statements that have already been announced after the FOMC meeting itself. So it happened yesterday. From the minutes of the October meeting, it follows that Fed officials believe that three key rate cuts will be enough in the long term to support the US economy. In other words, the Fed is not going to lower the key rate soon with a probability of 100% and expects a positive effect from a three-time reduction of 0.75%. The document also says that the policy of negative rates is not considered by the Fed's monetary committee as possible to apply, as it can cause "complexity and distortion of the financial system." Regarding the prospects for the US economy, the Fed participants are overwhelmed with positives, predicting strong economic growth, accelerating growth in the level of business activity, a strong labor market and the proximity of inflation to the target level of 2.0%. According to members of the Fed, geopolitical risks caused by trade wars have weakened recently, but continue to harm the world economy and, accordingly, the US economy, restraining investment spending and exports.
Thus, we see that the Fed as a whole is positive and if it weren't for the recently declining business activity in the manufacturing sector and a strong drop in industrial production in October, we would even say that everything is in order from macroeconomic statistics in America. If the Fed's expectations are confirmed by concrete figures, then the US economy may indeed stop showing signs of slowing down, which is certainly a plus for the US currency. As for the Fed protocol itself, it contains the main message that traders have been waiting for: Jerome Powell and the company do not intend to ease monetary policy anymore.
Today, the penultimate trading day of the week can again be safely considered empty in terms of macroeconomic events. Only the ECB's monetary policy report (an analog of the Fed protocol), the index of business activity in the Philadelphia manufacturing sector and the level of consumer confidence in the EU (preliminary value for November) can be distinguished from the entire calendar. Thus, we have at our disposal not only secondary reports, but third-party reports, the probability that traders will respond to them, no matter what they are, is not more than 5%. Thus, today we expect weakly volatile trading again, the absence of sharp movements in the forex market and possibly a weak upward movement, as the upward trend is still maintained for the pair. Well, it will be possible to expect a fall in the currency pair not earlier than fixing quotes under the moving average line, which will mean a change in trend to a downward one.
Nearest support levels:
S1 - 1.1047
S2 - 1.0986
S3 - 1.0925
Nearest resistance levels:
R1 - 1.1108
R2 - 1.1169
R3 - 1.1230
Trading recommendations:
The euro/dollar pair continues a weak upward movement, after a slight correction to the moving average. Thus, buy orders with a target of 1.1108 are now relevant until the new reversal of the Heiken Ashi indicator down. However, given the minimal volatility, we recommend being careful with opening any positions. It is recommended to buy the US dollar not earlier than the consolidation of bears below the moving average line with the first target of 1.0986.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression - the blue line of the unidirectional movement.
The lower channel of linear regression - the purple line of the unidirectional movement.
CCI - the blue line in the indicator window.
The moving average (20; smoothed) - the blue line on the price chart.
Support and resistance - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
