EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair secured under the correction level of 127.2% (1.1024), after which it closed under the low of the bullish divergence, which led to its cancellation. Thus, there are no visible obstacles for the pair to continue its fall towards the next correction level of 161.8% (1.0918) (or slightly above 1.0927). Several rebounds of the euro/dollar pair quotes from the upper line of the trend channel leave a very high chance of continuing the fall. The information background implies the same development of events. Economic reports from the European Union and Germany on business activity just "killed" the euro the day before. I wrote about the German indices of business activity yesterday, but we will dwell on the European ones in more detail. The most significant and important index – for the manufacturing sector – instead of growing to 47.6, it dropped to 45.6. In the services sector, the decline was recorded from 53.5 to 52.0. The composite PMI fell to 50.4. Thus, although these are preliminary values for September, it is already possible to declare an even greater deterioration in the economic situation of the European Union. By the way, this was later reported by Mario Draghi, who spoke before the European Parliament Committee on economic and monetary issues. Draghi said that there are no signals to improve the economic situation in the eurozone, inflation remains at its very weak levels, the slowdown in the industry can have a negative impact on other sectors of the economy, and on the service sector, Draghi said that it is also subject to the negative impact of external and internal factors. The ECB chairman also announced that he was ready to continue to use all the necessary tools to stimulate the EU economy. However, he has only one chance because he will be replaced by former IMF head Christine Lagarde as Chairman of the ECB on October 31.
This is a summary of yesterday's events. What can be said? The situation in the eurozone remains extremely tense. All economic indicators are slowing down and decreasing, which greatly hinders economic growth. Threats of a global recession are not just words; it is the European Union that may be one of the first to face this problem. As for the solution to this situation, it can only be one thing: stimulating the economy by injecting cash through the purchase of securities, as well as further reducing rates. There are no other options. For the euro, this is another package of negative news.
Today, I recommend paying attention only to the indicator of consumer confidence in America. Even so, it is not a very important indicator of the state of the economy, although its decline will reflect a deterioration in household confidence in the current state of the economy and its prospects. Thus, the indicator is interesting, but no more.
What to expect today from the euro/dollar currency pair?
On September 24, I expect the euro/dollar pair to fall further in the direction of the correction level of 161.8% (1.0918). Since the information background, today will be absent, but the activity of traders may not be on top. However, the euro is likely to remain under pressure, as the latest news from the European Union does not give reason to buy the euro/dollar pair. No new emerging divergences are observed in any indicator today.
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 (or staying close to previously opened sales) at 1.0927 as a new hold has been made at 1.1024. A stop-loss order above the level of 1.1029.
It will be possible to buy a pair after closing above a downward trend channel, but it is better to wait until it also consolidates above the correction level of 100.0% (1.1106).
