Good day, dear colleagues!
At the auction on March 23-27, the US dollar suffered losses against all major competitors. In particular, in relation to the single European currency, the "American" fell by 3.95%.
The global COVID-19 epidemic is still in the market's focus. The highest mortality rate from a new type of coronavirus is in European countries, namely in Spain and Italy. However, the pandemic is already rampant in the major cities of the United States — in New York and Los Angeles, that is, in the most densely populated centers. As it became known from a telephone conversation between Chinese leader Xi Jinping and US President Donald Trump, the Middle Kingdom is ready to help the US in the fight against the COVID-19 epidemic.
If you go to the analysis of the EUR/USD currency pair, I will start with the events that are scheduled for today in the economic calendar.
At 10:00 (London time), data will be released from the eurozone on business sentiment, optimism in the industrial sector, as well as the consumer confidence index. At 13:00 (London time), Germany will report on changes in consumer prices in the country. From the US, at 15:00 (London time), data will be received on pending transactions for the sale of housing.
Well, now we can proceed to consider the technical picture for the euro/dollar, and, as usual, on Monday, we will start the analysis with the weekly chart.
Weekly
Following the results of the last five-day trading, a large bullish candle appeared on the weekly timeframe, the opening price of which was slightly higher than the closing price of the previous candle. The same applies to the closing price. In general, the last candle was formed inside the body of the previous one, which is nothing more than a "Harami" model. However, given the huge bodies of the last two candles, the model is quite atypical.
In my opinion, it is worth paying attention to the fact that the pair has returned above the support of 1.0777 broken the week before last. Moreover, as a result of the growth, the Kijun line of the Ichimoku indicator and the 50 simple moving average were passed, and the trading ended within the Ichimoku cloud. All this definitely indicates a change in market sentiment.
Trading this week opened with a small bearish gap, which, in a situation of rampant coronavirus epidemic, is not surprising. At the time of writing, the euro/dollar is trading near 1.1075, which is slightly below 50 MA and the limits of the Ichimoku cloud. The current support is provided by the Kijun line, leaving below which may lead to a decrease in the area of 1.0980 and possibly 1.0878.
If the bullish scenario continues and the previous highs of 1.1146 are recorded, the euro bulls' targets will be the 89 exponential moving average at 1.1223, as well as the strong technical level of 1.1238 and the upper limit of the Ichimoku cloud, which this week passes at 1.1250.
Daily
On the daily chart, we see that the pair overcame the 50th correction level from the fall of 1.1494-1.0636, which now acts as a support. It is also worth noting that last Friday's trading closed above the 200 exponential moving average, but at the moment, the pair is trading under 200 EMA.
If the players on the increase manage to secure trades over 200 exponential, the next growth targets will be 1.1165 and 1.1238. If the bearish sentiment for euro/dollar returns and the quote goes below the level of 1.1055, the further targets of sellers will be 1.1030, 1.1000 and 1.0980.
Conclusion and recommendations
In the current situation, it is quite difficult to determine the further direction of the price and make a decision to enter the market. In my opinion, the situation is far from clear, and yet the priority is for purchases that should be considered after the decline to the levels of 1.1055, 1.1030, 1.1000 and 1.0980.
However, this does not exclude a bearish scenario and sales, which can be considered when the price rises to the area of 1.1120-1.1140 and there are reversal candles on the daily, four-hour and hourly timeframes.
Good luck!
