Hello, dear colleagues!
In yesterday's trading, the single European currency continued to strengthen its position against the US dollar. Market participants are concerned that the ongoing COVID-19 pandemic in the United States will have a negative impact on the world's leading economy, which will recover at a slower pace.
Another round of tension between Washington and Beijing has also done the US currency a disservice, both literally and figuratively. The Chinese Consulate in Houston was charged with espionage, and it was given 72 hours to complete its diplomatic mission. In these conditions, investors prefer traditional safe-haven currencies, which are considered to be the Swiss franc and Japanese yen. But "American" is no longer in high esteem.
In addition, according to yesterday's data, the number of applications for unemployment benefits in the United States increased. This happened for the first time in the last 4 months and it is largely an echo of the COVID-19 epidemic.
Looking at today's economic calendar, you can highlight business activity indices in the manufacturing and services sector in Germany (08:30 London time), the Eurozone (09:00 London time) and the United States (14:45 London time), as well as data on new home sales in the United States, which will be published at 15:00 London time.
Daily
In yesterday's trading, as a result of growth, the pair showed maximum values at 1.1626, however, it could not hold on to the peak and pulled back slightly, ending the Thursday session at 1.1595. I believe that a serious struggle can unfold around this figure for the final closing price of today's and weekly trading. If the euro bulls manage to finish the day and the whole week above 1.1600, the road will open to another important and strong technical level of 1.1700. However, these prospects will take real shape next week.
Continuous five-day growth of the main currency pair of the Forex market suggests a high probability of a corrective pullback, however, it is difficult to calculate when it will occur. The pair is in a fairly strong upward trend, which may continue today. Although before the weekend, there is always a high probability of fixing positions (in this case, long ones), which can provoke some course correction. For this purpose, such strong price zones as 1.1600-1.1625 today and 1.1700-1.1715 next week can be used.
The bears in the current situation have a very difficult task, and in order to somehow improve their affairs, they need to prevent a breakout of a significant level of 1.1600 and try to close trading not only below this level, but also under the 1.1570 mark. As already noted, this outcome of today's trading may be facilitated by profit-taking, as well as the continuing bearish divergence of the MACD indicator.
H1
Bearish divergence of the MACD is also observed on the hourly chart, which together with the daily diver is a serious potential for adjusting the euro/dollar.
Despite the strong bullish sentiment for the euro/dollar, buying a pair on the last day of weekly trading is very uncomfortable. For those who still want to trade today, I recommend considering two options. The first one is positions on the trend, that is, purchases that can be planned after the euro/dollar falls into the price zone of 1.1580-1.1570, and below near 1.1550. The second option is sales, which will become relevant if the four-hour and (or) hourly charts show bearish reversal candles in the area of 1.1600-1.1620. In both cases, I do not recommend setting large goals and moving positions to Monday. It is much safer to take your small part of the profit and quietly leave for the weekend. Isn't it?
Good luck!
