Hello, dear colleagues!
In today's euro/dollar review, let's summarize the trading week ended on Friday and determine the further prospects for the most popular trading instrument. In addition, we will highlight the most important macroeconomic events to be released this week.
As noted earlier, the epidemiological situation in the world caused by the second wave of the COVID-19 outbreak has led to increased demand among ivestors for the US dollar as a safe-haven asset. As a result, last week the US currency gained ground against all major competitors, including the euro.
Getting back to the subject of coronavirus, it should be noted that Europe is bracing for a second wave of the pandemic. However, according to many virology experts, the second wave of COVID-19 has already begun. The most difficult situation is observed in France and Spain. French restaurateurs in Marseille are to close their restaurants again from today for the next two weeks due to rising coronavirus cases. If the situation does not improve, the restrictive measures will be extended. In case the daily number of COVID-19 infections declines, the authorities will have to revise their lockdown measures. After the restrictive and sanitary measures were eased in Spain as a result of the influx of tourists, the country faced a sharp rise in coronavirus cases. In the regions that reported the highest daily increase in the number of infections, schools and entertainment venues are being closed. Besides, as for the European countries, Spain, along with Italy, turned out to be the main focus of the coronavirus outbreak. So, according to the Spanish authorities, more than 715 thousand people have been infected in the country since the beginning of the pandemic.
Weekly chart
The euro/dollar currency pair closed its previous trading week with huge losses, at the level of 1.1629. Thus, the most important level of 1.1700 can be considered as broken. However, the euro/dollar pair may try to return to the area above this important mark. Moreover, this week's macroeconomic calendar includes a lot of important releases that can affect the dynamics of the euro/dollar pair. Undoubtedly, the main event of the week will be the labour reports for September from the United States to be published on the last trading day, on October 2. Besides, the market will close the month of September this week, and we will most likely see a fight for the closing price level near 1.1700.
From a technical point of view, it can be seen from the weekly chart that the euro/dollar pair is about to continue moving in a downward trend. If this happens, the levels of 1.1600, 1.1570, 1.1540, and 1.1500 will be seen as the nearest targets. In case the price makes a correction, which implies the higher quotes, the pair may rise to the area of 1.1700-1.1743. The already mentioned important level of 1.1700, as well as the broken support level of 1.1743 are located in this area.
Daily chart
Last Friday, on the daily chart, the euro/dollar pair continued to move to the lower border of the Ichimoku cloud. Above this area, we can see the exponential moving average and the 50% Fibonacci retracement from the levels of 1.1167-1.2010. Thus, I recommend that you carefully follow the price behavior when losing ground towards the 1.1600-1.1566 region. If bullish Japanese candlestick reversal patterns appear in this indicated area, it will be possible to open long positions. In case the price goes down from the cloud and consolidates below its lower border, you should consider short positions amid a pullback. It will be possible to look for sales at a higher price in case the pair advances to the area of 1.1750-1.1780. In my opinion, the main trading idea for this currency pair implies sell deals. I think that purchases are more risky, and I recommend opening long positions with short targets counting on the pair's correction.
Have a nice day!
