In today's article on the main currency pair of the Forex market, we will summarize the results of the completed five-day trading and try to understand the further price dynamics of the euro/dollar. But before proceeding to the technical analysis of EUR/USD, let us briefly talk about other events. As it became known at the end of last week, US Treasury Secretary Janet Yellen recommended that the President of the United States Joe Biden approve the chairman of the US Federal Reserve System (FRS) Jerome Powell for a second term. Let me remind you that Powell was appointed head of the Federal Reserve by former US President Donald Trump, and he was replaced in this post by Janet Yellen. During this time, Jerome Powell has established himself as a very independent and pragmatic monetary politician. It is enough to recall how many times his fellow party members and Trump expressed dissatisfaction with the course pursued by the Fed under the leadership of Powell and demanded a softer "dovish" monetary policy. However, Jerome Powell remained of his opinion, once again emphasizing the independent status of the Fed.
Meanwhile, in Europe, they are trying hard to save the tourist season against the background of the COVID-19 pandemic that has not yet been completed. As you know, for southern European countries, such as Greece, the tourism business is a serious help in filling the budget and saving jobs. The key to success in this direction is considered by many to be the "European sign of protection of tourists from COVID-19", which is designed to reduce risks for travelers and should provide uniform standards of sanitary and epidemiological measures, in particular for the hotel business.
If we touch on the topic of the most important events that market participants will have to digest this week, then, in addition to numerous macroeconomic reports from Europe and the United States, we should add the ECB's decision on rates and the subsequent press conference of the President of the European Central Bank, Christine Lagarde. Well, now let's start analyzing the price charts and, taking advantage of the Friday end of weekly trading, let's turn our eyes to this particular timeframe.
Weekly
So, at the end of last week, the EUR/USD currency pair declined and ended trading at 1.1805. At the same time, it should be noted that the quote remained within the Ichimoku indicator cloud and even refused to try to get out of it, and the exit will be quite difficult. It is still a long way to the lower border of the cloud, which passes at 1.1492, especially since the pair is located in its upper part. However, considering that the blue 50 simple moving average, the blue Kijun line, and the red Tenkan line are concentrated near the upper border of the cloud, the key resistance area is 1.1975-1.2020. In my personal opinion, it will be possible to seriously talk about the implementation of the bullish scenario only if the quote overcomes all the listed obstacles and confidently fixes above 1.2020. The euro bears also have a difficult task. They need to break through the black 89 exponential moving average, which passes near 1.1730 and then test the strong and important technical level of 1.1700 for a breakdown.
Daily
On the daily EUR/USD chart, it is visible that the red Tenkan line is blocking the way up, the breakdown of which will send the quote to 1.1850, 1.1880, 1.1900, and 1.1930, where the orange 200 exponential moving average is located. An even more difficult task will be the passage of the price zone of 1.1975-1.1988, where the 89 EMA, the Kijun line, and the lower border of the Ichimoku daily cloud are slightly above the resistance level of 1.1975. For the continuation and resumption of the bearish scenario, the priority remains a true breakdown of the level of 1.1800, followed by a push through the support level of 1.1772 and a mandatory consolidation below this mark. At the moment, the range in which the euro/dollar is traded is 1.1895-1.1772.
Trading recommendations for EUR/USD:
Considering trading in the designated price area, for those who use a trading strategy in ranges, I recommend considering sales from the area of 1.1880-1.1900 and purchases from the price zone of 1.1805-1.1775. It is better to first see confirmation signals on this or lower timeframes and only then open positions in both cases. If EUR/USD leaves the range of 1.1895-1.1775, we will open positions in the direction of a breakdown on a rollback to one of its broken boundaries. However, something suggests that this exit will not happen today or tomorrow.
