Everything is completely logical at first glance - the heads of the European Union countries have finally come to an agreement that satisfies everyone, both on the budget and on the support fund for the economy affected by the coronavirus epidemic, and the euro has significantly strengthened. As much as 750 billion euros are allocated to save the eurozone economy. Of these, 390 billion euros are allocated in the form of various grants, and another 360 billion euros in loans. At the same time, the wishes of the poorest countries of the European Union, which are already experiencing colossal problems with debts, are really taken into account. Loans will be issued at extremely low interest rates, and even for a period of over thirty years. The only thing that, perhaps, can cause concern is the same grants for 390 billion euros. The fact is that out of the total amount of 750 billion euros, about 250 billion euros should be directed not to supporting the economy or improving the health care system, but to various environmental programs, especially on converting the energy of EU countries to the so-called green energy. And almost all of this amount accounts for grants. Given the fact that the development of such technologies is exclusively engaged in the richest countries of the EU, it turns out that they will also receive them - free of charge. But the not so rich countries of the bloc can only count on new loans. Even though it will take a long time to return them, it still makes them more and more dependent on Berlin and Paris. So the long-term effect of these measures may not be as impressive as it looks on paper and in the words of various politicians. However, the fact that the euro's main growth began only after the US session opened is quite alarming. After all, it turns out that the development of events largely depends on the mood of American traders, and not some real state of affairs in the economies of certain countries. So, as soon as American traders consider that the situation in the United States is slightly improving, the dollar will start to rise in price rapidly. Perhaps even faster than the euro is rising in price now. In addition, this only once again confirms the assumption that the euro is now overbought.
Today, there is a reason for increasing optimism towards the dollar. The euro could grow a little more by momentum before the US session opens. But data on home sales in the United States secondary market will be published within a couple of hours after the US traders start working. And the result should grow by 23.0%, from 3.91 million to 4.70 million. This is an extremely impressive growth. And the euro is noticeably overbought. So even less significant data may be enough.
Existing Home Sales (United States):
From the point of view of technical analysis, we see the inertial movement of the price, where the European currency managed to update the current year's high, pinning the quote above 1.1545. Speculative interest along with the flow of information background - is what we had during the past day, where the greatest activity was recorded during the start of the US trading session, which is where the pace of inertia was set. Such a high rate of change in quotes led to an even greater stage of overheating long positions, where a small change in trading forces is enough to cause a correction in the market.
In terms of dynamics, one of the highest volatility indicators is visible since the beginning of the summer trading season.
Considering the trading chart in general terms (daily period), you can see a shift in the medium-term trend, but there is an assumption that this is a temporary phenomenon in the market, since the general bearish mood has not gone anywhere.
It can be assumed that the 1.1550/1.1600 area can serve as a kind of resistance, where consolidating long positions will lead to forming a corrective move in the market, towards values of 1.1500-1.1450.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments at 1-minute intervals are already signaling a sale due to the primary stagnation/pullback. Hourly and daily periods continue to signal buy due to the inertial price movement.
