4-hour timeframe
Technical data:
The upper linear regression channel: direction – down.
The lower linear regression channel: direction – down.
The moving average (20; smoothed) – sideways.
CCI: 39.7326
Last week, the EUR/USD currency pair consolidated above the moving average line. Although on Thursday and Friday, traders had reason to buy the euro currency, or at least just for active trading, the euro/dollar pair behaved sluggishly at the end of the week. At the beginning of a new trading week, it consolidated itself back below the moving average. What's it? Correction against the emerging upward trend? Or are the bears reactivating and going to sell the euro?
The second trading week of the month will not be as interesting as the first. Until Thursday, no important macroeconomic statistics will be published in the European Union or the United States. Today, September 9, the news calendar is generally empty. But on Thursday in America, the inflation report for August will be published and forecasts predict a new slowdown in this indicator. And in the European Union, a meeting of the ECB will be held, at which a decision can be made on easing monetary policy. We remind you that Mario Draghi, chairman of the European regulator, will leave his post in any case on October 31. That is, exactly two meetings remain, at which he and the monetary policy committee can lower rates and revive the program of quantitative easing. Also on this day, a press conference will be held, at which the same Draghi can inform the markets about the state of the EU economy, forecasts, threats, and concerns, as well as plans for the future. Mario Draghi's rhetoric is unlikely to change from "dovish" to "neutral." Both from Draghi and Christine Lagarde, we expect only a softening of the EU monetary policy in the coming months, and possibly years. The world recession, which "does not see" Jerome Powell, but which already affects the economy of the European Union, and the economy of China, and the US economy, is to blame. Just on the indicators of the European Union, it is most clearly visible. Inflation in the eurozone has slipped to an unprecedented low when it is no longer impossible to stimulate it. Business activity in the manufacturing sector unequivocally indicates a decline and production volumes are declining, as a result, GDP is declining. But this has not yet begun a trade war between Washington and Brussels.
Of course, there may not be a war. Still, Donald Trump in 2020 may leave the post of president of the United States, despite his passionate desire to be re-elected to a second term. However, even the trade war with China is not brought to an end. The parties simply imposed duties on each other and are waiting. America – when China makes concessions and signs a trade agreement beneficial to Trump, China – when Trump leaves his post and his place will be taken by a new president with whom it will be possible to at least negotiate. In such circumstances, it would be extremely strange to foment a second trade war. However, such details and formalities rarely care about the US President. Thus, in the coming months, we may read on Trump's Twitter or in the media that "the European Union has been unfair in America for many years and it's time to end this."
What does all this mean for the EUR/USD pair? There is nothing good for the euro The beginning of the week shows the mood of the forex market participants. It looks like it is bearish again. Many experts and traders are waiting for the easing of the monetary policy of the ECB, respectively, the euro will come under pressure. Accordingly, in the coming days, the pair may decline to its two-year lows, which were updated last week.
Nearest support levels:
S1 – 1.1017
S2 – 1.0986
S3 – 1.0956
Nearest resistance levels:
R1 – 1.1047
R2 – 1.1078
R3 – 1.1108
Trading recommendations:
The euro/dollar pair turned down. At the moment, fixing below the moving average line has already taken place, so new sales of the pair with targets of 1.0986 and 1.0956 are already formally relevant. The fundamental background for the pair is negative again, so we are expecting another fall of the European currency this week.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi is an indicator that colors bars in blue or purple.
