Over the last trading day, the euro/dollar currency pair showed volatility slightly above the daily average of 61 points, resulting in a zigzag amplitude. From technical analysis, we see that the past days on the EURUSD pair were extremely volatile, the quote jumped up and down. The movement in the previously set limits of 1.1000/1.1080 remains to this day.
As discussed in the previous review, speculators worked at the stage of recovery quotes, outlining the goal of 1.1025-1.1000, where the first point was touched, but the main trading idea in terms of ride on the information and news background did not succeed due to the lack of due market reaction. Considering the trading chart in general terms (daily period), we see not just a corrective move, but a kind of multidirectional interest. Analyze the past ten trading days, and you will see that the movement has a horizontal character, with variable interest, which plays into the hands of the main market trend. Let me remind you that our fulcrum is 1.0926, and the resistance point is 1.1080/1.1115.
The news background of the last day had data on inflation in the eurozone, where the figures were confirmed at the same level of 1.0%, which surprised no one. In the afternoon, we published data on the construction sector in the United States, where the volume of construction of new homes increased from 1,215 M to 1,215 M, and the number of issued building permits increased from 1,317 M to 1,419 M. The key event of the last day was certainly the meeting of the Federal Open Market Committee, where the interest rate was reduced by 25 basis points for the second time in a year. Now, it is 2.0%, and this decision fully coincided with the expectations of most analysts, thus there was no surprise in this regard. After the announcement of the interest rates, a press conference was traditionally held, where Fed Chairman Jerome Powell talked about the reasons for the rate cut – "Although GDP continues to grow at a moderate pace and the labor market remains strong, the Fed lowered the rate in light of the impact of the global situation on economic development prospects and restrained inflationary pressure." At the same time, the head of the Fed noted that the forecasts for the US economy are favorable, and the situation in the job market is stable, in turn, inflation will soon return to the target level of 2.0%. Powell also stressed that he does not expect a recession in the US economy, which has been talked about so much lately.
In turn, US President Donald Trump was not satisfied with such a sluggish move by the Fed in terms of reducing the refinancing rate and traditionally outlined his criticism on Twitter.
"Jerome Powell and the Federal Reserve are failing again. No courage, no sense of reality, no vision of the situation!" – twitter @realDonaldTrump
Trump's systematic criticism does not go unanswered, and at a press conference last week, Jerome Powell recalled the independence of the Federal Reserve from direct political control.
"I continue to believe that the Fed's independence from direct political control has worked well in the past. I assure you that my colleagues and I will continue to pursue monetary policy regardless of political considerations," said Jerome Powell.
By tradition, we conclude our column of information and news background with divorce proceedings – Brexit. So, the plenary session of the European Parliament was held, where the majority of voters supported the resolution on the extension of the postponement of the UK's exit from the European Union, stipulated by Article 50 of the Lisbon Treaty if there are reasons and purpose for this. In turn, London is committed to providing good reasons for the delay, to keep the free movement on the Irish border, and to fulfill financial obligations to the EU even in the absence of a deal with Brussels.
At the same time, the EU issued an ultimatum to Boris Johnson that he must submit his proposals for Brexit by the end of the month or prepare for a hard exit from the EU.
Today, in terms of the economic calendar, we have a package of statistics on the United States. So, the first data are released regarding applications for unemployment benefits, where they expect growth from primary by 9 thousand and repeated by 2 thousand. After that, data on sales on the secondary housing market will be published, where they are expected to decrease from 5.42M to 5.37M. In general terms, statistics can put local pressure on the US dollar.
Analyzing the current trade chart, we see the return of quotations within the upper limits of the lateral movement of the 1.1000/ 1.1080 (of 1.1115). There are no major changes in the quotes, which reflects moderate volatility in the market. Speculators, in turn, considering both works on the principle of testing the upper bounds of a return, at the same time focus on the method of the breakdown of the main boundaries of the 1.1000/1.1080(of 1.1115) to identify key move.
It is likely to assume that in the absence of proper pressure on the dollar, we will feel the periodic ceiling in the area of 1.1080/1.1115 with the subsequent appearance of short positions. Thus, the chosen tactic above – work on the rebound/breakdown – is the most appropriate technique.
Based on the above information, we will derive trading recommendations:
Analyzing different sector timeframes (TF), we see that the indicators unanimously signal an upward interest. It is worth considering such a moment that when considering the current movement, we see a distinct divergence of interests, thus when working with indicators, it is worth considering this moment.
Volatility per week / Measurement of volatility: Month; Quarter; Year.
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 19 was built taking into account the time of publication of the article)
The volatility of the current time is 46 points, which, in principle, is not bad for this period. It is likely to assume that volatility may still rise slightly, but for now, we have a limitation in terms of the available price framework.
Resistance zones: 1,1100**; 1,1180*; 1,1300**; 1,1450; 1,1550; 1,1650*; 1,1720**; 1,1850**; 1,2100
Support zones: 1,1000***; 1,0850**; 1,0500***; 1,0350**; 1,0000***
* Periodic level
** Range level
*** Psychological level
**** The article is based on the principle of conducting transactions, with daily adjustments.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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