Emotions continue to put pressure on the single European currency. And there is a strong feeling that investors are finally convinced that almost the very first decision by Christine Lagarde, as head of the European Central Bank, will be to lower the refinancing rate. It is precisely these conclusions that can be reached if you hear the constant talk that the main threat is deflation, which still does not smell yet.
Nevertheless, the single European currency had a reason to decline, in the form of producer prices, the decline of which increased from -0.8% to -1.2%. However, it should be noted that investors were waiting for such a development. Now, if you look at American statistics, the growth of the dollar is somewhat surprising. Thus, the number of open vacancies decreased from 7 301 thousand to 7 024 thousand, which clearly postpones the possibility of reducing unemployment. In addition, the total data on business activity indices did not confirm the preliminary assessment. Meanwhile, the index of business activity in the services sector decreased from 50.9 to 50.6, while growth was projected to 51.0. The composite business activity index, which was supposed to grow from 51.0 to 51.2, unexpectedly dropped to 50.9. On the contrary, ISM data turned out to be significantly better than forecasts, although when they were published, the market stood still.
ISM Business Service Index (US):
In any case, despite all the emotions, even a single glance at the chart is enough to understand that a pullback has ripened in the market. The only question is what will be the reason for this pullback itself. And as per the order, retail sales in Europe will be published today, the growth rate of which should accelerate from 2.1% to 2.5%. If the forecasts come true, the growth in consumer activity will reduce the risks of a further decline in inflation, which may delay the decision of the European Central Bank to lower the refinancing rate. Moreover, in the United States today, no significant macroeconomic data is published, so nothing should distract market participants. However, there are still political factors, in the form of conversations regarding negotiations between Beijing and Washington.
Retail Sales (Europe):
The EUR/USD pair continues to amaze speculators with an intense downward move. So for some two working days, we were able to fly from one level 1.1180 to another 1.1080, drawing almost continuous impulse candles. As a result, we got a trial price consolidation below the control level, where we slowed down and moved into a small rollback stage. In terms of a general review of the trading chart, we see that the quote has returned to the first stage of recovery again, regarding an elongated correction, where the question arises, what's next?
It is likely to assume that in the phase of local oversold, we will still see a pullback above the level of 1.1080, where it is worth observing the potential of long positions, since there is still a chance of a rebound from the control level, there are characteristic confirmations in history. At the same time, if a certain emotional-inertial mood persists and the quotation after a pullback / stagnation goes down again, it is worth analyzing the fixation points, relative to the values of 1.1063.
Concretizing all of the above into trading signals:
- Long positions are considered in the case of a clear fixation of the price higher than 1.1090.
- Short positions are considered in the case of maintaining a downward mood and fixation lower than 1.1063.
From the point of view of a comprehensive indicator analysis, we see that hourly and even daily periods have taken a downward position, which surprises market participants a lot. On the other hand, minute intervals alternately work during the stagnation / rollback phase, signaling purchases.
