28.07.2022 06:26 AM
Overview of the EUR/USD pair. July 28. The bright future of the American currency.

This image is no longer relevant

The EUR/USD currency pair traded sluggishly and unwillingly for most of Wednesday. It is surprising because a day earlier, the pair unexpectedly went down by 120 points, and many felt that a new round of strengthening of the US currency had begun. We have also counted and are counting now. However, we wish to make a modest point now. By convention, we will not now consider the results of the Fed meeting. The results are announced late on Wednesday evening, and even later, a press conference with Jerome Powell begins. Thus, for example, the European market does not have the opportunity to work out all the new facts. The reaction to the findings of the most important central bank meeting can last for a day. Therefore, conclusions should be drawn no earlier than the middle of the next day. It's simple: the dollar has regularly shown varied dynamics soon after the Fed meeting. It may, for example, first go 100–150 points in one direction, then lose the same number and return to its old positions. And only after that does the market start trading with a new fundamental background.

Therefore, even technical analysis cannot answer the question in which direction the euro/dollar pair will move now. Moreover, it spent the last week and a half around the moving and between the Murray levels "3/8" and "4/8". From our point of view, the pair's slide will be resumed with any conference results. It is confirmed that there is simply no "bearish" or "dovish" in the list of available scenarios. The minimum rate will increase by 0.75 percent and the maximum - by 1.00 percent. Both alternatives are "bullish" or "hawkish" for the US dollar. Therefore, you should not rush to conclusions, and it is preferable to wait for the moment when the market digests all the information received completely and calms down.

Will the dollar strengthen further?

Since the conclusions of the meeting are already known, we will purposely not voice them and analyze what the long-term reaction of the market to them may be. Recall that, in essence, the dollar rose after each of the meetings in 2022. Maybe not immediately, but after a while, it still grew. It is the basic background, which might impact the pair for a long period. How could it be otherwise? What should traders and investors do if the Fed's rate is 2.5 percent and the ECB's rate is 0.5 percent? After all, the rate is not just some temporary instrument that looks to affect the economy somehow. The main bet is the starting point for all other bets. For example, on loans or deposits. If the rate climbs, loans become more expensive, but the profitability of bank deposits also increases. Since deposits did not deliver any return to their owners six months ago, the higher the rate, the more the desire of investors to entrust their wealth simply to the bank and obtain a peaceful, guaranteed reward.

At the same time, we want to stress that today this scenario is not yet fully fulfilled due to strong inflation, which negates the profitability of nearly every investment instrument. But inflation will start to fall sooner or later, and bank deposits will continue at the same rates, but the stock market is far from the fact that it will begin to recover rapidly enough that a certain part of the money will be transferred to it. Recall that there are not only "blue chips" and growth stocks on the stock market. Of course, it might be dubbed the "strategy of the century" to buy shares of Apple or Tesla, which have demonstrated enviable development in recent years and are the security of stable, major corporations. But there are some companies whose shares bring income to their owners through dividends, not growth. They can be reduced in price and not only perpetually expand. Thus, 1-2 percent payouts will not attract investors if you can get 3-4 percent guaranteed on a bank account. And of course, if the deposit rate in Europe is 1 percent, and in the USA, it is 4 percent, then to which banks will international investors carry their money? It is termed "capital flow." And the dollar can continue to strengthen owing to this cause alone.

This image is no longer relevant

The average volatility of the euro/dollar currency pair over the last 5 trading days as of July 27 is 104 points and is described as "high." Thus, we expect the pair to trade today between 1.0024 and 1.0233. The reversion of the Heiken Ashi indication downwards signifies the continuance of the downward movement.

Nearest support levels:

S1 – 1.0132

S2 – 1.0010

S3 – 0.9888

Nearest resistance levels:

R1 – 1.0254

R2 – 1.0376

R3 – 1.0498

Trading Recommendations:

The EUR/USD pair is seeking to restart a long-term downturn. Thus, it is now possible to stay in short positions with objectives of 1.0010 and 1.0001 if the Heiken Ashi signal does not turn up. Purchases of the pair will become significant again when fixed above the moving average with goals of 1.0254 and 1.0376.

Explanations of the illustrations:

Linear regression channels – help determine the present trend. If both are directed in the same direction, then the trend is strong presently.

Moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be undertaken currently.

Murray levels are target levels for movements and corrections.

Volatility levels (red lines) indicate the expected price channel in which the pair will spend the next day, based on current volatility indicators.

The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) implies that a trend reversal in the opposite direction is imminent.

Euro vs US Dollar
Select timeframe
Start trade
Start trade
  • Grand Choice
    Contest by
    InstaForex always strives to help you
    fulfill your biggest dreams.
  • Depósito al azar
    ¡Haga un depósito en su cuenta de $3,000 y obtenga $8000 más!
    ¡En Marzo, sorteamos $8000 dentro de la campaña Depósito afortunado!
    Obtenga la oportunidad de ganar depositando $3,000 en una cuenta de operaciones. Tras haber cumplido esta condición, se convertirá en un participante de la campaña.
  • Opere de forma inteligente, gane un dispositivo
    Recargue su cuenta con al menos $500, regístrese en el concurso y tenga la oportunidad de ganar dispositivos móviles.
  • 100% de bonificación
    Su oportunidad única de obtener un bono del 100 % en su depósito
  • 55% de bonificación
    Solicite un bono del 55% en cada depósito
  • 30% de bonificación
    Reciba un bono del 30% cada vez que recargue su cuenta

Recommended Stories

Análisis del par GBP/USD. El 24 de marzo. Perspectivas para la moneda británica en las próximas semanas.

El par de divisas GBP/USD también lleva quince días subiendo, pero se mantiene dentro de un canal lateral en el marco temporal de 24 horas. Al mismo tiempo, el euro

Paolo Greco 08:40 2023-03-24 UTC+2

Análisis del par EUR/USD. El 24 de marzo. Borrosa retórica de los responsables del BCE y de la Fed

El par de divisas EUR/USD sigue subiendo como si nada. El jueves no hubo muchos acontecimientos y noticias para la divisa europea o americana, pero un día antes

Paolo Greco 08:40 2023-03-24 UTC+2

¿Cómo seguirán los bancos centrales luchando contra la inflación?

En un artículo anterior, traté de averiguar qué esperar de los bancos centrales en 2023 y concluí que podemos esperar 2 o 3 aumentos de tasas más de cada

Chin Zhao 08:26 2023-03-24 UTC+2

EUR/USD. La Fed está en la línea de meta: los resultados de la reunión del FOMC de marzo rompieron el dólar

Los resultados de la reunión de la Fed en marzo no fueron a favor del dólar, aunque el banco central implementó el caso base al subir la tasa

Irina Manzenko 06:25 2023-03-24 UTC+2

Las reuniones del BCE, el Banco de Inglaterra y la Fed han terminado. ¿Qué conclusiones se pueden sacar?

El mercado ha estado anticipando las reuniones del banco central en marzo durante un tiempo, y en las últimas semanas, los analistas y los participantes del mercado han estado discutiendo

Chin Zhao 19:18 2023-03-23 UTC+2

La Fed ahora tiene menos trabajo que hacer, dice el presidente de la Fed, Powell

El presidente de la Reserva Federal de EE. UU., Jerome Powell, enfatizó el miércoles que es posible que la Fed ahora tenga menos trabajo por hacer. Durante la conferencia

Irina Yanina 14:08 2023-03-23 UTC+2

El dólar se salvará y luego se ahogará

Los choques van y vienen, pero los mercados permanecen. Ha pasado mucho tiempo desde que vimos choques como los de marzo. Los inversores elevaron el techo de la tasa

Marek Petkovich 13:52 2023-03-23 UTC+2

El BCE se mantiene firme en su posición

El euro subió debido a que los actores del mercado estaban complacidos con la decisión de ayer de la tasa de interés de la Fed y las declaraciones realizadas

Jakub Novak 13:47 2023-03-23 UTC+2

XAU/USD: Después de probar 2,000.00, ¿qué sigue?

La atención absoluta de la atención de los inversores hoy es la reunión de la Fed y la publicación (a las 18:00 GMT) de su decisión sobre la tasa

Jurij Tolin 17:28 2023-03-22 UTC+2

Los mercados esperan la decisión de la Fed sobre política monetaria

Los mercados esperan cómo planea la Fed lidiar con la alta inflación y la actual crisis del sector bancario. La mayoría cree que el presidente Jerome Powell intentará equilibrar

Jakub Novak 17:08 2023-03-22 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.