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Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – down.
CCI: -80.8725
Yesterday, if not a collapse, then we still associate the strong fall of the European currency with the preparation of markets for tomorrow's Fed meeting. In theory, the development of events will be as follows: at the moment, the EUR/USD pair fell enough that traders began to consider buying the euro against the background of negative expectations from the Fed. Accordingly, today or at most tomorrow morning, we will have to witness the strengthening of the European currency, as the Fed is expected to reduce the key rate, perhaps even immediately by 0.5%.
At the same time, another growth factor suddenly appears for the euro. That factor is Donald Trump. The fact is that more and more US citizens associate the slowdown in economic growth precisely with the figure of Trump, and more precisely with his trade wars, which he unleashes left and right. According to a recent poll, 56% of Americans do not support Trump's policies. That's more than half. Almost 60% of respondents believe that a recession will begin in America in 2019. Well, the upcoming presidential election, according to experts, will be won by Joe Biden (Democratic Party), who is now outperforming Trump by about 10%.
What does this mean in the context of a trade war with China and a possible trade war with the European Union? With Beijing, everything remains the same. China will do its best to pull the time before the elections in the United States in 2020 because their government has already realized that it is not possible to agree with Trump so that the agreement takes into account the desires and opinions of both parties. As for the European Union, Brussels can only hope that the American President will not unleash a second trade war without completing the first. Although knowing Trump, it is possible that by mid-November he will announce the introduction of trade duties on transport from the European Union, alcohol and some other categories of goods. For the European Union, this will mean another severe blow to the economy, which is already experiencing hard times. And for Donald Trump, it will mean a blow to his political ratings, which are also going through a bad time. If you look at Trump's actions superficially, you can only see the devastating consequences, from which no one was better. Trump, by the way, did not achieve one of the main goals of his election program – to return American production to America and is unlikely to achieve such methods.
Thus, as long as there is no trade war with the EU, the euro has another growth factor. In any case, for purchases of the euro/dollar pair, you should wait for a new consolidation above the moving average line. Today, the European Union plans to publish an insignificant index of economic sentiment from the ZEW Institute. And the United States – a report on industrial production for August will be released.
Nearest support levels:
S1 – 1.0986
S2 – 1.0956
S3 – 1.0925
Nearest resistance levels:
R1 – 1.1017
R2 – 1.1047
R3 – 1.1078
Trading recommendations:
The euro/dollar pair has fixed below the moving average, so now short positions with targets of 1.0986 and 1.0956 are formally relevant. However, we expect an upward turn in the near future, consolidation above the moving average and the resumption of growth of the euro.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of 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) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
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