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Amplitude of the last 5 days (high-low): 35p - 75p - 51p - 93p - 35p.
Average volatility over the past 5 days: 58p (average).
On Tuesday, December 17, the currency pair EUR/USD, continues, albeit not strong, but growth is approaching local maximums again, and around which, it has turned down several times. During the second trading day of the week, not a single important macroeconomic report was published either in the United States or in the European Union. Thus, in principle, the strengthening of the euro can be called unfounded. Nevertheless, a report on industrial production in the United States is still planned for today, which has a rather high forecasted values, but it is not known whether the market will follow it, as we have already noted that the euro does not always respond to macroeconomic statistics now. At the same time, the euro has managed to maintain its position so far which it won from the US dollar with great difficulty, while the pound quite logically began to fall into the abyss. Although, we still believe that the euro will begin to decline again sooner or later and this will not be an on-correction correction, but a strong downward trend. In yesterday's article, we already listed the reasons that are the basis for strengthening the American currency. Today, we'll try to understand the question - are there any reasons for the euro to strengthen?
At first glance, the answer is almost unequivocal - no. Macroeconomic statistics in the Eurozone continue to disappoint even the most optimistic traders, the ECB monetary policy remains "ultra-soft", and rates remain "ultra-low," and even this is not enough to prevent the European Union economy from showing signs of slowdown. In the United States, everything is much better with both "numbers" and monetary policy. But what's worse in the States is only with a geopolitical issue, as well as a purely political one. Thus, we believe that only a new escalation of trade wars between the United States and other countries can adversely affect the exchange rate of the American currency. In addition, we believe that only a severe political crisis can negatively affect the dollar. Thus, in order to count on a long and serious growth of the European currency, we need either the impeachment of Donald Trump, or the igniting of new trade wars around the world by the odious President in these conditions.
With the impeachment of Trump, everything is easy and complicated at the same time. The main problem remains in the US Senate, most of which consists of Republicans, who, of course, will not vote for Trump's resignation. However, at the same time, their decision should be justified, and not just from the category of "we do not want to vote for impeachment." Thus, much will depend on the explanations themselves of the decision of the US Senate to refuse approval of the impeachment of the president. However, we still believe that impeachment will not happen. This whole story, inflated by the democrats, is aimed only at achieving one goal - to lower as much as possible the political ratings of Donald Trump, to show as many of his "bad" sides as possible before the 2020 presidential election. The US president is certainly to blame, since he simply "framed" and gave the Democrats a chance to unleash all this political battle. So, will the Democrats be able to reach their goal? We will find out later.
As for trade wars, the connection here between them and the depreciation of the dollar should go through macroeconomic statistics and the Fed. The more the States is involved in trade wars, the greater the probability that their economies will suffer, and the greater the probability that the Federal Reserve will cut its key rate, which will reduce the investment attractiveness of the United States and reduce the willingness of investors to invest in American companies and deposit their funds to American banks, and the more statistics worsen, the more the Fed (in theory) will lower its key rate. Thus, no matter how trivial it may sound, the general economic situation in the United States should become worse than in the European Union in order for the euro to begin to rise in price. As we all understand, it is still very, very far during this time. That is why we believe that the general fundamental background remains unambiguously In favor of the dollar, and it is the US currency that will continue to rise in the long term. The only reason why the US currency has "taken a break" is the inability to constantly move the pair in one direction.
From a technical point of view, the upward movement has resumed now, but it is unlikely to be strong and will go beyond the previous local maximum. Tomorrow will be the speech of the ECB President Christine Lagarde and the publication of the consumer price index in the EU. Potentially, both of these events can put pressure on the euro. Thus, we are waiting for the pair to turn down and resume the downward movement today or tomorrow.
Trading recommendations:
EUR/USD is trying to resume the upward movement. Thus, long positions formally remain relevant with targets at the resistance level of 1.1196 and 1.1202, although we recommend to be wary of opening long positions. In addition, it is recommended to sell the euro/dollar pair after breaking through the Kijun-sen line, in small lots, with the first targets - volatility level of 1.1086 and the Senkou span B line.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicators window.
Support / Resistance Classic Levels:
Red and gray dotted lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
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