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4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - down.
CCI: -91.7024
For the EUR/USD currency pair, the second trading day of the week ended with a fall under the moving average line with the trend changing back to a downward one. This is exactly the scenario we expected yesterday morning, as the correction against the last downward momentum turned out to be just a little more than expected. Thus, now the euro-dollar pair can resume the downward movement immediately after the Murray level of "5/8" - 1.1139 is overcome, which the price has rested for the second time in two days. As for the mood of traders and the general fundamental background, we see it as bearish, and the background remains not in favor of the European currency, despite several optimistic reports from the eurozone.
Yesterday we also said that now the whole world and, in particular, traders are lying low and waiting for a response from Iran to the murder of Colonel Soleimani by Washington. We also said that while the topic of an open military conflict between the US and Iran does not cause any harm to the dollar, however, various options are possible. For example, if a full-scale US-Iran war begins, then the US currency may come under pressure because of this. Last night, it became known that Tehran had launched a missile attack on at least two US military bases in Iraq. This is stated by Pentagon officials. Ain al-Assad base and Erbil airport were bombarded. According to various sources, 10 to 35 ground-to-ground missiles were fired. The loss of American soldiers has not yet been reported. Donald Trump has already been informed about the incident and is preparing an emergency speech to the people of America. Iranian Press TV confirmed that Tehran attacked US bases in Iraq in response to the assassination of Colonel Soleimani, and warned Washington that in the event of a response, more devastating strikes would be made on American targets. Iranian Foreign Minister Mohammad Javad Zarif also posted a message on Twitter: "Iran has taken proportional self-defense measures, following Article 51 of the UN Charter, committed based on the armed forces that attacked our civilians and dignitaries. We do not want an escalation of the war, but we will defend ourselves against any aggression. " As you can see, the situation has moved from a state of conflict to a state of almost open war. The parties broke the nuclear agreement of 2015, Iran was not afraid to confront the States. There is no doubt that Washington will strike back at Iran.
On Wednesday, January 8, only the ADP report on the change in the number of employees in the US private sector for December can be noted from the macroeconomic statistics. Recall that this is the second most important indicator of the state of the labor market in America. The first - NonFarm Payrolls - turned out to be very strong in November, and the ADP report, on the contrary, failed. What will happen this time? The forecast is +160,000 employees at the previous value of +67,000. However, it is not the "past value-current value" ratio that is important, but the "forecast-real value" ratio that is important. If the figure of 160,000 is exceeded (which is unlikely), the US currency will be able to get additional support from market participants.
As for macroeconomic statistics from the European Union, no publication is planned for today. Thus, traders, logically, should continue to buy the US currency today, despite the events in Iran. If the euro-dollar pair changes direction again today and again overcomes the moving, it will be like a flat between the Murray levels of "5/8" and "7/8". We are still waiting for Murray to overcome the level of "5/8" and then move down.
The average volatility of the euro-dollar currency pair is currently 54 points, which is the average value for the euro. Thus, we have volatility levels on January 8 - 1.1097 and 1.1205. The Heiken Ashi indicator is still pointing downwards, which signals a possible continuation of the downward movement today to the lower border of the volatility channel. Overcoming the Murray level of "5/8" by the bears will indicate the intention to continue selling the pair.
Nearest support levels:
S1 - 1.1139
S2 - 1.1108
S3 - 1.1078
Nearest resistance levels:
R1 - 1.1169
R2 - 1.1200
R3 - 1.1230
Trading recommendations:
The euro-dollar pair resumed its downward movement and overcame the moving average. Thus, at the moment, traders are again recommended to sell the euro currency with the targets of 1.1139 and 1.1108 before the Heiken Ashi indicator turns up. It is recommended to return to the pair's purchases with the target of 1.1200 not earlier than the reverse overcoming of the moving average line.
In addition to the technical picture, you should also take into account the fundamental data and the time of their release.
Explanation of the illustrations:
The upper channel of linear regression - the blue lines of the unidirectional movement.
The lower channel of linear regression - the purple lines of the unidirectional movement.
CCI - the blue line in the indicator window.
The moving average (20; smoothed) - the blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
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