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Hello, traders!
At yesterday's trading, the main currency pair of the Forex market was just eager to continue strengthening, and it succeeded. As usual, we will move on to the technical picture for the euro/dollar pair a little later. For now, we will briefly talk about the events of yesterday and what is expected today.
From Europe, the indices of business activity in the manufacturing sector turned out to be mixed. If in Italy and France the indicator was better than the forecast values, in Germany and the Eurozone, as a whole, production activity decreased more than expected by economists.
Later, data on manufacturing activity in the United States of America were also released. The ISM manufacturing index, which in April was at an 11-year low of 41.5, rose to 43.1 last month. However, I note that if this indicator is below 50, this is a negative moment for the manufacturing sector, whose share in the US GDP is 10-11%. I would also like to remind you that the US economy in the first quarter of this year declined by 5% in annual terms, and after the crisis of 2008-2009 — this is the worst indicator. Nothing can be done, the consequences of COVID-19 are affecting.
Looking at today's economic calendar, it is somewhat surprising to find that no macroeconomic statistics from the Eurozone and the United States are planned, and therefore, with a high probability, we can assume that EUR/USD will be influenced by technical factors and market sentiment. By the way, if we talk about investor sentiment, against the background of the likely passage of the COVID-19 peak and the gradual lifting of restrictions in many countries of the world, there is more optimism and increased risk appetite. As for the US dollar, on a wide range of the market, the "American" is losing its position, and for some major currency pairs, it is just right to assume a change in the trend.
Daily
In yesterday's trading, the euro/dollar pair continued to strengthen and ended the session at 1.1134. Despite the fact that the candle for May 29 failed to be absorbed along with its long upper shadow (highs at 1.1144), the completion of trading significantly above the important level of 1.1100 indicates the readiness of the quote to continue moving in the north direction.
At the time of writing this article, there was a slight pullback to 1.1118, after which the pair reverses and trades near 1.136. There is reason to assume that continuous five-day growth will continue today. In this case, the euro bulls' targets will be 1.1200 and possibly 1.1235. However, this will only happen if the players to increase the rate will be able to overcome the resistance of sellers in the area of 1.1150 and rewrite yesterday's highs at 1.1153. The cancellation of the ascending scenario will be the closing of today's trading below the significant level of 1.1100, where the minimum values of the first summer day were shown.
H4
On the 4-hour timeframe, we observe consolidation in the price zone of 1.1100-1.1150. The exit from this range may indicate further prospects for the price movement of the euro/dollar. As you can see, the moving averages used (50 MA, 89 EMA, and 200 EMA) are steadily turning up after the price. However, the MACD indicator shows a neutral background and indicates the probability of a bearish divergence. In this timeframe, support is represented by the levels of 1.1100 and 1.1080, and resistance is at 1.144 and 1.153.
If the pair gives a pullback to the indicated support levels and there will be bullish patterns of Japanese candles on this or hourly charts, it is worth trying to buy with the nearest goals near 1.1150. In my opinion, this is the main trading idea for the euro/dollar pair. However, if the euro bulls are unable to overcome the resistance of sellers in the area of 1.144-1.153, and there are bearish reversal candles, a signal will be received to open short positions with the nearest goals in the area of 1.1100-1.1080.
The most important events of the current week are still ahead, so I do not recommend setting big goals. It is still unknown how things may turn out after the release of Friday's data on the US labor market. In the meantime, we are moving up.
Good luck!
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