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The single European currency grew quite well, mostly due to the momentum. However, it could not develop and consolidate its success precisely because of such momentum. In fact, it was back exactly where it had started yesterday. At the same time, the euro began to decline against the background of relatively weak US data. So it turns out that the single currency was significantly overbought.
Although, at first glance, it is not surprising that the euro began to decline against the background of data on the American industry, as the rate of its decline slowed from -15.4% to -10.8%. Everything seems to be going well, and the industry is gradually recovering. However, the fact is that we expected the decline to slow down to -6.2%. So the pace of recovery is much less than predicted. And most importantly, this frighteningly coincides with what the Federal Reserve says about the pace of recovery in economic activity being extremely slow.
Industrial production (United States):
It is clear that the meeting of the Board of the European Central Bank will be the main event of the day. However, most likely, this event will not have any impact on the market. There is no doubt that all the parameters of monetary policy will remain unchanged, so people will focus on the subsequent press conference. However, against the background of the expected increase in inflation and relatively good indicators of the state of the labor market, especially in comparison with the United States, ECB President Christine Lagarde may not say anything at all. More precisely, Lagarde will reiterate the need to closely monitor the situation and the willingness of the central bank to take emergency measures if necessary. That is, on-duty phrases that are of little interest to market participants.
Refinancing rate (Europe):
In this regard, investors can switch to US data, which will cause the dollar to strengthen further. Firstly, the decline in retail sales may slow down from -6.1% to -3.0%, which will be just another confirmation that the US economy is gradually trying to recover. Secondly, the number of applications for unemployment benefits should continue to decline. In particular, the number of initial applications should decrease from 1,314,000 to 1,290,000. The number of repeated applications from 18,062,000 to 17,700,000. Thus, the relatively positive nature of US data will further strengthen the dollar.
Retail sales (United States):
From the point of view of technical analysis, we see a rapid upward movement, during which the quote managed to jump to the value of 1.1452, where resistance was found and as a result, stagnation followed by a pullback. It is worth noting that the resistance area has been repeatedly confirmed in history, where short positions have appeared on a regular basis.
Considering the trading schedule in general terms (daily period), you can see the upward movement that has been taking place in the market for more than three months. A similar situation was seen in early March, where the area of 1.1450/1.1500 played the role of resistance.
We can assume that if the resistance area once again puts pressure on buyers, then traders will have a great opportunity to enter short positions at the beginning of the course.
You can consider selling positions below 1.1395, in the direction of the first coordinate of 1.1350.
You may consider an alternative scenario if the quote is kept in the area of 1.1450.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments on the minute and hour periods signal a sale due to the rebound process. The daily period, as before, signals a purchase, focusing on the overall price movement.
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