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Last week, the single European currency ended on a positive note, which was largely due to relatively good macroeconomic data. However, the new week immediately began with its weakening. This is largely due to the rate of spread of the coronavirus infections in Europe. Recently, there has been a steady increase in the number of new cases of infection in the Old World, which raises serious concerns. Most likely, this is because of the implementation of the vaccination program, which is extremely uneven, and there are constant interruptions in the supply of the vaccine. This is overlaid with a confusion of restrictive measures, which are now softened, then tightened. At the same time, the situation is changing even within the regions of individual countries of the European Union. But Europe is a fairly small piece of land, with an extremely high population density. So, the Old World is just an ideal place for the spread of various diseases, and this is clearly demonstrated by the spread of the coronavirus pandemic.
Vague and inconsistent actions of the authorities of the European Union countries only aggravate the situation, and there are fears that quarantine measures will only be tightened. Undoubtedly, such concerns have a very negative impact on the single European currency. Nonetheless, there is nothing new in all this, as the situation has been getting worse and worse over the past week. Rather, we should say that the epidemiological situation in Europe is a kind of permanent negative background for the single European currency, which begins to play a major role, if there is nothing else. But during almost the entire past week, the single European currency regularly received support in the form of macroeconomic statistics. A good one in Europe, and a rather strange one from the United States.
Just on Friday, the single European currency received support in the form of data on inflation, the growth rate of which accelerated from 0.9% to 1.3%, which fully coincided with forecasts. In fact, the data showed that inflation continues to rise. However, the growth itself is relatively moderate. Moreover, the European Central Bank, unlike many other central banks, does not hide its concerns about the prospect of rapid growth in consumer prices, and declares its readiness to take emergency measures to contain it. So, investors are basically ready for a potential reversal of the monetary policy of the European Central Bank, and have long laid this prospect in the value of the single European currency. Thus, Friday's data was rather positive, as it indicates that the probability of such steps is somewhat reduced.
Inflation (Europe):
The EUR/USD currency pair ended the last trading week at the bottom of the psychological level 1.1950/1.2000/1.2050, having a fairly low activity, while local speculative interest was observed during the first half of the European session on Friday.
The market dynamics went into a slowdown mode since April 14, just at the moment when they hit the boundaries of the psychological level. The average daily volatility for this period was only 38 points, which is lower than the average level by 50%.
If we proceed from the current location of the quote, we can see that the amplitude fluctuation of the price within the boundaries of the psychological level is still relevant among traders.
Looking at the trading chart in general terms, the daily period, it can be seen that the area of the level of 1.2000 affects the volume of long positions in terms of their reduction, which is confirmed by the slowdown in the period - April 14-16.
In this situation, we can assume that the quote will continue to fluctuate within the lower boundary of the psychological level of 1.1950/1.2000, where the most comfortable trading strategy will be considered the method of breaking a particular boundary, working on the principle of outgoing momentum, due to prolonged stagnation. In simple words, holding the price outside of one of the boundaries indicates a subsequent movement in the market.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments on the minute and hourly intervals have a variable buy/sell signal, due to the price movement along the lateral amplitude.
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