20.07.202109:59 Forex Analysis & Reviews: EUR/USD analysis and forecast for July 20, 2021

On the first trading day of the new week, the Forex currency market was dominated by cautious sentiment, which discouraged investors from taking risks. Against this background, the main demand of market participants was caused by protective assets. They are also safe-haven currencies, which are considered to be the Japanese yen, the US dollar, and the Swiss franc. The main factor of concern and increased demand for safe assets continued to be the situation with the new COVID19 delta strain, which may threaten the entire global economy. It is also necessary to recognize the delta strain of coronavirus as one of the most dangerous variants of COVID-19, which has sharply increased the number of daily infections in several countries and regions, including the United States of America. It is enough to cite information that over the past week, the number of daily infections from the new mutating delta strain COVID-19 has increased by as much as 70%, while the number of deaths has increased by 26% compared to the previous weekly data.

It is quite natural that such a situation in a country with a leading world economy causes serious concerns. Thus, in such a situation, there is no time for risky operations. Nevertheless, the countries' governments are still making every effort to vaccinate as many people as possible. According to the World Health Organization (WHO), to develop collective immunity, the number of vaccinated people should reach about 90%. There is every reason to believe that immunity has already been developed. I note that this is difficult to do since not all people trust vaccines and are afraid of serious side effects after vaccination.

Investors are also concerned about serious weather disasters in several European countries. As a result of heavy rains, many rivers overflowed their banks, which flooded and destroyed some European cities. The main economic donor of the EU, Germany, got the most. These events force market participants to be cautious and to transfer capital into protective assets.

Daily

Yesterday, on the first trading day of the new week, trading was very cautious. As can be seen on the daily euro/dollar chart, the red line of the Tenkan Ichimoku indicator again provided strong resistance to the price, not letting the quote go higher. However, the euro bears had quite serious problems, which can be judged by the long lower shadow of yesterday's daily candle. However, despite this shadow, the closing of yesterday's trading was slightly below the most important mark of 1.1800. This factor can significantly replenish the ranks of bears, which will make the pair's decline even stronger. Now about the immediate tasks of the opposing side. Euro bulls need to raise the rate above the red Tenkan line, after which they will take by storm 1.1800/20, after which a strong technical level of 1.1850. That's all. I don't see any other technical prerequisites for growth at this stage of time. Bears need at all costs to consolidate trading on EUR/USD below 1.1800 and then break through the support at 1.1764, where the minimum values of yesterday's trading were shown. In my personal opinion, there are more chances to count on a bearish trading scenario for EUR/USD. However, you never need to stop and rest on a single trading option. Anything can happen on the market.

Trading recommendations for EUR/USD:

Given the current technical picture for the euro/dollar, I think it is right to consider buying and selling options. Since yesterday's attempts to return the rate above 1.1800 were in vain, as well as a downward reversal, I believe the main trading idea to be sales that are better to open at more attractive prices, which include 1.1800, 1.1822, 1.1850/60. Today, I do not see any sense in determining even higher prices at the top. We will talk about this after the true breakdown of 1.1860. However, it is already clear that in case of successful completion of this mission, the pair will go to the price area of 1.1900-1.1930.

Nevertheless, I believe that the bulls have exhausted all their arguments for growth. A strong driver from Europe in the form of the ECB meeting with the announcement of rates, especially the subsequent press conference of Christine Lagarde, can affect trading with the participation of the single European currency. So far, this can only be assumed. For those waiting for recommendations on purchases, let me remind you that this is a more risky positioning option in the current situation. Nevertheless, in my subjective opinion, you can start looking at purchases after the pair drops into the price area of 1.1775-1.1765.