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The EUR/USD currency pair traded relatively calmly on Friday, April 24, as it had been throughout the past week. The average volatility over the last five trading days has dropped to 58 pips. This is not particularly low, but it is not high either. As shown in the chart, both volatility and market activity are decreasing. What might this be related to? Certainly, it is tied to geopolitics. It's worth noting that virtually every week, there are enough macroeconomic and fundamental events that could stimulate traders to trade more actively. However, the market remains focused on geopolitics. As there have been no significant "turning points" in this area recently, the market has "slowed down" and is waiting for events, not merely news.
Recent news over the past week, or even two, has become boring. Almost every few hours, there are new reports that negotiations with Iran may resume, that they are set to happen any minute now, that a deal is nearly agreed upon, etc. In the coming hours, contradictory statements arise, leaving the market at a standstill. Therefore, traders (and we too) have grown weary of reacting to or even analyzing the flow of false and unverified information.
Practically every reputable news agency feels obliged to announce that, according to some insider information, "something will happen soon." The fact that none of these insider predictions have materialized doesn't seem to trouble anyone. Thus, like many other experts, we advise focusing on actions rather than words. Actions indicate that there have been no movements in negotiations between Tehran and Washington. The second round of talks did not take place this past weekend, and Iranian Foreign Minister Abbas Araqchi's visit to Pakistan is unrelated to a desire to meet with the American delegation.
As we enter the new week, the macroeconomic and fundamental backdrop will be abundant, but it is far from certain that the market will not continue to ignore much of the economic information. Given the situation, there are three central bank meetings, but all three central banks may adopt a wait-and-see approach amid escalating uncertainty over the Middle East and energy prices. A significant series of macroeconomic data? Yes, these are important events, but the market has ignored substantial portions of important macroeconomic information over the last two months.
Therefore, even if there are no geopolitical events this week, it does not mean the market will shift its focus back to fundamentals and macroeconomics. Traders may react to the most critical events, but if volatility remains in the 50-60-pip range, it is unlikely to delight anyone. The EUR/USD pair may continue to correct, as the scenario involving a ceasefire and negotiations has already been priced in. Nonetheless, we still expect growth only from the euro in the medium term.
The average volatility of the EUR/USD pair over the last five trading days as of April 27 is 58 pips, which is considered "average." We anticipate the pair moving between 1.1664 and 1.1780 on Monday. The upper channel of the linear regression has turned downward, indicating a bearish trend. However, there could actually be a resumption of the upward trend for 2025. The CCI indicator has entered overbought territory and formed a "bearish" divergence, signaling a downward pullback.
The EUR/USD pair maintains an upward trend amid the weakening influence of geopolitics on market sentiment and a reduction in geopolitical tensions. The global fundamental backdrop for the dollar remains extremely negative, so in the long term, we still expect the pair to grow. If the price is below the moving average, short positions can be considered, with targets at 1.1664 and 1.1658 on technical grounds. Above the moving average line, long positions are relevant with targets of 1.1780 and 1.1841. The market is gradually distancing itself from the geopolitical factor, while the dollar loses its only growth driver.
Linear regression channels help to define the current trend. If both are directed in the same way, it means the trend is currently strong;
The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted;
Murray levels are target levels for movements and corrections;
Volatility levels (red lines) indicate the probable price channel in which the pair will operate over the next day, based on current volatility readings;
The CCI indicator – its entrance into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction may be approaching.
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