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Technical data:
The upper channel of linear regression: direction – up.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – down.
CSI: -109.8266
Although the volatility of the EUR/USD pair remains low, the downward trend remains, and the euro continues to fall steadily against the US dollar. Thus, the quotes came close to the Murray level of "4/8" - 1.0986, which, in turn, is very close to the 2-year lows of the pair. As you can see, bears continue to "steer" in the forex market, while the bulls continue to rest and wait for a more favorable time to return to work. At the same time, we draw readers' attention to the fact that traders have almost ceased to react to any macroeconomic events. In yesterday's evening article, we already wrote that the euro/dollar pair got into a paradoxical situation. On the one hand, there are no grounds for buying the euro currency, respectively, traders do not want to do it. On the other hand, there are no new good reasons for selling the euro around its 2-year lows. This leads to the fact that volatility is very weak and the downward movement slows down.
One of the bearish factors for EUR/USD quotes remains the Fed and Jerome Powell. Recall that the Fed lowered the key rate three times in a row, so, according to many experts, it is time to take a break. Yesterday, Jerome Powell officially confirmed this hypothesis, speaking before the Economic Committee of Congress. He said that the US economy continues to grow and the current state of monetary policy is appropriate as long as economic reports are in line with forecasts of moderate economic growth. Powell also said that the key indicators of the state of the economy remain the labor market and inflation. Powell himself expects further economic growth and looks to the future with a positive outlook. At the same time, noting that the effect of reducing key rates is always late, Powell said that it will take some time to fully experience the positive effect of easing monetary pressure on the economy.
What do we have in fact? Yesterday's US inflation report showed improvement. Jerome Powell almost openly stated that rates will not be reduced shortly. And the US dollar rose by 5 points at the end of the day. Such a reaction of market participants, from our point of view, could not be better said about the reluctance to continue to move the currency pair down. Traders are afraid of selling at the current, rather low levels so that news and events that would send the pair 50-60 points down in any other conditions now do not affect.
On Thursday, November 14, Germany and the European Union will release GDP data for the third quarter, their preliminary values. According to forecasts, the German GDP in the third quarter could be seriously affected (the consequences of falling industrial production?) and will decrease by 0.1% compared to the previous quarter. European GDP could add 0.2% quarterly and 1.1% on an annualized basis. We believe that in any case, these numbers are low enough to cause euphoria among traders. Accordingly, we will not see any particularly strong market reaction again. As yesterday's speech by Jerome Powell in Congress showed the rhetoric of the head of the Fed and did not cause any surprise at all, so we do not expect anything like this from today's speech by Powell.
From a technical point of view, the lower channel of the linear regression continues to support the downward trend, the moving average line is directed downwards, the Heiken Ashi indicator continues to paint the bars blue. Thus, 20-30 points per day but the pair will move down. The most interesting thing will happen at the levels around 1.09 when the question arises about updating the current lows of the pair. Since most trend indicators point down, we recommend continuing to trade lower, but we warn that the trend may end in the range of 1.0900-1.1000.
Nearest support levels:
S1 – 1.0986
S2 – 1.0925
S3 – 1.0864
Nearest resistance levels:
R1 – 1.1047
R2 – 1.1108
R3 – 1.1169
Trading recommendations:
The euro/dollar pair continues its downward movement. Thus, it is now recommended to sell the euro currency with targets at the levels of 1.0986 and 1.0925. Volatility at this time remains low and is likely to remain so. Purchases of the pair are now impractical since there are no fundamental or technical reasons for this.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue line of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – the red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
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