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EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair fell to the correction level of 61.8% (1.0995), despite the two bullish divergences formed earlier in the CCI and MACD indicators. Although these divergences were not worked out properly, they still warned and continue to warn traders about the upcoming correction. Today, the third consecutive bullish divergence of the CCI indicator is brewing, which may coincide with the rebound of the pair's quotes from the Fibo level of 61.8%, which will allow traders to count on a reversal in favor of the European currency and some growth in the direction of the correctional level of 50.0% (1.1029). The downward trend range still allows for such a scenario, as the euro/dollar exchange rate is near its lower line.
The US economy is showing fewer signs of recession. It would seem that this is great news! Well, at least for EUR/USD bears traders. However, not everything is so simple. It should be noted that the recession of the American economy was due to the trade wars of Donald Trump, who actively urged the Fed to lower rates and continues to do so now. Jerome Powell and the Fed not only went to meet the president but rather acted within the framework of their charter. If the economy shows signs of a slowdown, it needs to be stimulated, which has been done by three interest rate cuts. Now inflation in October has accelerated to 1.8%, other economic reports that will be released during November can also show positive dynamics. At least from the words of Jerome Powell at a speech to the Joint Economic Committee of Congress yesterday, it follows that the actions of the Fed were able to support the economy and that the economic situation will continue to improve, as the effect of lower interest rates has a gradual effect on the economy. "My colleagues and I see a steady expansion of economic activity, a strong labor market and inflation near our symmetric 2 percent target as the most likely scenario," Mr. Powell said.
Based on his speech yesterday, it became clear that the regulator does not intend to reduce rates in the coming months, so we have the right to expect from Donald Trump shortly for new angry messages on social networks, in which Powell will be criticized again. The US president still needs ultra-low interest rates to feel more confident in the trade and currency confrontation with the European Union and China. However, the Fed is of a different opinion, and it seems that the conflict between Powell and Trump will soon develop.
Based on the above, the US currency receives the necessary and important information background for further growth in pair with the euro, according to the direction of the trend range.
Forecast for EUR/USD and trading recommendations:
On November 14, traders are likely to start working out a new bullish divergence at the CCI indicator and move the pair up a little. Also, this moment may coincide with the rebound from the correction level of 61.8%. At the same time, I do not expect strong growth in the euro currency. One of the interesting events today is the EU GDP for the third quarter and Jerome Powell's number 2 speech to Congress. I recommend selling the pair now in case of closing under the Fibo level of 61.8% with a target of 1.0952. I do not recommend buying on a downward trend.
The Fibo grid is based on the extremes of October 1, 2019, and October 21, 2019.
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