24-hour timeframe
The third trading week of June ended unequivocally in favor of the euro. By and large, this was the most important week of the month for the euro/dollar pair, since it was the time for speeches by Mario Draghi, Jerome Powell, and the ECB and Federal Reserve meeting. Unfortunately, in June, in the confrontation between the Fed and the ECB, the score was 1: 1. Both regulators made it clear to the foreign exchange market that, if necessary, they are ready to lower the key rate and begin to stimulate the economy. However, if the "unit" of the Fed is confident, then the "unit" of the ECB is very weak. Firstly, the current interest rate in America is 2.5% and the Fed has room to reduce it, while in Europe the rate is 0.0% and any reduction means a transition to the negative zone. Secondly, the QE program in the US has been completed for a long time and there is no reason to resume it, in Europe it is the other way around - the stimulus program has been completed relatively recently, and Draghi allows for the beginning of its new phase, as well as the launch of a long-term lending program for commercial banks. Thirdly, inflation rates in the US and the EU do not reach the target, but in the European Union inflation is about 1% y/y, and in America around 2% y/y. So it turns out that the euro is growing, since the last three weeks of data in the United States are absolutely disappointing, both regulators are ready for easing, but the overall economic situation remains much better in the United States, despite the trade war with China. In general, we believe that while the upward trend persists, as evidenced by technical indicators, traders should work it out and not try to guess the pivot point and the resumption of the downward movement. However, the US dollar, from a fundamental point of view, continues to look more convincing and attractive.
Trading recommendations:
The trend for the euro/dollar pair has changed to an upward one, however, from a fundamental point of view, the dollar can regain its leadership at any time. If reports in the United States will cease to disappoint, then the traders will be missing the reasons for selling the dollar. At the moment, the target for longs is the resistance level of 1.1411.
In addition to the technical picture should also take into account the fundamental data and the time of their release.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen - the red line.
Kijun-sen - the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dotted line.
Chikou Span - green line.
Bollinger Bands indicator:
3 yellow lines.
MACD Indicator:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com