4-hour timeframe
Amplitude of the last 5 days (high-low): 98p - 39p - 53p - 69p - 68p.
Average volatility over the past 5 days: 65p (average).
The EUR/USD currency pair stopped growing against the US dollar on Thursday, September 5, and started to correct against a weak upward trend. The mood of traders, which in recent days could be called "bullish", macroeconomic statistics from the United States made adjustments. We have already said that Thursday and Friday will be very important for the future prospects of the euro, since it is on these days that important reports and indices will be released in the United States that can return high demand for the greenback. On Thursday, the number of new employees in the private sector from ADP was 195,000, with a forecast of 148,000; index of business activity in the services sector and composite from Markit fell short of forecasts and both amounted to 50.7; and the most significant index of business activity in the ISM services sector significantly exceeded analysts forecasts and reached 56.4. Thus, in general, the news package can be considered absolutely positive for the US and the dollar. This explains the pair's slight decline during the US trading session. And also good for the euro, which is small.
Strong macroeconomic reports from across the ocean for the currency pair right now are the worst that could happen. Firstly, despite all the talk about a possible rate cut by the Federal Reserve, despite several interviews with members of the monetary committee, which confirmed the Fed's intention to soften monetary policy, if economic indicators are strong then there will be no sense in lowering the rate. Powell and company will not lower the rate just like that. Secondly, strong US reports alone support the US currency. Thirdly, the balance of power between the EU and the US is again shifting towards the latter. More precisely, it shifts even more. All this works against the euro.
From a technical point of view, the euro/dollar pair did not even manage to enter the Ichimoku cloud. Thus, the future growth prospects of the euro are now very doubtful. Add to this a large number of macroeconomic publications on Friday, September 6, and it becomes clear that the euro may not receive any support from this news. There will be only one important publication at the European trading session - eurozone GDP for the second quarter with a forecast of +1.1% y/y. We advise traders to focus on this report. The remaining news (US) will be analyzed in the following reviews, after the release of EU GDP.
Trading recommendations:
The EUR/USD pair started a correction against the upward trend. Thus, long positions formally currently remain relevant with goals of 1.1102 and 1.1113, but it is better to wait until the price consolidates above the Ichimoku cloud before starting to trade for growth.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com