4-hour timeframe
Amplitude of the last 5 days (high-low): 41p - 44p - 45p - 57p - 25p.
Average volatility over the past 5 days: 43p (average).
The second trading day of the week ends for the EUR/USD pair with a rapid rise and the next no less rapid fall following it. At least that's how it looks in the graph, but in fact the pair went as much as 25 points up and now down. Thus, the current total volatility of the day is 32 points. Needless to say, this is the lowest value of volatility, which means that, in fact, no trading was conducted today, and the emptiness of the calendar of macroeconomic events can be stated without even looking at the calendar itself. The main thing is that the euro/dollar pair has made a correction and can now resume the downward movement, which, as we are tired of repeating, has all the necessary fundamental and macroeconomic reasons. The bulls remain extremely weak, and now only the bears, which regularly increase their shorts, and from time to time take profits, are trades, which leads to corrections. Thus, now we expect the resumption of the downward trend.
As we have already said, there were few macroeconomic publications today. There were no important ones at all. Information was received from the ZEW Institute that the index of moods in the business environment of Germany rose to 26.7, although the forecasts were significantly lower (15.0), the index for assessing current economic conditions in Germany was -9.5 (with the forecast - 13.5), and the index of economic sentiment in the eurozone was 25.6 with a forecast of 5.5. Thus, it turns out that the current economic conditions are assessed as negative, but investor sentiment is growing, which perhaps means that the business climate is starting to improve in the EU countries. Although it is too early to draw such conclusions, it is better to look at the indices of business activity and draw conclusions on them.
Meanwhile, the European Central Bank conducted a study according to which the demand for loans from an EU enterprise decreased in the fourth quarter of 2019 for the first time since 2013. Interest rates in the European Union, of course, remain ultra-low. Banks continue to expect that in 2020 the demand for bank loans will remain stable, we also believe that one decrease over six full years is not an indicator of decline. However, there is a bad call in itself. If in 2020 the demand for loans begins to fall at such low rates, then the EU economy may begin to suffer even more. And the central bank will have to further lower the key refinancing rate. But the demand for housing loans, as well as for consumer loans, continues to increase, which is good for the EU economy. But since any economy is repelled from the production of goods and services in the first place, corporate loans are, of course, more important.
Meanwhile, Christine Lagarde, the head of the ECB, according to many experts, is preparing to conduct the most ambitious revision of the central bank's strategy since 2003. This process can last about a year, and many landmarks will be revised in accordance with new realities and changes in the world in recent years and even decades. Most experts are skeptical of the revision of the strategy, as officials have not been able to accelerate inflation over the past ten years, despite the fact that the ECB does not abandon the quantitative stimulus program and uses a policy of ultra-low rates. Despite the fact that macroeconomic indicators of the eurozone remain rather weak, and business activity indexes in the manufacturing sector, as well as industrial production itself, continue to decline and lose growth, experts do not expect a revision of monetary policy parameters at the next ECB meeting, which will take place this Thursday . It is expected that the main topic during the two-day meeting of the ECB will be inflation, the reasons for its low value, the reasons for the failure to stimulate economic growth through all the same inflation.
At the same time, a poll was conducted in the United States regarding Donald Trump and his impeachment. About 1,200 Americans over the age of 18 were interviewed over the phone. The error of the study is not more than 3-4%. The main questions asked by the Americans were:
1) Do they support the impeachment of Trump? 51% were in favor, 45% were against.
2) Should the Senate sitting include the testimonies of new witnesses? 69% were in favor.
3) 58% of Americans believe the evidence, which indicates that Trump really took advantage of his official position to put pressure on Ukraine.
4) 57% believe that Trump impeded Congress.
These are the results that, despite Trump's statements at the international economic forum, which takes place at the same time in Davos, about "America's prosperity as never before," suggests otherwise. As before, a fairly large number of Americans do not support Trump's policies and do not want him to be re-elected for a second term. It remains to wait for the results of the Senate meeting.
The technical picture of the euro/dollar pair implies the resumption of the downward movement. At the moment, the correction has reached the pivot level of 1.1116 and this may end safely.
Trading recommendations:
EUR/USD may resume a downward movement. Thus, it is recommended that you either hold open shorts with targets 1.1060 and 1.1052, or open new ones with new signals (MACD turn down or a rebound from the Kijun-sen line). It will be possible to consider purchases of the euro/dollar pair no earlier than the traders of the Senkou Span B line overcome with the first goal the resistance level of 1.1203.
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 indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com