4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 136.2054
The EUR/USD currency pair has broken the moving average line and continues a very weak upward movement. Traders had some hopes that activity would increase yesterday, and there would be a reaction to all macroeconomic events. However, somewhere the events themselves did not impress, and somewhere there was nothing to react to. In general, according to the results of Wednesday, the situation on the currency market for the EUR/USD pair has not changed at all. The pair still has a chance to grow, and there are chances to fall, and the market mood can only be understood and tracked through technical analysis.
The fourth trading day of the week promises to be no less interesting in terms of fundamental events than the third, and no less boring in terms of market movements. We expected clearly more from the day during which GDP was published in the United States, as well as the results of the Fed meeting were summed up. However, we are forced to state the fact that traders continue to ignore almost all the news, messages, and reports that come to their disposal. Even the "coronavirus" epidemic no longer causes a shock among traders, although the number of diseases in the world continues to grow, already exceeding 3 million. However, it should be noted that 1 million have already been cured of the disease, but do not forget that the "coronavirus" is not measles. If you get sick once, it doesn't mean that once you get cured, you won't get sick a second time. Thus, the world needs concrete signals about the end of the pandemic, about the invention of a vaccine, and not about reducing the incidence rate below 1 (if the ratio is below 1, it means that each infected person will infect less than one person). After all, it is clear to everyone that if we begin to weaken the quarantine measures, a second wave of the epidemic is not excluded, because there was no medicine or vaccine. Thus, we believe that many countries of the world that have declared their readiness to ease the quarantine are walking on a knife's edge and taking a very big risk. After all, a new outbreak of "coronavirus" will definitely lead to the need to re-launch the quarantine.
On the fourth trading day of the week, more macroeconomic data is planned than on Wednesday. Important data will come from Germany, where the report on retail sales for March will be published (forecast of 1.5% in annual terms and -7.3% in monthly terms). The unemployment rate is also expected to increase in April from 5% to 5.2%-5.5%, and the number of applications for unemployment benefits should be from 76 to 120 thousand. The news is exciting, but it is unlikely to interest market participants. They will only have to note the actual values of these indicators and forget about them until the time when the markets start paying attention to the fundamental background again. Also on this day, GDP figures for France for the first quarter (forecast of -3.5% q/q), Spain (forecast of -4.4% q/q) and Italy (forecast of -5% q/q) will be published. These reports will help you find out how things are in individual EU countries. And a little later, the figures that may have an impact on the foreign exchange market will become known. First, it is inflation in the European Union, which should slow down to 0.1% in annual terms in April. Second, the unemployment rate, which experts predict will rise to 7.7% in March. Third, it is the Gross Domestic Product for the first quarter, which may lose 3.5% compared to the previous quarter. It is the latter indicator that is the most important and significant, as it will allow us to make the first comparisons between the losses of the American and European economies. If the forecast for Eurozone GDP is justified, then it will turn out that the European economy will decline by less than the American one. And this can provide some support for the euro currency in a pair with the dollar. Of course, we remind you once again that market participants now almost ignore any data; however, sooner or later, the market will return to normal and then all these figures will matter.
An equally significant event will take place in the European Union a little later - the summing up of the ECB meeting. As with the Fed, market participants do not expect any major changes in monetary policy parameters. The key rate (credit) is already in the negative area, and the deposit rate is at zero. Thus, formally, the European regulator has the ability to lower rates even more, but it is unlikely to resort to this now if it did not want to take such a step at a time when all the world's central banks cut rates in an emergency order. Accordingly, we will talk at most about new programs to stimulate the economy and expand existing ones. At the ECB press conference, Christine Lagarde can share the regulator's vision for the current state of the economy, as well as share forecasts for key indicators and plans for the coming months.
Well, no less significant event for the euro/dollar currency pair will be the publication of the next report in the US on applications for unemployment benefits, for the week of April 24. It is expected that there will be another 3.5 million new initial applications. Thus, the total number of initial applications for benefits in 6 weeks may reach 31 million. Recall that the economically active population in America is about 160 million. Some experts believe that the indicator of secondary applications for unemployment benefits is more important since it reflects applications for benefits from people who are already receiving it and are out of work. This figure for the week of April 17 (behind the indicator of initial applications for the week) may grow to 19.2 million. That is, it is not very far behind the indicator for initial applications. In any case, we state the fact that unemployment continues to grow, despite all the efforts of the government to lend and finance businesses in order to save jobs. According to this indicator, as well as GDP indicators, this week it will be possible to conclude that the European economy is suffering less from the pandemic than the American one. Or that the EU government has taken more effective measures to support the economy.
The latest indicators of changes in personal income and spending of the American population for March are planned for today. These are absolutely secondary indicators that are unlikely to cause any reaction from traders. The technical picture implies an upward movement in the near future, although both channels of linear regression are directed downward.
The volatility of the euro/dollar currency pair as of April 30 is 76 points. Volatility, therefore, remains average in strength, and there is no reason to expect a new wave of panic yet. Today, we expect the pair's quotes to move between the levels of 1.0798 and 1.0950. The reversal of the Heiken Ashi indicator downwards may signal the beginning of a downward correction.
Nearest support levels:
S1 – 1.0864
S2 – 1.0742
S3 – 1.0620
Nearest resistance levels:
R1 – 1.0986
R2 – 1.1108
R3 – 1.1230
Trading recommendations:
The EUR/USD pair has broken the moving average so the trend is already rising. Thus, traders are recommended to trade for an increase today with the goal of a volatility level of 1.0950 before the Heiken Ashi indicator turns down. It is recommended to consider selling the euro/dollar pair not before fixing the price below the moving average line with the goals of 1.0798 and 1.0742.
The material has been provided by InstaForex Company - www.instaforex.com