4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -90.7906
The EUR/USD currency pair spent the first trading day of the week in absolutely calm trading without major price changes. By and large, the market was flat all day. In principle, this behavior of traders is not surprising for Monday. It often happens that the first days of the week are spent in a frank flat. No important macroeconomic statistics were planned for this day, either in the United States or in the European Union. Moreover, most of the macroeconomic background continues to be simply ignored by market participants. We would call the fundamental background for the EUR/USD pair very strong, but it is important for the future, not at this time. The most important topics that can affect both the US economy and the economy of the whole world are now plentiful. They are developing, but do not yet have a proper effect on the movement of the pair. Hardly anyone can argue that the topic of the re-election of Donald Trump for a second term is not important. This will determine the entire future policy of the United States for the next 4 years. Will trade wars and conflicts continue around the world, or will there be a relatively quiet time when the global economy can recover from the coronavirus epidemic? It is safe to say that there will be little peace in the world under Donald Trump. With a calmer Joe Biden, the chances of establishing relations with China and Russia are much greater. Thus, it would seem that the presidential election is still about six months away, but many experts already consider the probability of a candidate's victory, regularly updating their political ratings and conducting various simulations, according to which Trump is unlikely to win. If this topic were not so important, it would not be given so much time. Also of great importance is the confrontation between China and the United States, which is again gaining momentum. We have already repeatedly discussed why the conflict between the two superpowers has re-emerged. In short, China's spread of the COVID-2019 virus has dealt a major blow to the US economy and personally to the positions of Donald Trump. We can't say whether Beijing did it on purpose, and no one can. This kind of information will never become public. Therefore, Washington can only continue to blame China, and China - to renounce accusations. However, both countries can award each other new sanctions, duties and other "amenities" in 2020, and not only the American and Chinese economies will suffer, which would be fair, but also the economies of other countries of the world, since everyone on the planet Earth is tied to each other.
As we have already said, the entire fundamental background for the EUR/USD pair continues to revolve around US policy, the China-US confrontation, and future US elections. The head of the White House, Donald Trump, continues to criticize and insult everyone who comes under his hand. Of course, most of the attention goes to China, the Democrats, personally Joe Biden and Barack Obama. For example, just the other day, Donald Trump, who dubbed his main opponent "Sleepy Joe" said that he is not fit to serve as President of the United States. Asked about Biden's strong qualities, Trump said: "I could say that he has the experience, but in reality, this is not the case, because he does not even remember what he did yesterday. He has been in politics for a long time, and he has never been known as a smart person." When asked by the same journalist about Biden's weaknesses, Trump replied: "He has a lot of them. I can talk about them all day. First, he doesn't have a sharp enough mind to be President. Biden doesn't know if he's alive. I'm against anyone who can't answer simple questions. I've never seen anything like it." These two statements are all about Donald Trump, as well as a reflection of his policies inside and outside the country. The most important thing is the US President's lack of respect for really strong opponents. Biden was elected by the Democratic Party, which means he is one of the most powerful US politicians at this time. China is one of the strongest countries in the world and has one of the largest economies. However, Trump continues to treat these opponents from a position of strength, threats, and insults, believing that he is invincible. Moreover, Trump continues to make a huge number of unsubstantiated statements that are not supported by anything. For example, he called the entire Democratic Party "corrupt": "I am against a powerful and very corrupt party. The Democrats are very corrupt, and we caught them on it." Who and what caught the Democrats is unclear. However, Trump allows himself to continue making such statements, which further incites voters against him. Also, the odious leader of the United States said that the media, which he personally regularly insults, do not write enough about his services to the country and are generally unfair to him. "The media is also completely corrupt in this country. Whenever I do good things, they write something bad about me. I do something good again and again get a bad story or nothing at all. I solved the problem with the ventilator – nothing in response. Raised the economy – in response, nothing. Have you ever seen anything good written about me? I raised the market, but if Biden takes my place, it will collapse." Is there anything to comment on here? We are not biased against the US President, we only analyze his statements and come to the conclusion that this is a very strange leader who seems to have leadership qualities and can raise the country, however, his exceptional conflict levels all his advantages as a President.
Well, technical factors remain the most important and significant for the euro/dollar pair. We have already said that after the price rebounds from the level of 1.1000 and we expect a move down to the lower border of the side channel of 1.0750. Thus, the pair remains inside the side channel and overcame the moving average line. The volatility of the first trading day of the week was low, no more than 50 points. Thus, there were no significant changes in the technical picture.
The average volatility of the euro/dollar currency pair as of May 26 is 68 points and has been steadily declining in recent days. Thus, the value of the indicator is characterized at this time as "average". Today, we expect quotes to move between the levels of 1.0828 and 1.0964. The reversal of the Heiken Ashi indicator downwards signals a possible resumption of the downward movement to the lower border of the side channel 1.0750-1.1000.
Nearest support levels:
S1 – 1.0864
S2 – 1.0803
S3 – 1.0742
Nearest resistance levels:
R1 – 1.0925
R2 – 1.0986
R3 – 1.1047
Trading recommendations:
The EUR/USD pair has started a round of upward correction. Since traders have fixed below the moving average line and rebounded from the level of 1.1000, it is now recommended to sell the pair with the goals of 1.0864 and 1.0803, but after the reversal of the Heiken Ashi indicator down. It is recommended to buy the euro currency in the case of a reverse price fixing above the moving average line with the goal of a volatility level of 1.0964.
The material has been provided by InstaForex Company - www.instaforex.com