4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: 180.3218
The second trading day of the week again remained behind the European currency, which slowly but surely continues to creep up. The upward movement has not stopped since June 26, that is, for 13 working days. During this period, the pair managed to cover a distance of approximately 150 points. Judge for yourself whether this can be called an "upward trend". Moreover, during the past day, the pair again traded near the Murray level of "5/8"-1.1353, which is also the upper limit of the side channel 1.1200-1.1350, in which the pair has been trading for more than a month. Thus, the current technical picture is quite ambiguous. On the one hand, there is a side channel, above which buyers have not managed to gain a foothold, on the other - a weak upward trend. One thing is for sure - now is not the most favorable time to conduct trading. The movements of the euro/dollar pair are multidirectional alternating segments.
As we expected, the macroeconomic statistics of the last day did not have any impact on the mood of market participants. Yesterday, the consumer price index in Germany for June was published first. This indicator fully coincided with the forecast values, amounting to 0.9% in annual terms and 0.6% in monthly terms. A little later, data from the ZEW Institute was published, which reflects the mood in the business environment of Germany and the European Union. Without going into the figures, we can say that all three indicators were worse than the forecast values. Absolute values of indicators indicate that investors are very skeptical about the current state of the German and EU economies, but still optimistic about the future. But industrial production in the European Union turned out to be much worse than experts' forecasts. In annual terms, the reduction was 20.9% with a forecast of -20.0%, and in monthly terms - an increase of 12.4% with a forecast of 15.0%. Thus, the conclusions on European statistics are unambiguous – it failed. However, the euro currency was trading higher in the European session. In the afternoon, the United States published a report on inflation for June, which showed 0.6% in annual and monthly terms for the main indicator and +1.2% y/y and +0.2% m/m for the indicator excluding food and energy. In general, these values almost completely coincided with the forecast. They are neither optimistic nor pessimistic. So the general conclusion is this. In the European session, traders had reason to sell the euro but did not do so. There was no reason to change the mood in the American session. In general, the entire package of macroeconomic information was ignored.
Meanwhile, more and more media are paying attention to the raging "coronavirus" epidemic in the United States. According to the American doctor Chad Krilich, the second "wave" is currently taking place in the United States, but after it, there will be a third. The doctor also said that in the near future we should not expect a vaccine against "coronavirus", as "this is a very long and time-consuming process". Meanwhile, Hong Kong scientists have concluded that the "coronavirus" has mutated and is now even more contagious than before. Previously, a person with the COVID-2019 virus could potentially infect three other people, but now this figure has increased to four. This was stated by the Dean of the medical school of the University of Hong Kong, Professor Gabriel Leung. Earlier, the same was reported by the chief epidemiologist of the United States Anthony Fauci. Dr. Fauci, who remains at this time almost the main actor in America, continues to conflict with President Donald Trump based on the epidemic. The conflict is very simple. The doctor makes statements based on his knowledge, experience, and research, which Donald Trump does not like, who makes his statements based on nothing. The leader of the American nation does not like that Fauci's attitude is too pessimistic and he constantly predicts deterioration of the situation. Fauci's latest statement, made on July 14, states that "the US authorities have not been able to impose a total quarantine, which is why we are currently seeing a huge increase in new cases". According to the epidemiologist, the United States managed to achieve a significant reduction in the number of diseases, to about 20,000 per day, which is not so terrible for a multi-million country. But at this point, it was necessary to maintain the "lockdown", instead, the government began to remove restrictive measures and received a second "wave" of the pandemic, according to Fauci. Also, Fauci said that now the country does not need to introduce a full range of restrictions, it is enough to "roll back a little" and then prudently take steps towards lifting the restrictions.
Donald Trump himself continues to bend his line on the issue of the gigantic scale of the epidemic in the United States. The President still believes that the high incidence of diseases in his country is due to the large number of tests carried out, and the death rate from the "coronavirus" is falling. "We check more than anyone in the world. We have one of the lowest death rates in the world. We are doing a great job. We have the best and most extensive testing program in the world. If you were testing China, Russia, or any of the major countries like we are testing, you would see numbers that would surprise you," Trump said during a speech at the White House.
On the third trading day of the week in the US, only a more or less important report is planned – on industrial production for June. We believe that in the current conditions, it is the production indicator that is one of the most important, but yesterday's report on European production shows that most traders do not think so. Therefore, we do not expect a serious reaction from market participants to this report. There are no more planned events in the EU or the US today unless you count the evening economic review of the Federal Reserve "Beige Book", which rarely causes any reaction from the market.
Thus, from our point of view, technical factors continue to be in the first place, which, unfortunately, can not lead the pair out of an inarticulate upward movement, which is extremely difficult to reject. However, the upward movement continues, and cautious and small purchases of the euro currency are allowed as long as the EUR/USD pair is located above the moving average line. Moreover, both linear regression channels are also directed upwards.
The volatility of the euro/dollar currency pair as of July 15 is 84 points and is characterized as "average". We expect the pair to move today between the levels of 1.1336 and 1.1504. A reversal of the Heiken Ashi indicator downwards will signal a turn of the downward correction to the moving average.
Nearest support levels:
S1 – 1.1353
S2 – 1.1230
S3 – 1.1108
Nearest resistance levels:
R1 – 1.1475
R2 – 1.1597
R3 – 1.1719
Trading recommendations:
The EUR/USD pair seems to have resumed the formation of an upward trend. Thus, it is now recommended to trade for an increase with the goals of 1.1475 and 1.1504 before the Heiken Ashi indicator turns down. Sell orders are recommended to be considered no earlier than fixing the pair below the moving average line with the first goal of 1.1230.
The material has been provided by InstaForex Company - www.instaforex.com