4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -218.1381
The EUR/USD currency pair suddenly and quite abruptly began a downward movement. It happened at the auction on Tuesday, which was quite strange and cost a lot of stops to traders. At the end of that day, the pair's quotes were fixed above the level of the Murray "3/8"-1.2146, which opened up excellent prospects for the pair for further growth. But instead, the bulls retreated, and the bears took over, which in the following days led the pair down by more than 100 points. Thus, at the moment, a new downward trend has already been formed, and the US currency is cheerfully strengthening. However, do not immediately make plans to resume the strengthening of the dollar, which was observed in January 2020. So far, the prospects for this currency remain extremely dubious. We have already talked about two powerful signals on the 24-hour timeframe: the rebound from the Senkou Span B line and the 50% Fibonacci level. Thus, it is these signals that currently maintain a high probability of further growth of the pair and the fall of the US currency. Global fundamental factors, which we have already discussed more than once, also play against the dollar. However, in the light of recent events and reports, it turns out that the American economy shrank by a smaller number of percent compared to the fourth quarter of 2019 than the European one. Recall that official reports say that the EU GDP lost 5%, and the US GDP - 2.5%. So, bearing in mind the record decline in the US economy in the second quarter of 2020, the conclusion is that the US economy is recovering much faster than the EU economy. However, this is not surprising, given the amount of dollars poured into the US economy as stimulus measures. Thus, the key factor in the fall of the dollar now is the factor of the current and new stimulus packages.
Meanwhile, news from the United States began to arrive again - Donald Trump. The former president of the United States, who left office almost with a scandal, once again began to give out daily interviews and give comments on who and what should be done in this country. From Joe Biden during the first month of his administration, we received several messages that related to various kinds of important issues for the country. Trump "came out of vacation" and then said that the leader of the Republican minority in the Senate, Mitch McConnell, should be replaced. "Mitch is a tough, sullen, unsmiling political nag, and if the Republican senators are going to stick with him, they won't win again. He will never do what needs to be done, what is right for our country," the former president said. What can I say about this? Trump is not going to leave big politics and blames the defeat in the presidential election not on himself but the Republican senators. However, Trump has always been famous for his controversial, and sometimes outright false statements. And blaming others is Trump's forte. Donald also said that he will support McConnell's rivals, who are adherents of the "Make America great again" movement, as the country needs "strong and responsive leadership". Earlier, McConnell refused to support the impeachment of Trump, however, he also said that the former president should still be held responsible for the events of January 6. According to media reports, there was a conflict between him and the former president based on whether the Republican Party should continue Trump's political line or abandon it.
However, Trump's position in the Republican Party after all the recent events can only get stronger. The point is that some members of the party wanted to divert it from the Trumpian course. Republican senators who voted against Trump in the impeachment case are now considered traitors and Trump will try to get rid of them. Since the majority of Republicans still support Trump, it can be assumed that his position will only become stronger. Moreover, in addition to Trump, there were simply no candidates for the presidency in 2020, and there are no other strong and charismatic leaders in the party now. Moreover, the main paradox within the Republican Party now lies in the excessive popularity of Trump among the people. Although he lost the election, more than 70 million people still voted for him. If Trump leaves the party and creates his own, then 36% of its members are ready to leave the Republican ranks with him. Fantastic figure. It turns out that the Republicans themselves, in the event of Trump's departure, can lose a huge number of electoral votes, which is unprofitable for them. Thus, although Trump has a huge number of opponents and detractors, even within his party, everyone understands perfectly well that it is not about Trump himself, but about how popular he is and how many votes he will bring in the next election. According to a recent poll, if Trump left the Republican Party, 23% of respondents would vote for his new party, and 17% would vote for the Republicans.
Thus, "Trump left, but promised to return" turns into "Trump left, but has already started work on his return". So far, of course, he is excluded from making key decisions, however, there is no doubt that he will continue to play a prominent role in the big politics of the United States. There is no doubt that for the next 4 years, Trump will put pressure on Joe Biden and criticize his every move. And if Biden makes mistakes, the odious Republican will smear him through the media. If Biden doesn't make mistakes, then Trump will come up with mistakes and smear him through the media. This is the reality and it could be a new political crisis. Trump may be immensely popular, however, he clearly won't let the country run smoothly. The latest poll shows that 66% of Americans believe that the Democrats and Republicans are poorly governing the country and are in favor of creating a third party that could compete with the two main ones.
The volatility of the euro/dollar currency pair as of February 18 is 56 points and is characterized as "low". Thus, we expect the pair to move today between the levels of 1.1986 and 1.2098. A reversal of the Heiken Ashi indicator to the top can signal a round of upward correction.
Nearest support levels:
S1 – 1.2024
S2 – 1.1963
S3 – 1.1902
Nearest resistance levels:
R1 – 1.2085
R2 – 1.2146
R3 – 1.2207
Trading Recommendations:
The EUR/USD pair continues to move down. Thus, today it is recommended to stay in short positions with targets of 1.1986 and 1.1963 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders if the pair is fixed above the moving average with a target of 1.2146.
The material has been provided by InstaForex Company - www.instaforex.com