At the auction on March 30, the US dollar showed a significant strengthening against the single European currency, which was facilitated by several factors. First of all, this is a technical component, which we will discuss later. In addition to the technical picture, the strengthening of the US dollar was pushed by the good pace of vaccination of the population of the United States against the COVID-19 pandemic, an impressive stimulus package adopted by Congress and signed by President Biden, as well as the increased yield of US treasuries. As for the large-scale stimulus package, experts suggest that it may strengthen inflation expectations, which means that in this scenario, the Federal Reserve will move ahead of other major world Central Banks to a tighter monetary policy, in other words, start raising interest rates in the United States. Another important factor that led to an increase in demand for the US dollar as a protective asset was the financial collapse of a large investment fund, Archegos Capital, which spooked investors and sowed some panic in the stock market.
Of course, we can not ignore the fundamental factors that also supported the "American" yesterday. Thus, the S&P/Case-Shiller housing price index and the consumer confidence indicator were better than forecast values and came out in the green zone. And today's economic calendar for the EUR/USD pair is saturated with even more macroeconomic statistics. At 08:55 London time, data on the labor market will be received from Germany, and at 10:00 (London time), the eurozone will report on the growth of consumer prices. With the arrival of the US session, we will learn about the change in employment from ADP, the Chicago purchasing managers' index, as well as about pending home sales. The fundamental events of today will end with a speech by the President of the Federal Reserve Bank of Atlanta, Raphael Bostic. The release time and forecasts for these and other events can be found in the economic calendar, and we turn to the technical analysis of the euro/dollar currency pair.
Daily
As expected, at yesterday's trading, the main currency pair of the Forex market continued to move in a southerly direction, that is, to decline. The assumption that the quote will fall to the strong technical and psychological level of 1.1700 and may find support there at this stage of time is fully justified. At the time of the end of this article, the quote was already falling to 1.1703 and is trying to adjust to its previous decline. In my opinion, it is unlikely that EUR/USD will roll back up by a whole figure, that is, it will reach the broken support level of 1.1804. The position of the US dollar across the entire spectrum of the foreign exchange market looks very strong. Naturally, under such conditions, the main trading recommendation will be sales of EUR/USD, however, I suggest looking for points to enter the market on the hourly chart.
H1
I will start with the fact that after such an impressive decline, today's trading may well end with the growth of the pair, which will have to be considered corrective for the time being. As you can see, the euro/dollar is trading in a descending channel with the following parameters: 1.1989-1.1946 (resistance line) and 1.1761 (support line). Since the pair is located below the middle line of the channel (dotted line), I fully assume that this line will be the nearest correction target. Also, near it is the level of 23.6 fibo from the fall of 1.1988-1.1703, as well as the black 89 exponential moving average. Given that the 50 simple moving average passes below, which is colored blue on the chart, the most aggressive and risky sales can be considered after the pair rises to 50 MA, which passes at 1.1745. I recommend looking for sales at more attractive prices in the price zone of 1.1760-1.1770. Since purchases are seen exclusively in the expectation of a corrective pullback, which can be very insignificant, I recommend that you skip them for now and open positions on the current downward trend.
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