The euro/dollar currency pair, as expected, showed high activity in the flow of information and news background, where the quote first rushed towards the value of 1.1910, and then returned to the starting point 1.1810, from which it all began.
The side channel levels 1.1700/1.1810/1.1910 are still relevant in the market, and this is confirmed by the interaction of the price with the established coordinates. It should be noted that this channel has already been broken through by the quote, which means that the levels will be considered only areas of interaction without reference to the direction.
If we proceed from the corrective move from the psychological level of 1.2000, then the current activity locally restored long positions by more than half may jeopardize the downward development, that is, if the quote fails to consolidate below 1.1700. In this case, everything can change dramatically and quickly.
Analyzing the last trading day by the fifteen-minute, you can see that a round of long positions appeared at 12:30 UTC+00 and lasted an hour, eventually reaching the coordinates 1.1910. On the other hand, the cycle of short positions began at 12:45 and lasted until the end of the trading day, eventually touching the coordinates of 1.1810. The developed pattern of the V-shaped formation, in a mirror form.
In terms of daily dynamics, the highest indicator for 10 trading days is recorded - 118 points, which is 42% higher than the average level. The slowdown since the start of the week ended up being a catalyst for trade forces.
As discussed in the previous review, everyone expected a surge in activity, so that they could easily enter local positions.
Yesterday's recommendation regarding the upward surge fully coincided with the forecast, the reverse move could be calculated based on the current situation.
[Buy positions are considered higher than 1.1865 with the prospect of moving to 1.1910.]
Considering the trading chart in general terms (daily period), we can see that the market has been in the stage of slowing down the upward trend for the sixth week, which may indicate a change in the market mood.
The focus of the news flow was the meeting of the European Central Bank (ECB), where as expected, the regulator kept the base interest rate at zero and the deposit rate at -0.5%. The parameters of the PEPP (Pandemic Emergency Purchase Program) special asset purchase program have also remained unchanged and will continue until the end of June 2021. The regulator noted that the PEPP program could be extended to 2022.
We did not hear anything new from the results of the meeting and the market did not react in any way the time the data was announced.
Everyone was expecting clarifications at the upcoming press conference with the head of the ECB Christine Lagarde (15:30), since they only heard only unclear hints such as that forecasts for GDP had improved and coronavirus is no longer so dangerous for the economy. Most importantly, Lagarde has not confirmed rumors that the regulator will change its attitude to negative rates. Let me remind you that representatives of the ECB have repeatedly hinted at the need to change monetary policy, as the instrument of negative interest rates has outlived its usefulness, but the head of the ECB declares that the interest rate will remain unchanged until inflation approaches 2.0%
Is it possible to consider that the forecasts for the recovery of the EU economy pushed the euro during the press conference. In principle, it is possible, but it seems that the reaction was precisely for the dollar, since they published applications for unemployment benefits in the United States at the same time.
So, the applications came out badly. Instead of lowering the value, we saw retention and growth. Initial deals are holding the level of 884,000, while the previous figures were revised in favor of the growth of 881,000 ---> 884,000. Moreover, repeated applications were also revised from 13,254,000 to 13,292,000, and the current ones came out with an increase to 13,385,000.
The labor market factor already carries a certain psychological background, which may well push the dollar positions towards sales.
In terms of the economic calendar, we have the final data on inflation in the United States today. It is predicted to grow from 1.0% to 1.2%, which may have a positive effect on the dollar.
The upcoming trading week has a busy economic calendar, where the center of everyone's attention is the Fed meeting, from which, they always expect clarification on the strategy of monetary policy in the future. In terms of statistics, this day is the most calm.
[All time zones are in Universal Time]
Monday, September 14
EU 9:00 - Volume of industrial production, for July
Tuesday, September 15
USA 12:30 - Volume of industrial production, for August
Wednesday, September 16
USA 12:30 - Volume of retail sales, for August
USA 18:00 - FRS meeting
USA 18:30 - Press conference of the Federal Open Markets Committee of the FRS
Thursday, September 17
EU 9:00 - Inflation, for August
USA 12:30 - Claims for unemployment benefits
USA 12:30 - Number of building permits issued, for August
USA 12:30 - The volume of construction of new houses, in August
Further development
Analyzing the current trading chart, you can see that there was a pullback process from the level of 1.1810 during the Pacific and Asian sessions, where the quote came the day before. Meanwhile, the downward interest is still held in the market, but the characteristic ambiguity can introduce adjustments in the positions of speculators, which can provoke local ones relative to the stagnation point. In order for the downward interest to acquire more impressive forms, the quote must consolidate below 1.1800, which can lead to a movement towards 1.1755-1.1700.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on the minute and hourly intervals have a buy signal due to the amplitude fluctuation. In turn, the daily period changed the signal from sell to neutral due to sharp price fluctuations.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(It was built considering the publication time of the article)
The current time volatility is 39 points, which is 53% below the average. We can assume that speculative mood will provoke another surge in activity, which will lead to a growing volatility.
Key levels
Resistance zones: 1.1800; 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support zones: 1.1800; 1.1650 *; 1.1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***.
* Periodic level
** Range level
*** Psychological level