Today's review of the main currency pair will begin with the data published yesterday on the index of business activity in the manufacturing and services sectors in the European region. Thus, activity in the manufacturing sector in Germany and the Eurozone was higher than economists had predicted, however, the business activity in the service sector fell short of the forecast values. According to yesterday's data, the same situation is observed in the United States of America.
The main events of the day will be the indices of expectations, business climate, and current IFO conditions for Germany, initial applications for unemployment benefits from the United States, as well as another speech by the Chairman of the Federal Reserve System (FRS) Jerome Powell on monetary policy. If we recall Powell's previous speech, it was still quite neutral. The head of the Federal Reserve emphasized the uncertainty of economic recovery after the COVID-19 pandemic, however, the pandemic has not gone away yet, and Europe is completely covered by the second wave of coronavirus, which virologists have so often warned about. However, in the United States, the number of daily infections and the number of deaths has declined. If the spring daily death rate in America was about two thousand people, now this sad figure has fallen to 750 people per day. The main task of the White House is to vaccinate the population against COVID-19 as soon as possible. President Trump has promised that mass vaccination of Americans against a new type of coronavirus infection will begin by the end of this year. However, Trump promises a lot due to the upcoming US presidential election. The main task of Donald Trump is to restore the economy as soon as possible before the start of the pandemic. However, according to the same Jerome Powell, this process is extremely uncertain and quite difficult.
Daily
On the chart of the EUR/USD, yesterday was again negative for the main currency pair. As a result of the decline, the pair fell below the landmark level of 1.1700 and entered approximately the middle of the Ichimoku indicator cloud. Such an outcome can not bode well for the euro bulls, however, their opponents can count on a subsequent decline in the exchange rate, at least to the lower border of the cloud, which passes at 1.1566. However, we must admit that to reach this price, we must first overcome the strong technical mark of 1.1600, and then try to bring the price down from the cloud. I believe that the 89 (black) exponential moving average, which runs at 1.1575, that is, right above the lower boundary of the Ichimoku cloud, can actively counteract this.
But for the return of bullish sentiment for EUR/USD, it will not be enough to bring the price up from the cloud. After that, you still need to break through 1.1780, where the Tenkan line and the 50 simple moving average met, and then return trades for the pair above 1.1800. I believe that to implement such a scenario, the market situation should change dramatically, and the anti-dollar sentiment should significantly increase. At the moment, there is no hope for such a development. The US dollar is again in demand as a protective asset in connection with the COVID-19 outbreak and is strengthening across a wide range of markets.
H1
Despite the continuing bullish divergence of the MACD indicator, to open long positions, you need to see clearer and stronger signals, so in their absence, I suggest skipping buying the pair for now. But I recommend considering selling EUR/USD when the pair tries to return above the important level of 1.1700, from the price zone of 1.1700-1.1720. It is worth noting that the highs of yesterday's trading were recorded at 1.1720. If this level is broken and the correction takes a deeper shape, I recommend that you consider opening short positions from the strong technical area of 1.1740-1.1780.