4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -93.1191
If at the beginning of the trading week, the EUR/USD pair showed signs of life and even intended to start a new downward trend, then by the middle of the week it became clear that this was just an accident. Markets were agitated on Monday due to news about a new strain of "coronavirus", which, as it turned out later, is not the only "brother" of COVID-2019. Thus, on Tuesday, traders behaved less actively, and on Wednesday, volatility decreased even more. What is most important is the absence of a downward movement. After such a long and strong strengthening of the European currency, we still expect either a strong correction or a new downward trend. However, all that the bears were capable of was a decrease of 140 points, and even then against the background of Monday's epidemiological news. In general, the news for the US currency is still sad.
By the way, yesterday, we listed all sorts of reasons that could trigger the fall of the euro/dollar pair and in the end concluded that perhaps all of them have nothing to do with the current movement. For example, today, it became known that the current US President Donald Trump is not going to sign a bill that involves the allocation of assistance to the American economy in the amount of $ 900 billion. The US President called the stimulus package agreed and approved by Congress "shameful" and added that the $ 600 payments it provides for all Americans are "ridiculously low." Trump calls for increasing payments to at least $ 2,000. Also, Donald Trump, in his usual manner, "rode" on his opponents in Congress, saying "that not everyone read the document, as it is too long and complex". Trump is waiting for a new bill to be signed, which will eliminate "unnecessary spending" and higher assistance to American families. Once again, we are wondering if Trump is tired of fighting against Congress and the Democrats? That's it, Trump lost the election. Joe Biden's inauguration is less than a month away. Trump lost all the courts and even the US Supreme Court, in which six of the nine judges are appointed to their posts by Republicans, rejected the lawsuit of Texas and 17 other states that called for a review of the results of elections in four states. Why block a bill to help the American economy if it will not affect your political ratings in any way? After all, it is not only about helping American families but also businesses and the unemployed. The new stimulus package includes "coronavirus surcharges" for unemployment payments of $ 300 weekly, as well as a $ 284 billion small business loan program. Also, it provides for the allocation of assistance to schools, universities, and airlines.
There is one hypothesis about this, which is not a hypothesis. The fact is that Donald Trump is seriously intending to run for a second term. He, unlike many other former presidents, is not going to retire from business and leave politics. Under American law, the President can spend no more than two terms in the White House. That is, Trump is going to run for President in 2024. What's the problem? Yes, Trump will then be 78 years old. The same age as Joe Biden is now. Thus, as we said earlier, it is now profitable for Donald Trump to do everything to interfere with the work of the future President of the country. We have absolutely no doubt that Trump will "forget" to hand over a lot of official documents to Biden or "accidentally" lose them. We have little doubt that as long as Trump can, he will put a spoke in the wheels of Joe Biden, doing everything to make life difficult for him in the chair of the President of the country. The more difficult and uncomfortable a Democrat feels, the more likely it is that his results will be weak. If before November 3, Joe Biden had the advantage, since he could openly criticize almost any action and statement of Trump as President for four years (while he was in the shadows, since there was not much to criticize him for), now the Republican and Democrat can switch places. Now Trump will criticize "sleepy Joe" for any mistake or blunder, for unsatisfactory results, for weak economic growth, and so on. And if in four years it turns out that Trump's results were better than Biden's, then who will Americans vote for in 2024? Thus, it is safe to say that now Trump is building a springboard for future elections. Therefore, he is unlikely to sign the stimulus package that Congress offers him. He needs to knock out "his version", then to declare that he cares for the American people and in general "Americans are the best people on Earth".
Well, the US dollar still does not find any reason to start strengthening. We still believe that, from a fundamental point of view, the European currency has long been showing an unjustified upward movement. The ward currency was fairly weak in late spring, summer, and early autumn. But now all the fundamental and macroeconomic factors do not look in favor of the euro currency at all. Moreover, as we have already said, the European economy will lose a few percent in the fourth quarter due to the repeated "lockdown", and the American economy will not. But even if you do not take this factor into account, the euro is now heavily overbought, and the dollar is heavily oversold. Therefore, we continue to wait for the current upward trend to end. But at the same time, it continues to recommend trading for an increase if technical indicators indicate an upward trend. No need to try to guess the reversal of the global downward trend. It's impossible. It is better to always follow the trend, but at the same time clearly understand what the "foundation" is now and what can be expected from the pair based on it. Recall that the "oil bubble" was inflated for a very long time, the same can be with the depreciation of the US currency.
The volatility of the euro/dollar currency pair as of December 24 is 85 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.2096 and 1.2262. The reversal of the Heiken Ashi indicator downwards signals a new round of downward movement.
Nearest support levels:
S1 – 1.2146
S2 – 1.2085
S3 – 1.2024
Nearest resistance levels:
R1 – 1.2207
R2 – 1.2268
R3 – 1.2329
Trading recommendations:
The EUR/USD pair is trying to continue its downward movement. Thus, today it is recommended to stay in sell orders with targets of 1.2146 and 1.2096 until the price fixes above the moving average. It is recommended to consider buy orders if the pair is again fixed above the moving average with targets of 1.2262 and 1.2329.