4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 152.0050
The EUR/USD currency pair was trading more than calmly until the results of the Fed meeting were summed up. Volatility in the first half of this week was low, and the downward trend continued, however, the bears were in no hurry to sell the pair, preferring to wait for the speech of Jerome Powell. Only after summing up the results of the Fed meeting, a strong upward movement began. We would like to focus the attention of traders on another important factor of influence on the euro/dollar pair, which has emerged recently. We are talking about the difficult epidemiological situation in the European Union and problems with the vaccination process. This problem is not just an epidemiological problem. It means not only that the number of cases of "coronavirus" is growing again, as well as the number of victims. It means that economic growth is again postponed indefinitely. The fact is that in recent weeks, several EU states have announced that they are re-introducing a "hard" quarantine or at least simply tightening quarantine measures. Thus, it is not a fact that in the second quarter of 2021, the EU economy will show a significant plus. We have already written about the problems with the AstraZeneca vaccine. In short, several people in Denmark died from blood clots, the cause of which was attributed to the possible use of a vaccine against the "coronavirus". Thus, many EU countries have suspended vaccination with this drug, although representatives of the manufacturer said that no such side effects were detected at the stage of clinical trials. Also, the British-Swedish company believes that in any case, the use of the vaccine should continue, since the losses are disproportionately low compared to the benefits that the use of the drug gives. Boris Johnson also came to the defense of the vaccine, who said that in the UK, for 11 million doses of the vaccine used, there were no cases of severe side effects. The World Health Organization has recommended continued use of the drug and recognizes it as completely safe. The organization found no direct evidence that the vaccine causes blood clots. However, the problem is not just the AstraZeneca vaccine. The problem is that there is a catastrophic shortage of vaccines in the European Union. Naturally, the EU authorities are mercilessly criticized for the failed process of purchasing vaccines. More and more discontent is being heard from some EU member states regarding the unfair distribution of the vaccine. Many countries practically do not get a vaccine, so they are forced to turn their attention to drugs produced in China or Russia. Hungary and Slovakia have already approved the use of the Russian "Sputnik V" vaccine without EU approval, and Russia has already signed an agreement for the production of the vaccine in the EU - in Italy. However, there is a rather sensitive situation here, since the European Union has actively imposed sanctions against the Russian Federation in recent years. However, not all countries of the European Union are ready to use Russian or Chinese vaccines. But the tension persists.
At the same time, the head of the European Commission, Ursula von der Leyen, said that "the situation with the coronavirus is getting worse". "We intend to increase the pace of vaccination, which has started somewhat slowly," von der Leyen said, without saying how she intends to do this, given the fact that she recently accused vaccine manufacturers of disrupting supplies and not meeting deadlines. "The European Commission is tired of being a scapegoat," the head of the European Commission said at the time, blaming the slow pace of vaccination on pharmaceutical companies. All this does not contribute to the strengthening of the European currency. However, it should be noted that there is no obvious fall in the euro either. In global terms, a downward correction is maintained against the November-December round of the upward trend. Or against the entire upward trend that started a year ago. Thus, for now, traders are paying more attention to other global fundamentals. And they remain the same - unchanged. Recall that this week, Americans will start receiving checks for $ 1,400 per person as part of stimulating the economy with another package of "helicopter money" from Joe Biden and the US Congress. Although, of course, it would be more correct to say: from the Democrats. Since all Republicans opposed such a vast stimulus package. However, the elections they lost did not allow them to block this aid package, so $ 1.9 trillion will now flow into the US economy. From our point of view, this is the most important factor at this time. We have repeatedly compared the change in the volume of money supply in the United States over the past year and the same indicator in the European Union and concluded that the money supply in the United States increased by 50% or more, and in the European Union – by no more than 15%. However, this is often indirectly talked about by many experts, accusing the EU authorities of insufficient financial support for the economy during the pandemic and citing them as an example just the US authorities, which poured incentives for $ 5 trillion and this is not counting the money that the Fed spent through the program of buying securities from the open market. Thus, from our point of view, the growth of the euro/dollar pair may resume in the coming weeks. Of course, this week the markets will be under the impression of the Fed meeting and its results, as well as the speech of Jerome Powell, but next week the banal factor of increasing the supply of the US currency in the markets may lead to a new fall. Especially if Americans start spending the one and a half-trillion dollars that they have accumulated during the pandemic.
The volatility of the euro/dollar currency pair as of March 18 is 76 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1898 and 1.2050. A reversal of the Heiken Ashi indicator downwards will signal a new round of downward movement.
Nearest support levels:
S1 – 1.1963
S2 – 1.1902
S3 – 1.1841
Nearest resistance levels:
R1 – 1.2024
R2 – 1.2085
R3 – 1.2146
Trading recommendations:
The EUR/USD pair has consolidated above the moving average, so now there are more chances to continue the upward movement. Thus, today it is recommended to stay in long positions with targets of 1.2024 and 1.2050 until the Heiken Ashi indicator turns down. It is recommended to consider sell orders if the pair is fixed back below the moving average, with targets of 1.1902 and 1.1841.