The European currency paired with the US dollar continues to grow. On the 24-hour timeframe, it is visible that a new round of the global upward trend has been going on for almost two months and there was only one more or less significant correction. Thus, as we said earlier, macroeconomic and local fundamental factors, such as the speech of Christine Lagarde or Jerome Powell, have an impact on the movement of the pair. For example, this Friday, the head of the ECB finally began to talk about monetary policy and the prospects of the economy (before that, several of her speeches did not give any new information to the markets at all). And this caused the fall of the European currency. But along with this, the pound also fell on Friday, although the words of Christine Lagarde had nothing to do with the British currency. The euro fell because of the openly "dovish" rhetoric of Christine Lagarde and the "formally hawkish" rhetoric of the Fed. In the case of the Fed, you can see a radically opposite picture, since no specifics were contained in the protocol. However, formally, he was still more "hawkish" than before. So it turned out that this week the euro currency declined only on the Fed minutes and the statement of Christine Lagarde. All other days, the euro grew, maintaining an upward trend. Therefore, now "macroeconomics" and "foundation" have an impact only locally. For example, markets may react to a particular event or report. However, this reaction is not too strong and does not break the main trend in any way.
Let's figure out what to expect from the "foundation" and "statistics" next week. The calendar of macroeconomic events for the next week in the European Union does not include a single important event. There will be some minor macroeconomic publications and some minor speeches by ECB representatives. And nothing else. Perhaps the situation will change on Monday or Tuesday. In any case, you need to pay attention to the calendar. As for the United States, it will publish an indicator of consumer confidence on Tuesday, on Thursday – applications for unemployment benefits, GDP for the first quarter and orders for durable goods, and on Friday – data on personal spending and income of the American population. What can be distinguished from this small list? Market participants are already familiar with the GDP data. If the previous value of + 6.4% is not very different from the next estimate, then there is no need to wait for a reaction. Orders for durable goods? It is extremely rare to cause at least some reaction from traders. The other reports have even less significance and degree of significance. It turns out that the next week will be extremely boring, and the euro/dollar pair will be traded exclusively on "technology". Of course, fundamental events may still appear. Therefore, perhaps next week will not be as boring as it seems now.
The most important thing now is different. All the "macroeconomics" and "foundation" still have a very weak and indirect influence on the movement of the pair. And the "global factors" that we constantly talk about continue to work. But what can you do if it is these "global factors" that have the greatest impact on the movement? Before the pandemic crisis and the epidemic itself, things were somewhat different. The trends for the currency pairs were slightly different, and the factors that influenced them also worked differently. But in the last year, everything has changed and now the question is, when will everything be the same as before? Judging by the statements of the Fed and the ECB, "as before" will not be soon. At least the two largest central banks are simultaneously talking about the need to continue monetary stimulus. Consequently, the markets will be affected for a long time by the imbalance between the money supply.
As for the latest rhetoric of the Fed and the ECB, Christine Lagarde continues to press that the European economy is weak and therefore continues to demand monetary stimulus. Consequently, the PEPP program will continue to work and stimulate the economy. And no one is even talking about the rates in the European Union right now. They have been at ultra-low levels in recent years. However, now the situation is much worse than in 2016-2019 when the ECB rate was already 0%. And all the macroeconomic indicators of the European Union suggest that Christine Lagarde is not lying when she talks about the weakness of the European economy. Recall that in the last two quarters, the EU recorded a contraction in the economy. At a time when the American economy was growing at a high rate, the European economy was shrinking. Consequently, in the EU, exactly the stimulus will be weakened after similar actions from the Fed. In the United States, only the latest Fed minutes contained a micro-hint that in the future (it is not known when) the Fed members may begin to discuss the curtailment of the quantitative stimulus program if the economy continues to recover at a high pace. Even in the US, where the recovery is really fast, they are not even thinking about reducing the stimulus yet.
Trading recommendations for the EUR/USD pair:
The technical picture of the EUR/USD pair on the 4-hour chart is unambiguous. The upward trend continues. However, the price on Friday was fixed below the critical line, so a pullback or correction is possible. The pair may try to go down to 1.2084 (Senkou Span B line). In general, we see that the movement is not too strong now, with frequent and rather deep corrections. A kind of "swing", but with a clear upward slope. Therefore, it is recommended to trade for a buy on the 4-hour timeframe when the price returns above the Kijun-sen line. Recall that the pair is already very close to its local and 3-year highs. Most likely, they will be overcome.
Explanation of illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.
Ichimoku indicators, Bollinger Bands, MACD.