4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -178.6251
The EUR/USD currency pair continued to trade quite calmly on Wednesday, July 7. The minimal downward bias remained throughout the day. However, the volatility again left much to be desired. In principle, so far everything is going according to our assumptions. We have said in recent articles that at this time the euro/dollar pair closes 3 days out of 5 with minimal volatility and trades normally for 1-2 days. It is exactly how it looks on the chart of the euro/dollar pair. On July 6, the pair showed volatility of almost 90 points, while it was reliably known that it was not macroeconomic statistics that affected the markets so much. There were macroeconomic publications that day, but none of them coincided with price reversals within the day and none coincided with the nature of the movement. And the reports themselves were far from the most significant, so the probability that they would provoke a 90-point movement was minimal from the very beginning. As for yesterday, the first half of it was generally in the range of 20 points. Only in the American trading session, the price finally moves a little. Recall that according to global technical factors, the pair may fall to the level of 1.1700. It is near this level that the previous local minimum is located and it is near this level that a three-wave correction can end in a 24-hour time frame. As for the fundamental factors, there are no topics that could create pressure on the euro or the dollar. Macroeconomic statistics – market participants continue to react to it very selectively and not always logically. Recall that last Friday, a strong Nonfarm Payrolls report was published in the US, but instead of strengthening the US currency, we saw its fall. Thus, from our point of view, the confrontation between global technical factors and global fundamental ones continues now. We have already said about the technical one above. We have been talking about the fundamental ones without stopping in the last six months. From our point of view, after working off the level of 1.1700 or even without it, the fall of the US dollar can resume at any time simply on the basis that hundreds of billions of dollars continue to flow into the American economy, which inflates the money supply, lead to an increase in inflation, and also increase the supply of US currency on the international currency market.
Unfortunately, the problem of "coronavirus" is still relevant for many countries. Moreover, this is not only the countries of the "third world", but also, for example, Europe. We have already said that the beginning of the fourth "wave" of the pandemic is being celebrated in the UK and 25-30 thousand new cases of the disease are recorded every day. So it turns out that the situation in the European Union is better, but only slightly. Given that only 40% of residents in the European Union have received both vaccinations against COVID, many experts are already calling on the European authorities to prepare for the fourth "wave" of the pandemic this autumn (if not earlier). In the UK, we recall that more than 60% of the adult population has already been fully vaccinated, and on July 19, Boris Johnson wants to completely cancel all quarantine restrictions, although doctors urge him not to do it so soon. So in Europe, Slovenian Prime Minister Janez Jansa has already predicted a new round of the pandemic for the entire European Union and called on the authorities of all countries to prepare for a new fight against the "coronavirus", which should have the highest priority. "We see a gradual resumption of public life, but we are focusing on preparing for a potential fourth wave. We don't want it to bring with it the problems that we had last year," Jansa said. The same opinion is shared by the head of the Scientific Council of France, Jean-Francois Delfraissy. He noted that despite the ongoing vaccination and a decrease in the number of cases of the disease, this does not mean that a new "wave" of the pandemic will bypass the European Union. In Portugal, they have already begun to tighten quarantine restrictions, without waiting for the beginning of a new "wave" of diseases. Also, the EU authorities, in particular Ursula von der Leyen, note that they expect an increase in cases of infection, with new strains of the "coronavirus", in particular, the "delta strain". In general, many countries of the world admit that they will have to face the fourth "wave" of the epidemic in the fall, and the WHO has generally stated that the "coronavirus" will become a satellite of humanity for many years or even decades. Thus, only countries where more than 60-70% of the population has already been vaccinated can feel relatively calm.
Meanwhile, the European Commission has published new GDP forecasts. The European Commission noted the progress in countering the "coronavirus", as well as the success of vaccination in the EU countries and raised GDP forecasts for 2021-2022. According to the new expectations, the EU's GDP will grow by 4.8% this year and by 4.5% next year. Earlier, the figures predicted economic growth of 4.3% and 4.4%, respectively. The European Commission also expects that the economy will return to the pre-crisis level no earlier than the 4th quarter of 2021. "The improvement in forecasts is due to several factors. Economic activity in Europe in the first quarter of 2021 exceeded all expectations. The effectiveness of the strategy to contain the spread of infection and progress in vaccination led to a drop in morbidity and hospitalization rates, which allowed countries to fully open their economies," the EC review says. The European Commission also expects that private consumption and investment will become engines of economic growth, and employment will gradually increase. "The economic recovery in the EU trade partner countries will have a positive impact on export volumes, but some areas that are most vulnerable to the virus (for example, tourism) will still experience problems," the review says.
The volatility of the euro/dollar currency pair as of July 8 is 58 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1741 and 1.1857. The upward reversal of the Heiken Ashi indicator will signal a new round of corrective movement.
Nearest support levels:
S1 – 1.1780
S2 – 1.1719
S3 – 1.1658
Nearest resistance levels:
R1 – 1.1841
R2 – 1.1902
R3 – 1.1963
Trading recommendations:
The EUR/USD pair continues to move down. Thus, today it is recommended to stay in short positions with targets of 1.1741 and 1.1719 until the Heiken Ashi indicator turns up. It is recommended to open buy orders now no earlier than fixing the price above the moving average line with the goals of 1.1902 and 1.1963.