The EUR/USD pair continues to consolidate in a narrow range
Hello, dear colleagues!
In yesterday's trading, the US dollar suffered losses across a wide range of markets as expectations that the Fed will soon begin to taper asset purchases weakened. Investors reached this conclusion due to the latest US Consumer Price Index data. Notably, in August the consumer prices in the United States increased less than economists expected. It means that the Fed management's view about the temporary jump in inflation at the moment is confirmed. Most likely, the Fed will continue to monitor inflation reports and labor market data for some time before it makes a decision on the timing of the start of the quantitative easing program tapering. Yesterday's data on import prices and industrial production also released worse than forecasted. This fact made it more problematic for market participants to interpret the terms of the Fed's decision to finally start tightening its monetary policy. Today investors will focus on the President of the European Central Bank, Christine Lagarde's speech, which is scheduled for 15:00 (Moscow time). At 15:30 Moscow time, the US initial jobless claims data and retail sales reports will be due. I believe the latest releases may also affect the timing of the QE tapering.
Daily
During the last two days the euro-bulls have had problems to keep the price within the Ichimoku cloud and to break through the red Tenkan line. It is indicated by long upper shadows of the last two candlesticks. At the moment, the support is provided by the 50-day simple moving average, colored bluish purple on the chart. Notably, below the 50 MA there is a blue Kijun line, which may help support the moving average in case of a break-down. Since September 8, the EUR/USD pair has been trading in a fairly narrow price range of 1.1771-1.1851. It may also be a sign of consolidation. After it a strong directional movement is possible.Coming fundamental data, high-ranking monetary officials' comments, as well as market sentiment will influence the duration of this movement (whether it happens at all). At the moment this article is due, the bears are active, and the EUR/USD pair is trading lower under the bottom of the daily Ichimoku indicator cloud.
H4
On the 4-hour chart the above mentioned range is seen even more clearly. At the moment, the pair breaks below the 89th and the 200th exponential moving averages, aiming to retest the support at 1.1771. Taking into account a narrow trading range and the uncertainty concerning the timing of the start of the US asset purchase program tapering, it is worth considering options for positioning in both directions, but with short-term targets so far. If bullish Japanese candlestick patterns appear on this or hourly charts on the way to the support level of 1.1771, it will be a signal to open purchases. In the case of consolidation below the 89 and 200 exponents, on a rollback to them it is better to consider selling. Bearish candlestick signals will indicate it.
Good luck!