The EUR/USD currency pair tried to start a new upward correction on Monday, but at the same time remained below the moving average line. In recent days, the price has not moved as zealous as it had for several weeks before, but volatility remained high. Now both linear regression channels are directed downwards, so there is no doubt about what the trend is now. Unfortunately for the euro currency, it now has practically no growth factors. Of course, its downfall can't go on forever. Sooner or later, an upward correction will begin and growth of 300-400 points can be counted on. The problem is that such a movement will be as similar as possible to what was observed last week when the euro rose out of the blue by 300 points for 2 days without any reason. It was impossible to predict such a movement.
Unfortunately for the euro, the ECB did not provide any support to it either, continuing to remain in the "dovish" rhetoric. But, on the other hand, it should be remembered that the ECB benefits from a low euro exchange rate, and during the past and the year before, Philippe Lane and Christine Lagarde mentioned several times that the euro is too expensive, which hinders the European economy. However, now they can no longer claim that all the problems of the European economy are due to the euro currency. European GDP in the fourth quarter showed a simply "fabulous" growth of 0.3% q/q. At the same time, the American economy grew by more than 6% q/q. Thus, the European regulator has its hands tied to influence inflation, which also continues to grow. And, of course, the geopolitical situation. It is not even the military conflict between Ukraine and Russia itself that matters for Europe. The growing prices of oil and gas are important. Huge sanctions against the Russian Federation are important, which could not be imposed, and which are hitting Europe itself. What matters is the decision to gradually abandon Russian oil and gas, which will lead to an even greater increase in energy prices. And, accordingly, for heating, gasoline, production, and all goods and services whose prices include the prices of oil, gas, and gasoline.
It will also be difficult for the euro to get support this week.
Although the technical picture allows for a serious upward correction of the euro, it would be very good if some important statistics or events preceded its beginning. Achieving progress in negotiations between Ukraine and the Russian Federation could work best. However, there is no progress yet and, given the positions of Kyiv and Moscow, it will be very difficult to achieve. And we certainly should not expect progress in the negotiations in the coming weeks. According to not the most verified information, Moscow is now looking for additional ways of military pressure on Kyiv, attracting mercenaries from Syria. There is also information that Belarusian troops may be involved in the special operation. However, there have been no official statements about this, so these are just rumors and Western intelligence data.
However, as they say, "there is no smoke without fire." Moscow may indeed take the path of greater pressure on Kyiv since so far it has not achieved the desired result. But it has collected so many sanctions that many experts speak out loud about the USSR 2.0, the DPRK 2.0, and the "Iron Curtain". Thus, it turns out that many Russian soldiers were killed, huge losses in equipment, huge monetary losses (a military operation is an expensive matter + sanctions from the West and the European Union), and there are no goals achieved since Kyiv has not given up and is not going to give up. Moreover, with the support of the West and the European Union, it is well armed and can resist for a very long time. Many military experts say that it is simply impossible to "take" such a huge country as Ukraine utilizing 150,000 military personnel. At least 1 million soldiers and an appropriate amount of equipment will be required. Thus, this whole conflict can become Donbas 2.0, which will last for several years. Consequently, the economy will continue to suffer. And European, and Russian, and world.
The volatility of the euro/dollar currency pair as of March 15 is 132 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.0838 and 1.1102. The reversal of the Heiken Ashi indicator downwards signals a possible resumption of the downward movement.
Nearest support levels:
S1 – 1.0864
S2 – 1.0742
S3 – 1.0620
Nearest resistance levels:
R1 – 1.0986
R2 – 1.1108
R3 – 1.1230
Trading recommendations:
The EUR/USD pair completed a round of correction and consolidated back below the moving average. Thus, new short positions with targets of 1.0864 and 1.0838 should now be considered if the price bounces off the moving average. Long positions should be opened no earlier than the price-fixing above the moving average line with a target of 1.1102.
Explanations to the illustrations:
Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.