FX.co ★ Trader's diary 11/18/2019

The situation at the beginning of the day is uncertain. On the one hand, we do not have a very strong one, but the momentum up – we struck up 1.1045.

Below, the euro supports the accumulation of H4 averages. On the other hand, if you switch the chart to the daily – we see that on the way up, there is a cluster of daily averages – zone of 1.1050-1.1095.

Still, the upward movement seems somewhat more relevant.

It is clear that the differential in rates in favor of the dollar is pressing down on the euro (and each trader can easily feel this pressure on himself – just open a buy position and wait for the position to move overnight. And if it is Wednesday-Thursday night, this is generally quite noticeable for the account).

But what supports the euro, why does the EURUSD not fall a stone down?

The fact is that there are some stable price ratios for real goods – commodities, industrial goods; and asset price ratios. If you look at the monthly euro chart (EURUSD), we will see that the 8-year average for the euro is about 1.2000.

At current prices, the euro is noticeably underestimated – from a long-term view. About 10%.

This keeps the euro from a new big fall.

Also, we do not know what will be the policy of the new head of the ECB Christine Lagarde – negative rates are very painful for large banks in the eurozone – a vivid example – Deutsche Bank.

EURUSD:

We stand in the purchase from 1.1045.

In the case of a downward turn, we sell from 1.0985.