FX.co ★ Analysis and forecast for EUR/USD on June 21, 2021

Last trading week was held under the sign of the US dollar, which demonstrated its dominance over all major competitors. At the same time, the strengthening of the "American" was so impressive that the fall of the single European currency by 1.98% compared to other allied currencies was far from the strongest. The main impact on the strengthening of the US currency was the results of the extended two-day meeting of the US Federal Reserve System (FRS) and the Fed leadership's comments on inflation. So, the Federal Reserve chairman, Jerome Powell, suggested that due to the unprecedented pace of economic recovery after the COVID-19 pandemic, inflation may remain at higher values for an extended period. It implies an earlier process of monetary policy tightening, which means that the main interest rate hike will start sooner.

For now, most members of the Open Market Committee (FOMC) believe that a rate hike could begin as early as the middle of next year. Thus, the main criterion for strengthening the US dollar can be recognized as the tightening of the Fed's rhetoric. This week, several important events are planned, among which it is worth highlighting the speech of Fed Chairman Jerome Powell with the semi-annual report on monetary policy, US GDP data, and other macroeconomic indicators. Today, on the first trading day of the week, very few reports will be received. The main attention of investors will be attracted by the President of the European Central Bank (ECB), Christine Lagarde, which is scheduled for 15:15 London time. Now we turn to the technical part of the review and start it with a weekly chart review.

Weekly

A huge bearish candle with a closing price of 1.1860 leaves no doubt that the main currency pair of the Forex market has changed the trend. It was mentioned in the review a week ago. However, the results of the last five days left no doubt that this is what we are seeing.

The pair is currently trading near the lower border of the weekly Ichimoku indicator cloud and a strong technical level of 1.1835. If the euro/dollar finishes trading within the cloud, and even more so below the landmark mark of 1.1800, there will be almost no doubts about the further movement of the pair in the south direction. To somehow change the situation, the euro bulls will have to make a lot of effort and finish the weekly trading above the most important psychological level of 1.2000. I believe that it will be extremely difficult to do this at this stage of time, which means that the most likely direction will remain a further decline in the quote. However, before this, some corrective pullback up is not excluded, after which the bears will resume pressure on the course.

Daily

In this timeframe, you can see how strong the price resistance was provided by the blue and red lines of the Ichimoku indicator. At the same time, during the decline that started from them, the black 89 exponential moving average was passed, and the Ichimoku indicator went down from the cloud. The orange 200 exponential moving average was broken. If the assumption about the probability of the current corrective pullback turns out to be correct, we wait for the pair at the broken lower border of the daily cloud and 200 EMA, from where we consider options for opening deals for sale. Moreover, the price area near 1.1930 is quite suitable for opening sales since this level is very strong technically. The presence of 200 EMA near it and the lower border of the Ichimoku cloud will only strengthen the resistance. So far, this is the main option for positioning for EUR/USD. Tomorrow, we will look at smaller timeframes and make necessary changes or add trading ideas for the main currency pair.