4-hour timeframe
Technical data:
The upper channel of linear regression: direction-down.
The lower channel of linear regression: direction-down.
The moving average (20; smoothed) – down.
CCI: -150.3038
The last trading day of the week and month, the EUR/USD currency pair starts in the usual way – with a systematic decline. Last night, the lows of last week were updated, and no more than 20 points remain to pass to two-year lows. Thus, we expect the pair to decline further today, but volatility is likely to remain at a low level, as there are few important macroeconomic reports and reports from the eurozone and the States. Yesterday, inflation for Germany in August was published (preliminary value) and we assumed that inflation in the EU would also be worse than expected. The forecast value is 1.0% y/y in August. Thus, any value below 1.0% will confirm our concerns. If European inflation slows even more (than it has already slowed in the last 3-4 months), then traders are unlikely to have questions in which direction to trade the euro/dollar pair on Friday, August 30. The chances that the euro will continue to depreciate against the US dollar will be even greater.
Further, the probability that the ECB will "rush into battle" at the next meeting in September will also increase, as annual inflation below 1% is not just a "negative moment", it is a "catastrophe". But the European Union has not yet engaged in a trade war with America. More precisely, the United States is busy with other things (trade war with China) and is not in a hurry to escalate a new trade conflict. Any weakening of monetary policy by the European Central Bank will be regarded by traders as an additional "bearish" factor. Bears, in principle, already dominate the market for the euro/dollar pair, they do not even need additional fundamental support, but when it is available, it becomes even easier to sell euro.
In the afternoon, data on personal income and spending of the American population for July will be published, as well as the consumer confidence index from the Michigan Institute. And according to American statistics, no downturns and reductions are expected. Thus, based on forecasts, it can be assumed that August 30 will also remain for the US currency.
The forex market finds no good and serious fundamental reasons to stop buying the US dollar. In general, the number of factors that speak in favor of euro sales may become even greater. Technical indicators are directed down. Bulls remain extremely weak.
Nearest support levels:
S1 – 1.1047
S2 – 1.0986
S3 – 1.0925
Nearest resistance levels:
R1 – 1.1108
R2 – 1.1169
R3 – 1.1230
Trading recommendations:
The euro/dollar pair continues its downward trend. Thus, it is now recommended to trade downwards with a target of 1.0986. Buying the euro is not recommended now, as both the technical and fundamental picture do not give grounds for expectations of strengthening the euro. A turn of Heiken Ashi upward will indicate a round of upward correction.
In addition to the technical picture, fundamental data and the time of their release should also be considered.
Explanation of the illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – the purple line of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – blue line on the price chart.
Murray levels – multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple.
