4-hour timeframe
Amplitude of the last 5 days (high-low): 60p - 40p - 84p - 59p - 54p.
Average volatility over the past 5 days: 59p (average).
The skepticism of traders regarding the prospects for the European currency rolls over. During the first trading day of the new week and the last day of September, not a single truly important macroeconomic report was published either in Europe or in the US. It is unlikely that the preliminary value of inflation for September in Germany can be regarded as an important report. Nevertheless, traders drew attention to inflation slowing down to 1.2% in Germany, did not pay attention to the declining unemployment rate in the eurozone in August to 7.4%, and considered the report on retail sales in Germany to be important, showing an increase in August of +3 , 2% y/y, with a forecast of +3.3% and a past value of +4.4%. As we have repeatedly said, inflation in Germany is most interesting only as a more accurate forecast of inflation in the European Union. If the CPI of the largest economy of the eurozone slows down, then there is every reason to assume a slowdown and the CPI throughout the eurozone. In general, this is in any case negative data for the European currency, which today again updated two-year lows and is not going to stop there. As we have already said, price parity with the US currency does not look like something unrealistic now.
It should also be noted that traders are now completely not interested in a number of topics that should seem to put pressure on the US dollar. Starting with the topic of a possible impeachment to Donald Trump, ending with the same trade wars. We will not dwell on these topics in detail, since they have been examined a thousand times already. More important now is the macroeconomic statistics from the United States and the European Union, the balance between the monetary policies of the ECB and the Federal Reserve. These factors definitely work in favor of the US dollar.
A number of important macroeconomic indicators will be published tomorrow, starting with the preliminary EU inflation in September and ending with the equally important ISM business activity index in the US manufacturing sector, which amounted to 49.1 last month, indicating a decline in the industry. Markit PMI will also be released, which balances "on the edge" - 51.0 in August. These two indicators are the possible rescue of the euro from a new fall tomorrow. If business activity in the industry falls/stays below 50.0, this will be a bullish factor for the EUR/USD currency pair. In fact, the US economy has long been showing signs of a slowdown, however, it does not play a special role in the context of the euro/dollar currency pair, as things are much worse in the European Union. So it turns out that the US economy seems to be trying to catch up with the European one, but it is slowing at a faster pace. Investors therefore calmly continue to buy the dollar, and Donald Trump has no choice but to criticize the Fed again for the too slow lowering of the key rate, which does not give the US currency a reason to fall.
The technical picture of the pair is unambiguous. On Monday, September 30, the support level of 1.0887 was worked out. A rebound from it is very likely. If inflation in the European Union does not slow down even more tomorrow, and business activity indices in the US industry disappoint, then we can count on a more or less serious correction. However, below the critical line of Kijun-sen, a downward mood in the Forex market is still preserved.
Trading recommendations:
EUR/USD continues to move down. Thus, we recommend taking profits near the level of 1.0887, and open new sales no earlier than overcoming this target with the target level of 1.0842. It's still impractical to buy the euro/dollar pair.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
