EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair made a second attempt to consolidate under the correction level of 161.8% (1.0918). Thus, the fall of quotations continues in the direction of the next correction level of 200.0% (1.0802) following the direction of the main trend channel. Also, a bullish divergence is brewing in the CCI indicator, which allows us to expect some growth of the euro/dollar pair, but does not allow us to expect this growth of the information background, which remains the main opponent of the European currency.
This morning, business activity indices in the manufacturing sectors of the largest countries of the European Union have already been published. There is little positive news for the euro. In Switzerland, business activity fell from 47.2 to 44.6, in Italy – from 48.7 to 47.8, in Spain – from 48.8 to 47.7, in France – from 50.3 to 50.1. Only German business activity "grew" from 41.4 to 41.7, and the European – from 45.6 to 45.7. However, this growth is unlikely to please traders. All indices of business activity, except the French, remained below the key mark of 50.0, signaling a continuing slowdown in growth. Thus, the further fall of the European currency is now justified by the information background.
In just half an hour, data on inflation in the European Union will also be known. Traders expect to see 1.0% inflation in September, and the underlying consumer price index may increase from 0.9% to 1.0%. However, the situation here is approximately the same as with business activity. Even an increase in core inflation to 1.0% can hardly be taken as a positive moment, given the fact that the ECB has been aiming for inflation at 2.0% for several years. This level is officially called the target, but we are not witnessing the movement of inflation to this level. Thus, I see no reason for traders to refuse further sales of the euro/dollar pair.
After lunch, business activity in the US manufacturing sector will be known. Things are better in America. In any case, conclusions on these indicators can be drawn after their release. It is not necessary to guess whether they will show growth or fall.
Meanwhile, the situation with the possible impeachment of Donald Trump acquires new details. According to world media, Trump could also put pressure on Australian Prime Minister Scott Morrison to obtain evidence of the insolvency of the investigation of Robert Mueller. Former US Attorney General Mueller has been investigating Russia's potential interference in the 2016 presidential election for almost two years. According to media reports, Trump wanted to conduct an audit to find out who initiated the investigation and what were the reasons. Thus, as I expected, any activity of Trump will now be under the scrutiny of the media, democrats, and special services. Presidential elections will be held in a year, during this time, Trump's opponents need to collect as much dirt as possible on the current US president, who wants to be re-elected for a second term.
What to expect today from the euro/dollar currency pair?
On October 1, I expect the euro/dollar pair to fall further in the direction of the Fibo level of 200.0% (1.0802). The information background today has already supported the US currency and caused new sales of the pair. Even taking into account, the unknown values of business activity indices in the US manufacturing sector, I would say that the dollar will continue to grow today.
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair today with a target of 1.0802, as the close was made at 1.0918. A stop-loss order above the level of 1.0927.
It will be possible to buy the pair after the close above the downward trend channel, before – I do not recommend it.
