EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the European currency after the formation of two bullish divergences at the CCI and MACD indicators. Subsequently, the pair's quotes performed growth above the Fibo level of 161.8% (1.0918). Nevertheless, the downward trend channel is adamant and continues to indicate the "bearish" mood of most traders. Thus, the consolidation of the euro/dollar exchange rate under the correction level of 161.8% will again work in favor of the US currency and the resumption of the fall in the direction of the correction level of 200.0% (1.0802).
Yesterday, I wrote that almost all the indices of business activity in the industrial sectors of European countries showed a negative trend. Only two indicators rose compared to August, but even they were below the key level of 50.0. Thus, the euro continued to remain under pressure until the second half of the day, when the indices of business activity in the US manufacturing sector were released. And it turned out that in America, not everything is smooth. In recent months, both indices, which determine the level of business activity, have shown a decline, but traders still hoped that they still would not go below 50.0. Yesterday's reports showed that the ISM index sank significantly to 47.8, instead of returning above 50.0. Thus, in the afternoon, traders bought the euro and got rid of the dollar. Against the background of declining business activity in the US, it is even somehow uninteresting to talk about another slowdown in inflation in the European Union, although this value is not final for September.
In America, the topic of impeachment of Donald Trump has faded into the background, but the US President does not like to be in the shadows for a long time. Once again, Trump "rode" around the Fed and personally to Jerome Powell, criticizing the organization and its chairman for a too-high key rate. As always, via Twitter: "As I expected, Jerome Powell and the Federal Reserve have allowed the dollar to become very strong against all other currencies, and our producers are experiencing a negative impact. The stakes are too high! They are the worst enemies of themselves, although they have no idea about it. What a pity!" – Trump wrote. It seems that Donald Trump will not leave the Fed alone until the regulator lowers the rate to 0%, as the US President wants. However, Trump does not specify that a strong dollar prevents him, first of all, from waging a trade war with China. Also, the more expensive the US dollar, the more expensive any goods produced in the US on world markets. And one of Trump's goals is to return all the production capacity of American companies to the territory of America. And, of course, the huge US public debt that needs to be serviced, which is easier to do with the cheap national currency.
What to expect today from the euro/dollar currency pair?
On October 2, traders will wait for developments near the correction level of 161.8% (1.0918). If there is a close below this level, the fall of quotations with a high probability will resume, as well as the entire downward trend. But until this happens, there are small chances for some growth of the pair in the direction of the upper line of the trend channel.
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 again today with the target of 1.0802 if a new close is made below the level of 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.
