4-hour timeframe
Amplitude of the last 5 days (high-low): 59p - 54p - 63p - 64p - 60p.
Average volatility over the past 5 days: 60p (average).
The EUR/USD currency pair has adjusted for the third consecutive day. The pair was trading in a narrow price range for most of the day and only resumed the upward movement at the US trading session, which began two days earlier. The next package of macroeconomic data from the eurozone was published in the morning during the European trading session. Indices of business activity in the service sector and composite indices of Germany and the European Union disappointed all as one. All four indices were worse than their forecast values and August values. Thus, traders had no reason to buy the euro in the morning. A little later, the situation was slightly corrected by the report on retail sales in the EU, which showed an increase of 2.1% against the forecast of +1.9% y/y. Data for applications for unemployment benefits, production orders, indexes of business activity in Markit and ISM services, and a composite index of business activity were published during the US session. However, all these reports can be safely forgotten and not be paid any attention to, as traders reacted to only one report, the most significant. This is a business activity according to ISM in the US services sector. According to the results of September, this indicator decreased 52.6, while the previous value was 56.4. Traders expected a decrease in this indicator, but not as sharp and strong. This is precisely what disappointed dollar investors, who began to reduce short positions in the pair again, which led to the euro's growth. As you can see, statistics from the European Union again has nothing to do with strengthening the euro. We have already noted more than once that the hopes of the euro are associated exclusively with the United States and with the fall in US indicators of the economy. And it turns out in practice.
Meanwhile, a trade war between the EU and the United States seems to be inevitable. The other day it became known that the European Union lost a dispute with America in the WTO. Recall that the European authorities were accused of illegally subsidizing the aircraft manufacturer Airbus. Thus, the United States suffered damage and now, according to the decision of the WTO, they have the right to establish at least 100% duty on European imports. True, America is about to set high duties immediately. However, at first it was a question of the total amount of duties of approximately $7.5 billion. Despite the fact that the EU is officially found guilty of the trial, it is not going to sit aside while Donald Trump slaps taxes on imports from Europe, and prepares his list of goods from the US, which will also be covered by duties on a mirror amount.
It should immediately be noted that traders did not pay much attention to the possible start of a trade war between the EU and the USA. In the same way as before they paid no attention to the trade war with China. Market participants are still worried about the negative impact on America's economy from Trump's policies, trade wars, the introduction of reciprocal duties, and not the fact that there are trade disagreements with one country or another. Thus, investors are not interested in news about the lists of goods for which duties will be introduced, the validity of these duties, and so on. But all the same macroeconomic indicators are very interesting, which reflect the impact of trade disputes on the real economy. We believe that if a trade war between the EU and the US begins, it will obviously not be in Europe's favor, but the American economy will also have to slow down even more.
In general, certain chances for the growth of the European currency are gradually appearing. And only thanks to weakening macroeconomic statistics from overseas. However, it's a sin for bulls not to take advantage of the opportunities provided. At the moment, the euro/dollar pair has worked the Senkou Span B line, if the bulls manage to overcome it, the upward movement will continue, and the buy signal from the Ichimoku "golden cross" will increase.
Trading recommendations:
EUR/USD continues to move up. Since the bulls managed to work out the Senkou Span B line, it is now recommended to wait for it to be overcome, after which you can once again buy the euro while aiming for 1,1008 and 1,1049. It is recommended to return to the pair's sales no earlier than consolidating below the critical Kijun-sen line.
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.
