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) – sideways.
CCI: 119.1684
The first three trading days of the week were spent in frankly sleepy trading of the EUR/USD currency pair. Traders did not find any fundamental reasons and reasons for conducting active trading despite the fact that the head of the Fed, Jerome Powell, spoke every day, and last night a protocol was published from the last meeting of the Fed. However, neither Powell's speech shook the foreign exchange market, nor, moreover, the FOMC protocol. The FOMC Protocol, of course, gave some interesting information. For example, that there is no consensus among the members of the monetary committee on the issue of changing the key rate at the next meetings. It also became known that the representatives of the Fed decided, as before, to respond to macroeconomic statistics, and not try to be proactive. And we believe that this very phrase "respond to economic reports" is a great opportunity for Powell to change the key rate behind macroeconomic statistics. Because now the macroeconomic data from across the ocean cannot be called unambiguously bad, but also positive. Thus, Powell and the company can reduce the rate in October and report that, for example, business activity indices showed a negative trend. Or inflation has slowed. Since there are a lot of macroeconomic indicators, it is difficult to say whether the situation worsened during the reporting month or not.
And the reason why Powell needs such a vague wording, from our point of view, is the desire to follow the instructions of Trump – that is, to reduce the key rate almost to zero. And the point is not even in the weekly criticism of the Donald Trump Fed, but in the fact that Washington needs as many trump cards as possible in the trade war between the States and China. Part of the negative impact of the introduction of duties on its goods, China easily offset the fall of the yuan, which is subject to the Bank of China. Also, the non-stop decline in the euro negatively affects trade with the European Union. Maybe Powell and Trump just agreed, maybe Powell just accepted the opinion of the US President, after all, both the Fed and Trump are in the same boat. But, one way or another, a clear conviction must be left in the eyes of the public that the Fed is not subject to political influence.
Today, October 10, the United States will finally publish the first important report this week – inflation for September. It is expected that the consumer price index in September will accelerate to 1.8% y/y, and in monthly terms, an increase of 0.1%. However, we recall that last month, traders also expected acceleration of inflation, but in the end they got a slowdown. We believe that lower inflation in September could have a negative impact on the US dollar today.
The technical picture suggests that the euro/dollar pair returned to the area above the moving average line, but cannot overcome the Murray level of "4/8" - 1.0986. Thus, the downward trend has not yet resumed, and the bulls have very little strength to continue the upward movement. The result is flat.
Nearest support levels:
S1 – 1.0925
S2 – 1.0864
S3 – 1.0803
Nearest resistance levels:
R1 – 1.0986
R2 – 1.1047
R3 – 1.1108
Trading recommendations:
The euro/dollar pair has fixed itself back above the moving average line, thus, it will be possible to consider the purchase of the euro currency in the case of overcoming the Murray level "4/8" with the target of 1.1047, but in small lots, since both channels of linear regression are directed downwards. It is recommended to sell the pair when fixing below the moving target of 1.0925, but also cautiously, since the pair is now in the flat.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue lines of the unidirectional motion.
The lower channel of linear regression – the purple lines of the unidirectional motion.
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 – an indicator that colors bars in blue or purple.
