Good afternoon, dear colleagues!
In yesterday's trading, the EUR/USD currency pair continued to grow and ended Monday's session much higher than the important mark of 1.1300, at 1.1343. At the same time, although very slightly, the maximum values were updated at 1.1370, shown on July 9.
However, before proceeding to the analysis of the price charts of the main currency pair, it is necessary to mention one important point. According to the German Ministry of Economics, the leading European economy began to recover from the effects of COVID-19. However, as stated in the press release, this process is only in the initial stage, and the full potential is still far from being fully used. Thus, German industrial production has already touched the bottom, and now a large number of orders and the recovery of this important sector of the German economy are expected. At the same time, there is low demand from countries from other continents. This factor is fraught with risks of a longer recovery of the German economy.
Nevertheless, this statement by the German Ministry of Economy was received with optimism by market participants and had an impact on the strengthening of the single European currency.
In general, the currency market yesterday showed moderate optimism, which led to pressure on the US dollar. Today is an interesting and important day in terms of publishing macroeconomic statistics. From the Eurozone at 10:00 (London time), data on industrial production, as well as the index of sentiment in the business environment from the ZEW Institute will be received. The United States will publish data on the consumer price index at 13:30 (London time). Let me remind you that this is the most important indicator that determines the level of inflation in the country, and therefore the Fed's steps in its decision on interest rates. Although it is clear that in the conditions of the COVID-19 pandemic, even in the case of good growth in consumer prices, there can be no question of raising rates.
Daily
So, the main currency pair finally finished the day's trading above 1.1300. And much higher at the level of 1.1343. Let me remind you that the last time the trading closed above this important mark on July 8, when the closing price was 1.1329.
What's next? And then the euro bulls need to break through a series of strong resistance levels: 1.1374, 1.1383, 1.1403, and 1.1422. Moreover, only after a true breakdown (with fixing) of the last mark, it will be possible to assume that the market for the euro/dollar is under the control of players to increase.
Let's see what variants of developments can happen in the course of today's trading.
The bullish scenario implies a census of yesterday's highs at 1.1374 and a confident closing above this mark. In this case, the next targets of the euro/dollar bulls will be the levels indicated above.
In order for bears to manage the market, they need to lower the price below the mark of 1.1300. By the way, this is where the minimum values of yesterday's trading were shown. Given that the Kijun and Tenkan lines of the Ichimoku indicator are located directly below this level, we can expect that sellers will have serious problems pushing through the mark of 1.1300. At the same time, I do not exclude and even expect strong support in the price zone of 1.1300-1.1290. What is not an option to consider opening long positions from the selected zone? But whether such prices will give or not, the course of today's trading and the reaction of investors to the macroeconomic data will show. I recommend considering earlier and aggressive purchases after the decline to the area of 1.1330-1.1320. Another option for opening purchases can be recommended by those traders who use a breakdown strategy. This means a break in yesterday's resistance, which was formed at 1.1374. However, given that there are still a number of resistances above, such positioning seems quite risky.
If the pair stalled before reaching yesterday's highs of 1.1374, and under this level there will be reversal candlestick patterns on H4 and (or) H1, this may serve as a signal to open sales with small goals near 1.1330-1.1305. In my personal opinion, the highest priority is for the ascending scenario.
Good luck!
