Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
The EUR/USD currency pair on Monday, March 29, maintained a downward trend but traded rather boring and inactive. However, the same applies to trading last Friday. Thus, the US currency continues to rise in price in the framework of the same global correction, which we have already discussed more than once. The problem is that it is very difficult to name the specific fundamental reasons for the current strengthening of the US currency. In the last two weeks, the top officials of the EU and the US have held quite a lot of press conferences and speeches, however, 95% of the information that was announced has long been known to traders. They were not interested in the phrases about "economic recovery", "the continuing risks of a pandemic" and "the need to achieve 2% inflation". For some time, many experts said that the growth of the dollar is associated exclusively with the growth of the yield of American treasuries. But treasuries have not been rising for a week, and the US dollar continues to strengthen. Thus, we believe that this factor can not be taken into account. Thus, there are simply no new important factors that could support the US currency now. There are no particularly serious changes in the American or European economy right now. The key differences are the rate of vaccination growth, the rate of economic recovery, and the amount of money being poured into the economy to stimulate it. Let's try to understand these three differences to find out what exactly provokes traders to make new purchases of the US currency.
To begin with, the US dollar has been falling for the last 9 months of 2020. And during this period, many people had a question, and based on what exactly did it fall? 2020 was quite a difficult year for the States. The pandemic that hit the United States the most. Donald Trump, who made too many fatal mistakes as president. The most high-profile elections in the last 100 years. The Republicans' loss of control of the Senate and the formation of a fully democratic government. Impeachment of Donald Trump from the House of Representatives (second in a row). Racist scandals. Political crisis. In general, there were plenty of reasons for the fall of the dollar. But at the same time, it was still hard to believe that because of the impeachment process of Trump, for example, the US currency is falling. We still tend to believe that initially, the US currency declined solely on the strongest decline in the economy in the second quarter. Then this decline began to be supported by the factor of trillions of dollars that poured into the economy, increasing its money supply. Thus, if these reasons are correct, then we are now seeing only a technical correction for the euro/dollar pair. After all, the situation has not changed much in recent months. The US economy was recovering at a much faster pace than the European one last year. Trillions of dollars in economic stimulus programs were allocated last year and will continue to be allocated this year. Thus, the most global factors remained the same. Of course, we can also compare the epidemiological situation in the United States and the European Union. At the moment, vaccination of the population in the United States is much faster than in the EU. However, at this time, vaccination is faster in many countries than in the EU. We do not believe that this reason matters to traders. In any case, the European economy will recover more slowly. At least with high vaccination rates, at least with slow ones. At least with the third "wave" of the pandemic, at least without it.
The most interesting thing is that the pound sterling in its last round of correction, which took 1 month, fell by 560 points, and the euro - in three months of correction, lost 580 points. Although volatility has always been higher for the pound. Moreover, on Monday, while the European currency continued to move since last week, the pound sterling again began to rise in price, although there are much fewer objective reasons for its strengthening than the euro currency. This means, firstly, that there is no correlation between the two main pairs at the moment. Secondly, the factors that affect the movement of the euro/dollar pair and the pound/dollar are not the same now. And since they are not the same, it is unlikely that they come from the States, since it is the dollar that unites these pairs. Hence the conclusion: the euro continues a technically justified correction against the entire upward trend that began a year ago, and the pound remains at the mercy of the "speculative factor", so it corrected much weaker, and now it has again begun to gravitate towards an upward movement, which is extremely difficult to explain if we take into account the fundamental situation in the UK. But we remind traders once again that any fundamental and technical factors are only assumptions of future price changes. Everything will depend on market participants, especially large ones, who are not always guided by generally accepted types of analysis when making any transactions in the foreign exchange market. Therefore, any fundamental hypotheses and forecasts must necessarily be supported by technical factors.
At the end of the article, we would like to focus on Joe Biden's first press conference, which he held last Thursday. As we've said before, Biden is the exact opposite of Donald Trump. Trump gave public comments every day, his social networks were bursting with comments that were posted, even if not personally by the president himself, but they came from his name. In the case of Joe Biden, there was total silence for 68 days. At the press conference, Biden appeared with a bunch of cheat sheets, answered questions with some delay, had a booklet with photos of all the journalists and notes opposite them present in the White House, made several mistakes, and generally did not look like a confident and strong leader of the nation. Not a single sharp question was asked of him. We were once again convinced that on November 3, 2020, Americans did not vote for Biden. They voted against Trump.
The volatility of the euro/dollar currency pair as of March 30 is 53 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1723 and 1.1829. A reversal of the Heiken Ashi indicator to the top will signal a round of upward correction.
Nearest support levels:
S1 – 1.1719
S2 – 1.1658
S3 – 1.1597
Nearest resistance levels:
R1 – 1.1780
R2 – 1.1841
R3 – 1.1902
The EUR/USD pair continues its downward movement. Thus, today it is recommended to stay in short positions with targets of 1.1719 and 1.1706 until the Heiken Ashi indicator turns up. It is recommended to consider buy orders if the pair is fixed back above the moving average with a target of 1.1963.