The EUR/USD pair traders continue to ignore macroeconomic reports, amid geopolitical tensions and uncertainty about the prospects for a massive infrastructure plan. The pair is trading in a narrow price range, reflecting indecision on the part of both buyers and sellers. But judging by the price dynamics of the previous two days, there are still certain conclusions. Buyers of EUR/USD have been moving pushing the pair upwards for two weeks, that is, since April began. But as soon as the level of 1.2000 appeared, the upward impulse began to fade, and eventually stopped. As a result, the EUR/USD bulls succumbed to the strong resistance level and did not dare to reach it.
However, another problem is that the bears failed to take the initiative: the US dollar is still showing weakness. As a result, there was a situation when both sales and purchases of the pair became a risky event. Investors quite reasonably doubt that the euro will be able to break through the level of 1.2000, and most importantly, consolidate above this target. Therefore, they are not in a hurry to open longs. However, the current state of the dollar is not credible. The "dovish" rhetoric of the Fed members on the wave of strong macroeconomic reports confused dollar bulls. On the one hand, the US economy is recovering at an active pace, while on the other, the Fed does not get tired of repeating its statement that the current parameters of monetary policy will not be changed in the near future. In addition, the US dollar came under background pressure and other fundamental factors, including the uncertain prospects for a large – scale infrastructure project, as well as problems with the Johnson & Johnson vaccine. It can be recalled that the US decided to suspend the use of this drug.
As mentioned above, traders ignore the macroeconomic statistics from the US, including key ones. The market ignored strong Nonfarm and fairly good inflation dynamics. At the same time, traders ignored the release of US retail volume data yesterday, despite the fact that the indicator updated an almost-year high: the overall indicator surged to 9.8% (best result since May last year). Excluding car sales, this indicator also updated its multi-month high, increasing to 8.4%, which is the best result since June 2020.
Meanwhile, traders remained indifferent to the significant news from China during today's Asian session: the economy of this country showed record growth, although it did not reach the forecast values. In particular, China's GDP in the Q1 of this year rose by 18.3% compared to the same period last year. The accompanying statement states that this trend is due to "an improvement in the epidemiological situation and the active recovery of key economic indicators." But at the same time, it should be noted that the indicator was slightly lower than the expectations of most analysts, who predicted growth of 19-20%.
However, traders ignored both the record growth of the Chinese economy and the temporary growth to the forecast level. In this case, the EUR/USD pair is still drifting in the mid-19th figure area, waiting for further instructions, that is, for a more powerful information driver.
Now, if we consider short-term trading, then it is best to take a wait-and-see position. The nearest resistance level of 1.2000 is only a few points away – but there is no guarantee that buyers of the EUR/USD pair will still decide to attack this target, as it looks like an impassable price level. Therefore, longs in the range of 1.1950-1.2000 look risky, since it is likely that the pair reached its correction peak during the past day. After all, the upward impulse began to fade gradually and finally worked out only yesterday.
Analyzing the daily time frame, the pair has been showing a wave-like upward trend since April 1, going from the level of 1.1704 to the local high of 1.1993. The last upward wave was from April 12 to 14, but even within the upward momentum, traders retreated from the borders of the 1.20 mark, recording a profit. So, it is risky to go into purchases in the expectation of a possible breakdown on the 1.2000 mark.
On the other hand, if we talk about the downward scenario, then it is necessary to consider either a medium-term time period or a long-term one. If the Euro currency does not show character in the near future, the bears will take control: if not in the context of the continuation of the downward trend, then at least in the context of a massive downward pullback at least to the level of 1.1890 (Tenkan-sen line on the daily TF).
