As usual, in Monday's review of the main currency pair of the Forex market, we will summarize the results of the five-day trading session that has ended, and we will also try to understand and determine the further price movement of EUR/USD. At the same time, trading recommendations will be given, which are relevant at the moment.
So, at the auction on April 12-16, the US dollar weakened against all major competitors. I do not think that such dynamics of the US currency were seriously influenced by the comments of the chairman of the US Federal Reserve System (FRS), the meaning of which was that it is still very far from the start of raising rates. I do not think that this was crucial in the weakening of the US currency, since market participants understood and realized it. Let me remind you that earlier, the head of the Federal Reserve and other high-ranking monetary officials of the world's largest central bank did not inspire hope in investors regarding the early start of monetary policy tightening. As for me, a fairly high estimate of the pace of economic recovery from the effects of COVID-19, put forward by Powell, on the contrary, should have supported the dollar. The same can be said about the higher-than-expected growth in consumer prices in the United States. However, neither these nor other factors had a proper positive impact on the US currency. I believe that this should not be surprising. This is not the first time this has happened, meaning that the fundamental factor is either not taken into account at all, or positive American statistics are playing against the US dollar. To complete the fundamental part of the review, I will highlight the most important macroeconomic events that will or may affect the price dynamics of the euro/dollar this week. Of course, the main event of the current week for EUR/USD will be the decision of the European Central Bank on interest rates and the subsequent press conference of ECB President Christine Lagarde. Since changes in the main interest rate are not expected and it is likely to remain at zero, the main attention of market participants will be focused on the speech of Christine Lagarde. The ECB will announce its decision on supplies on April 22 (at 12:45 London time), and the press conference of the ECB head will begin at 13:15 London time. From the US statistics, we can distinguish the index of business activity in the manufacturing sector, as well as the index of business activity for the services sector from Markit, which will be released on Friday, at 14:45 (London time). Well, now we turn to the analysis of the price charts, and let's start with the results of the completed weekly trading.
Weekly
Following the results of the last five-day trading session, the main currency pair showed an upward trend, while strengthening by 0.69%. Here it is necessary to identify several points. First, as a result of the growth, the pair almost came close to the most important psychological level of 1.2000. Second, trading on April 12-16 closed above the red Tenkan line and the blue Kijun line of the Ichimoku indicator. At the same time, it should be noted that the breakdown of the strong resistance of sellers at 1.1988/90 did not occur, despite the maximum values shown at 1.1994. Nevertheless, the euro bulls gradually (step by step) solve their problems and move the quote up. And yet, the main factor that will indicate the ability of the pair to continue moving in the north direction will be the breakdown of the strong and important price zone of 1.2000-1.2030. Thus, it is difficult to overestimate the results of the weekly trading that began today. If EUR/USD completes them above 1.2000 and also the strong technical level of 1.2030, the road to much higher prices will open, where the next target will be another significant and difficult area of 1.2080-1.2120. In the event of an unsuccessful attempt to break through the price zone of 1.2000-1.2030 and the formation of a bearish reversal candle model with a closing price below 1.2000, and even more so below 1.1988, we can consider the rebound up from 1.1700 completed and hope for a price reversal in the south direction.
Daily
The picture on the daily chart promises players to increase the rate of additional and quite serious problems when trying to pass the level of 1.2000. The fact is that it is here that the lower border of the daily cloud of the Ichimoku indicator passes, which, along with the most important level of 1.2000, is likely to provide strong resistance to growth attempts. On the other hand, closing three daily candles in a row over the black 89 exponential and blue 50 simple moving averages increases the chances of continued growth. I am inclined to believe that the ECB's decision on rates and the press conference of Christine Lagarde will have a significant impact on the outcome of weekly trading. As a rule, such important events do not pass without a trace.
Trading recommendations for EUR/USD:
Despite the existing prerequisites to continue the rise, the presence of a very close strong resistance in the area of 1.1994-1.2030 leaves chances for positioning in both directions, where the main trading recommendation is still buying. I suggest looking closely at opening long positions after short-term declines to the levels of 1.1975, 1.1960, and 1.1925. If bearish patterns of Japanese candlesticks appear under the resistance level of 1.1994 or in the price zone of 1.1994-1.2030 on this or lower timeframes, this will be a signal for opening sales. In both cases, I do not recommend setting large goals yet and taking into account the signals following the timeframe value. Let me remind you that on the older charts, the signals are usually stronger and more often worked out by the market.
