At the auction of the last five days, the main currency pair EUR/USD increased by 0.67% against the US dollar. In addition, the US dollar declined against all major competitors, except the Japanese yen. The speech of the chairman of the US Federal Reserve System (FRS) with the semi-annual report on monetary policy dispelled the hopes of market participants that the Federal Reserve will start a cycle of tightening monetary policy at an earlier date. To date, more options that the Fed will begin raising rates are reduced to 2023. Although a week earlier, there was hope that tightening could start in the middle of next year. The current week is also expected to be highly saturated with various macroeconomic reports, where, among all others, data on the US labor market will stand apart. These important releases will be released on the last day of weekly trading, namely on Friday, July 2. In addition, since the date has already been mentioned, it is necessary to recall that this week the market will close the auction of the first summer month. Therefore, it should also be attributed to a significant event. In the meantime, let's consider the results of weekly trading.
Weekly
As already noted at the beginning of the article, the EUR/USD pair rose at the auction on June 21-25. At the same time, it should be noted separately that the strong support zone of 1880-1.1835 brilliantly fulfilled its function and did not let the quote go higher. As a result, the bears' attempts to continue the exchange rate pressure on the instrument were limited to 1.1847, and it was from here that the strengthening of the exchange rate began. Another important point is that the weekly trading ended above 1.1900 and slightly above the strong technical level of 1.1930, at 1.1934. I believe that this is a very important factor that must be taken into account when determining the prospects for the price movement of the euro/dollar. However, the growth was also limited, and the chart clearly shows that this was done by the blue 50 simple moving average, which blocked the quote's further path in the north direction. If we consider that the Tenkan and Kijun lines of the Ichimoku indicator are located in the area of 1.2026-1.2056, then we can assume that the euro bulls are waiting for "bitter bread."
Simply put, it will be extremely difficult to pass the most important psychological level of 1.2000 and the price zone of 1.2026-1.2056. One hope is that this will become possible if the labor market data comes out extremely weak and disappoints investors.
On the other hand, strong US reports do not leave a stone unturned from the support zone of 1.1880-1.1835. At the same time, the breakthrough of this zone may occur earlier than Friday's labor releases from the United States. Therefore, a lot will depend on market sentiment here.
Daily
A characteristic feature on the daily euro/dollar chart is that after forming the "Bullish Absorption" candle, the growth began. However, the rise was short-lived and ended exactly at the strong technical level of 1.1975, where the lower border of the daily cloud of the Ichimoku indicator also passes. After reaching this price zone, long upper shadows began to appear in the daily candles, which signaled further problems with the upward movement of the course. For the pair to continue growing, it is necessary to break through the sellers' resistance at 1.1975, enter the cloud and gain a foothold in it. If this condition is met, the next targets at the top will be 1.2000, 1.2030, and 1.2055. The bears have the same tasks. First, they need to lower the rate below the 1.1900 mark and then break through the two support levels of 1.1880 and 1.1835.
Trading recommendations for EUR/USD:
Given the technical picture on the two timeframes considered, the subsequent depreciation and sales have a slightly higher priority. At the same time, it is impossible to dismiss the growth options and the opening of buy positions. To open short positions, I suggest taking a closer look at the price approach to 1.1935 and 1.1955. The confirmation signal for sales will be the corresponding bearish candlestick analysis models on these smaller timeframes. We are looking for purchases under the same conditions after a decline in 1.1900-1.1880 and 1.1880-1.1835.
