At the auction last week, the US dollar showed strength and strengthened against all major competitors. In particular, the main currency pair of the Forex market EUR/USD fell by 0.66%. Investors' attention was still focused on expectations that the US Federal Reserve System (FRS) will begin to reduce bond purchases in the near future, namely by the end of this year, an increase in the number of cases of COVID-19 diseases, as well as macroeconomic statistics from the United States. I believe that the designated market priorities will not change this week. The most important event will be an extended meeting of the Federal Reserve, which includes a press conference by the head of this department, Jerome Powell. Market participants will look forward to this event, and it will take place on Wednesday to catch new signals regarding the curtailment of the quantitative easing program.
Although many market participants expect the Fed to tighten monetary policy, which will be announced at the next meeting, in my personal opinion, not everything is so clear. Macroeconomic statistics from the United States are mixed. In some regions, including the United States itself, there are still outbreaks of COVID-19, and everything is not so simple and unambiguous with inflationary pressure in the States. I would venture to assume that Jerome Powell will refrain from any specifics at his press conference on Wednesday. At the same time, the main American banker will confirm the probability of the beginning of the curtailment of economic incentives, but subject to several conditions. In the meantime, as the author of this article sees, the main motive for starting the reduction of the QE program is a fairly strong and rapid recovery of the US labor market. However, it is still too early to draw unambiguous conclusions on this issue. The September labor reports should confirm this trend. And we turn to the consideration of price charts and start with the results of last week.
Weekly
As noted at the article's beginning, the last five-day trading period certainly remained behind the US dollar. As a result of the decline in trading on September 13-17, some important changes occurred weekly. First of all, this is the pair's departure under the red Tenkan line of the Ichimoku indicator and the black 89 exponential moving average. I also consider it necessary to pay attention to the fact that the last bearish candle has no lower shadow. I believe that this factor indicates the strength of bearish sentiment and high prospects for continuing the downward dynamics of the main currency pair. If this assumption is correct, the pair will retest the currently key support level of 1.1664. However, the orange 200 exponential moving average, which is located at 1.1630, may prevent the bears from trying to push through this level for the pair. By the way, this level itself is technically quite strong and has repeatedly influenced the price movement. In general, if we summarize the review of the weekly chart, then only a true exit from the current range of 1.1909-1.1664 can become a signal regarding the further direction of the quote.
Daily
Regarding the daily timeframe, I would like to note that the technical picture is becoming more and more bearish. As can be seen, the pair has already fallen below all the indicators used, the last of which was the blue Kijun line, as well as the 50 simple moving average. Currently, only a true breakdown of the support level of 1.1664 with mandatory consolidation under this mark remains to confirm and strengthen bearish sentiment. However, at this stage, the pair is trading in a very strong and significant price zone of 1.1745-1.1700, which is also historically quite strong, since it has repeatedly reversed the course and even changed trends for EUR/USD. Given this factor, players on the downgrade will first need to lower the price below the level of 1.1700, and this task is by no means easy. If we identify trading recommendations, then I consider the main selling of the pair, which is better to consider after short-term pullbacks to the area of 1.1760-1.1775. Tomorrow's review will discuss possible entry points into the market in more detail, which will consider smaller time intervals.
