Hello dear colleagues!
The last five days of trading were not favourable for the US dollar as it weakened against the vast majority of its main rivals. I suppose that market participants should be accustomed to such an uneven, swinging course of trading each week in a row. During a week, the greenback is getting stronger across a wide range of the market. However, in the following five-day period it loses its ground. Therefore, it is quite probable that the announcement of the Fed's reduction of the quantitative easing program may not cause such a violent reaction of market participants, and hence an increased volatility. Only time will tell.
A lot of different macroeconomic statistics are expected this week. However, significant events like ECB and/or Fed's decision on interest rates and the US labour market data are not scheduled. So, let's take into account only current events. Today, at 11:00 MSK three IFO German indexes are due. At 15:30 MSK, the US will release data on economic activity from the Federal Reserve Bank of Chicago. Consequently, the introductory part is likely to end at this point. It is time to analyze the price charts of the EUR/USD currency pair.
Weekly
Concerning the Ichimoku indicator, it is really essential when used appropriately! Notably, the red Tenkan line, the blue Kijun line, and both boundaries of the Ichimoku cloud exert a powerful influence on the price dynamics. Depending on the situation, all these instruments may represent quite strong supports and/or resistances. A typical example (in this case a support) is clearly shown on the weekly price chart. Bears' attempts to push the euro down from the Ichimoku indicator cloud in the previous two weeks failed and produced no desired result to the downside traders.
Moreover, euro bulls managed to close the trades above the 200 EMA last week after the previous candlesticks closed under the very strong orange 200-exponential moving average. I think it is a positive sign for bulls. Now, the pair is entering the area of 1.1725 with the red Tenkan line and black 89 exponential moving average. If euro bulls manage to close this week above the 89 EMA, it will open a way to a highly significant and very strong level of 1.1900. However, I believe it is too early to discuss it. Besides, chances of a downward scenario are also quite high, and the pair's way can pass in the southern direction.
Daily
The main feature of the daily timeframe is the pair's unsuccessful attempts to resume rising higher than the resistance level of 1.166 broken earlier. It is shown on the chart and needs no description. Today, the EUR/USD pair makes the third attempt to return above the broken level of support 1.1664. However, at the moment of completing this review the price again rebounds from this mark. If bulls' persistence regarding the single currency will produce a beneficial effect and the quote returns above 1.1664, this level will be considered as a false break. Besides, it will create the preconditions for further growth, the nearest target of which will be the all-time and strong technical area of 1.1700-1.1750. The key task for euro bears is to move the pair down from the weekly Ichimoku cloud. If this task is accomplished, the pair is likely to decline and test the strong and significant support zone of 1.1525-1.1500.
Now, it is time to mention trading recommendations. In case the pair's growth to 1.1700 and the appearance of bearish reversal candlesticks or a candlestick there, it will be a signal to open short positions. Notably, there is also a 50MA above 1.1700, which will produce additional and strong resistance to the price. I recommend buying after the pair falls to the red Tenkan line and bullish candlestick signals will appear there on this or smaller time frames. They will be specified in tomorrow's EUR/USD article. That is all for today.
Good luck!
