4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -74.2912
The EUR/USD currency pair was finally paralyzed by Thursday, December 24. If the trading week started with a drop of 120 points and the same growth, then the volatility on Thursday was about 40 points. In principle, this behavior of traders is not at all surprising. Catholic Christmas will be celebrated tomorrow, however, many financial institutions and various institutions are already not working today. The same applies to foreign exchange market participants. Many have stopped trading, some have already gone on vacation. Thus, the weakest movement of the pair during the penultimate trading day is quite understandable. Today, the foreign exchange market will not work at all, so those who want to enter the market during the Christmas and New Year holidays will have to wait for Monday.
There has been no major news from America since the presidential election. However, in the last few days, Donald Trump has become active again, returning increased media attention to his person. Up to this point, there was a feeling that America had a "long vacation". Trump regularly appealed to all sorts of courts to review the results of the 2020 election, however, he failed on all fronts. Well, apart from the elections and topics related to them, there was nothing to talk about at all. In the last few days, America has remembered that since the beginning of August, they have not been able to agree on a package of stimulus measures for the American economy. "For the American economy" - sounds loud and proud, however, we are talking about ordinary Americans and those who lost their jobs in connection with the pandemic and the crisis caused by it. Most of the proposed and agreed package of incentive measures was directed at such people, on payments to them. It was proposed that each American make a payment of $ 600, as well as pay "coronavirus allowances" to all unemployed people for $ 300 a week. However, Donald Trump had his way and vetoed the bill, saying it was "beggarly" and "pathetic." The US President believes that Americans deserve to get more money, perhaps "2 or 4 thousand dollars per family". Therefore, they will not receive anything, since Trump vetoed the congressional proposal.
In addition to the new stimulus package, Trump also blocked the defense budget for the fiscal year 2021. It was also previously approved by the US Congress. The US President believes that the military budget in its current form affects veterans and US history, and also does not contain an important point about strengthening control over social networks. Recall that it was Donald Trump who repeatedly clashed with both Twitter and Facebook. The House of Representatives of the US Congress, led by Nancy Pelosi, has already said that it will initiate a vote to circumvent the president's veto on the defense budget. In a statement, the speaker of the Lower House called Trump's actions "an act of astounding recklessness" that threatens the country's security. In general, the term of office of Donald Trump expires in less than a month, however, he continues to act not entirely in the interests of his own country. Further, the US currency can not find any reasons to start getting more expensive in pair with the euro.
Although the quotes of the euro/dollar pair have been corrected for several days, this movement cannot be called a correction in the literal sense of the word. The pair fell back from 2.5-year highs by 140 points. The last round of the upward movement was almost 700 points. That is, the pair has adjusted by 20% so far. That's not enough. Thus, in general, this is not even a correction, but a banal downward pullback. Thus, the upward movement can resume almost at any time. Well, we have already talked about the reasons for the strongest strengthening of the European currency in 2020 more than once. There are no visible reasons. Most of the fundamental factors, if they do not speak in favor of the dollar, then they do not support the European currency. Thus, it would be more logical to see a long-term flat in recent months. However, traders continue to buy the euro, thus, the upward trend persists. Therefore, the euro's growth is purely speculative. There is another possible reason for the strengthening of the euro currency. In the foreign exchange market, major players mainly conduct operations. For example, we can assume that some large banks need euros and they buy them for dollars. The volume of transactions is estimated in billions and tens of billions. Naturally, such operations cause a strong skew in demand towards the euro, which is becoming more expensive. And for ordinary traders who rely on fundamental factors and macroeconomic statistics for making trading decisions and forecasting, the true reasons for the strengthening of the euro remain hidden.
The volatility of the euro/dollar currency pair as of December 25 is 76 points and is characterized as "average". Thus, we expect the pair to move on the 28th between the levels of 1.2105 and 1.2257. The reversal of the Heiken Ashi indicator to the top signals a new round of upward movement.
Nearest support levels:
S1 – 1.2146
S2 – 1.2085
S3 – 1.2024
Nearest resistance levels:
R1 – 1.2207
R2 – 1.2268
R3 – 1.2329
Trading recommendations:
The EUR/USD pair is trying to continue its downward movement. Thus, on December 28, it is recommended to stay in sell orders with targets of 1.2146 and 1.2105, until the Heiken Ashi indicator turns up. It is recommended to consider buy orders if the pair is again fixed above the moving average with targets of 1.2257 and 1.2268. Now the volatility of the pair has fallen significantly and there are signs of a flat.
The material has been provided by InstaForex Company - www.instaforex.com