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EUR/USD. November 25. Results of the day. The US currency needs new reasons to continue growth

4-hour timeframe

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Amplitude of the last 5 days (high-low): 40p - 21p - 28p - 45p - 74p.

Average volatility over the past 5 days: 42p (low).

On the first trading day of the new week, the EUR/USD currency pair was trading with a high volatility of 28 points. This is even below the average of the last five days, which is also defined as low. Thus, by and large, there is practically nothing to talk about in today's trading on the forex market. Traders extended their weekend by at least one day, but tomorrow they should be active, because on Tuesday, unlike today, there will be macroeconomic data and events that deserve attention. Today, in terms of fundamental events, there is practically nothing to highlight. Not a single important macroeconomic publication in the European Union or the United States.

In the light of the situation with an empty fundamental background, we suggest once again trying to understand the question of why the trade war between China and the United States has a greater negative impact on the European currency, and not on the US dollar, and why this effect will continue for the currency pair in the future. Roughly speaking, trade disagreements between Beijing and Washington are hitting the entire global economy, which, of course, affects each country individually. The European Union, along with each of its individual country, and Great Britain are no exception. Since the United States and China have introduced import duties, the demand for these groups of goods has accordingly decreased, consumers are looking for alternatives, respectively, the production volumes of these goods are reduced, respectively, the supply of components and raw materials is reduced, and the volume of investment in the manufacturing sectors of these goods is reduced, and this whole whirlpool involves many countries. That is why the European Union and its currencies are under pressure, as well as the direct participants in the conflict, macroeconomic indicators are falling, the euro is weakening against the US currency. However, how come the dollar does not fall? If we consider it precisely in conjunction with the euro, then the situation remains exactly the same as it was a month ago, and six months ago, and before the start of the trade war. Everything is simple and banal: the US economy is stronger, more stable, showing a slower slowdown compared to the EU economy, and monetary policy in the United States is more hawkish. Accordingly, investment flows to a greater extent precisely in America, the US stock market, despite geopolitical tensions, feels great, while Europe is suffering not only from a slowdown in the economy, but also from Brexit. For these reasons, the US dollar continues to rise in the long run, and at the moment it's even difficult to say when and why the dollar trend may stop.

It seems that in order for the demand for the US dollar to decrease, an even greater trade conflict should erupt between China and the United States, which will critically affect American companies and discourage international investors from investing in them. Demand for American goods should be greatly reduced, possibly due to the strong increase in cost and cost of production, which are possible due to the introduction of new economic sanctions and duties on American goods. US GDP should suffer much more than European GDP, only in this case will it be possible for traders to hope and investors will turn to the euro currency. But so far we do not see the reasons for this development of events.

In addition, both the central banks and their respective heads do not work in favor of the European currency. For example, the recent speeches of Federal Reserve Chairman Jerome Powell were held under the neutral flag, that is, the Fed is not going to soften its monetary policy again in the near future. The ECB led by Christine Lagarde said that "the time has come for strategic changes," and the EU economy needs additional stimulation. Thus, if we expect a new reduction in the key rate, then it is in Europe, where the key tool for influencing the economy is already in the negative area. Powell is set to give another speech tonight. It is unlikely that his rhetoric will suffer serious changes in comparison with the previous speech, however, such an event always has a high degree of significance.

From a technical point of view, the weakest downward movement in the euro/dollar pair after the formation of a new signal from Ichimoku dead cross continues. Bollinger Bands also indicate a downward trend. However, the pair is approaching the values at which there are fewer sellers of the euro. Recall the paradoxical situation, which we have already described several times earlier. If in the coming days the US dollar does not receive significant fundamental support, then it is likely that the pair's quotes will move upward.

Trading recommendations:

The EUR/USD pair resumed the downward movement, and volatility in trading sharply fell again on Monday. Thus, it is now recommended to remain selling the euro/dollar pair with targets at 1.0990 and 1.0977. It is recommended to consider pair purchases not earlier than the reverse consolidation of traders above the critical Kijun-sen line and the levels 1.1061 and 1.1073 with the first goal being the resistance level of 1.1127.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

The material has been provided by InstaForex Company - www.instaforex.com