4-hour time frame
Amplitude of the last 5 days (high-low): 67p - 28p - 44p - 34p - 41p.
Average volatility over the past 5 days: 43p (average).
The third trading day of the week for the EUR / USD pair ends with a corrective movement again, which may move into a new upward trend in the near future. During today, traders ignored macroeconomic statistics, being at the mercy of optimism regarding the signing of a trade deal between China and the States in the White House. Oddly enough, such news supports the European currency, although a trade conflict seems to be between China and America. Thus, it is clear that the conflict also affects European countries to one degree or another. But why then the US dollar does not go up, which also gets rid of one of the negative factors? Moreover, a report on industrial production was published today in the European Union itself, which very predictably showed a 1.5% drop in the indicator, which is worse than the forecast value (-1, 1% g / g). Mostly, this report is another in a series of weak or failed macroeconomic statistics from the European Union. Nevertheless, the reduction in industrial production is not surprising given the weak business activity in the manufacturing sector of the EU countries. But the growth of the European currency - causes. Once again, we have to return to the topic of justice and the validity of strengthening the euro. It is clear that one currency (in our case, the dollar) cannot grow constantly. We need corrections, pullbacks and if we look at the whole picture in this context, then everything is logical. The dollar regularly rises in price, and corrections of euro currency are justified simply on the need to adjust and do not correlate with macroeconomic statistics. Well, at least such a picture was just observed today. During the day, the euro / dollar pair reached the upper border of the Ichimoku cloud. So now, the bears, which obviously have fundamental support, have new good chances for the pair to decline. On the other hand, the price rebound from the Senkou Span B line is a strong signal. However, we will be able to see whether traders will be able to return the downward trend to the currency market only tomorrow and the day after tomorrow.
Meanwhile, today is January 15, and the markets are still waiting for the signing of the "first phase" agreement and the official announcement of this. And while time goes on, we would like to note once again that it is still very, very early to talk about the victory of Donald Trump and the end of the trade war. According to many experts, the signing of the "first phase" agreement is nothing more than Trump's political move in order to somehow smooth out the electorate's displeasure. It's no secret that Trump and China are fighting in fact, but American consumers and American business are paying for this war, for which goods from China have become more expensive due to duties. Moreover, Donald Trump, as often happens among confident leaders, clearly counted on a quick victory. Those are: introduction of duties - China is afraid of monetary losses - makes concessions - countries sign an agreement that is beneficial to the States, - peace, friendship, chewing gum. However, China turned out to be a "tough nut", and the parties in total negotiated for almost two years. And now, when the first step towards reconciliation seems to have been taken, many experts note that the current agreement is the easiest part of the general trade agreement. Thus far, the simplest questions have been resolved, and most of the duties have remained in effect. However, Trump will now be able to announce his next victory and count on raising his political ratings. and the parties in total negotiated for almost two years. And now, when the first step towards reconciliation seems to have been taken, many experts note that the current agreement is the easiest part of the general trade agreement. Thus far, the simplest questions have been resolved, and most of the duties have remained in effect. However, Trump will now be able to announce his next victory and count on raising his political ratings. and the parties in total negotiated for almost two years. And now, when the first step towards reconciliation seems to have been taken, many experts note that the current agreement is the easiest part of the general trade agreement. Thus far, the simplest questions have been resolved, and most of the duties have remained in effect. However, Trump will now be able to announce his next victory and count on raising his political ratings.
In the light of the trade war, I would like to note the actions of the Fed to flood the US economy with cash in very large amounts. Many experts called it a full-scale program of quantitative easing, but the Fed disallows QE and calls such injections temporary measures aimed at maintaining liquidity. However, we find it strange that the US economy suffers much less from a trade war with China than the EU economy, for example. Most likely, the Fed just hides the fact of a rather impressive stimulation of the American economy and Jerome Powell can do this for only one reason - the US president should not be shown in a negative light to voters less than a year before the presidential election . It can be noticed, how did any criticism of Jerome Powell and the Fed by Donald Trump cut short, which failed to reach a rate reduction to 0%? Perhaps the parties agreed, as they say, "amicably"? The Fed will stimulate the economy secretly, with cash injections so that the negative effects of the trade war are not visible. In turn, Trump will negotiate with Beijing from a position of strength, and in the eyes of the electorate - look like an invincible leader, whose actions did not lead to a fall in the economy, but, on the contrary, will lead to its even greater growth.
The Euro currency is still showing growth, but high chances remain for the resumption of the downward trend until the Ichimoku cloud is overcome. Even in the case of overcoming the Senkou Span B line, it is unlikely that the euro will be able to rise in price too much. European statistics upset European bulls with alarming regularity.
Trading recommendations:
The pair EUR / USD continues to adjust. Thus, now, it is recommended for traders to wait for the pair to consolidate back below the Kijun-sen line and resume trading for a decline with goals 1.1084 and 1.1067. Moreover, it will be possible to consider purchases of the euro / dollar pair not earlier than the traders of the Senkou Span B line overcome with the first goal the resistance level of 1.1188.
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 indicators 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