4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: -129.2316
While the British pound is growing without apparent effort, the euro currency is moving up quite hard. The euro/dollar pair spent several days near the Murray level of "4/8" - 1.2146 and managed to break through it yesterday. Thus, the upward trend for the pair remains, however, it does not look as unambiguous as for the pound sterling. And this is quite strange since the factors that drive both pairs are now the same. More precisely, even one factor. Factor in the infusion of trillions of dollars into the American economy, which inflate the national debt and the balance sheet of the Fed by unimaginable amounts. In addition to this factor, it is even difficult to say what else may be associated with the fall of the US dollar in the long term. However, this is also the main paradox. The pound sterling and the euro currency should become cheaper in the same way and synchronously. However, the pairs are very weakly correlated with each other in recent months. For example, the euro currency was adjusted for the entire month of January, however, the pound sterling did not think about it. Moreover, the second important factor – the "balance of forces of the economies" – is simply bound to put pressure on the pound. The British economy lost about 8.7% of GDP compared to the fourth quarter of 2019, the European – 5%, the American – 2.5%. At the same time, the conclusion can be made here: the American economy, thanks to huge monetary injections from Congress and the Fed, is recovering faster than the European or British one. Thus, based on this logic, the pound sterling should rise in price much weaker than the euro. In practice, we see an opposite picture. Thus, we conclude that a logical and reasonable movement is the movement of the euro/dollar pair. The pound/dollar pair moves under the influence of a "speculative factor" that cannot be controlled.
Meanwhile, Donald Trump, who has not been heard from in the past few weeks, has announced his return to Big Politics through his aide Jason Miller. The former US president, according to people close to him, was very worried about impeachment. However, after it became known about his acquittal by the Senate, he decided to restore his power. First of all, Trump is going to resume distributing interviews to media-friendly to him. It is also reported that in the near future, the former US president will pursue two goals: to take revenge on Republican senators who voted "for" his impeachment and to help Republicans regain control of the upper house of Congress during the midterm elections in 2022. So far, nothing has been reported about Trump's desire or unwillingness to run for president in 2024. However, the Democrats, who probably foresaw such a development, are already making a new attempt to remove Trump once and for all from the Capitol, the White House, and in general from any government positions in the United States. Speaker of the House of Representatives Nancy Pelosi, who is one of the most ardent opponents of Trump, recently announced the creation of a special commission that will investigate the events of January 6. In a letter to the congressmen of the lower house, Pelosi said that the commission will investigate the facts and reasons related to the manifestation of domestic terrorism on January 6. According to the speaker, the commission will also study attempts to disrupt the process of peaceful transfer of power. The name of Donald Trump did not appear in her letter, but even without this, it is clear who the new commission will work against. However, it is not surprising at all. The Democrats will be fighting against Trump for a long time to come.
At the same time, we have to admit that so far there are no important news and events that could affect the movement of the euro/dollar pair. The US Congress has not yet announced the adoption of Joe Biden's plan to save the American economy. But we believe that this event can "help" the dollar to resume falling against the European currency (the pound does not need such support). But so far, no such information has been received. In Italy, the political crisis, which could hypothetically put pressure on the euro, can be said to have passed, at least for a while. Thus, the markets will now trade the pair exclusively on technical factors. Therefore, we also draw the attention of traders to the "technique", because there is simply nothing else to pay attention to right now. In recent days, the upward movement has slowed down. The pair broke through the level of 1.2146 with great difficulty, but could not continue its upward movement. Thus, now a new round of downward correction can begin, during which the pair can overcome the moving average line. We remind you that on the 24-hour timeframe, the quotes bounced off the Senkou Span B line of the Ichimoku indicator and the 50.0% Fibonacci level. Thus, in the long term, we are in favor of maintaining the upward trend. However, in the short term, a downward correction is quite possible. And it can continue just until the US Congress approves a new package of incentives. Taking into account the fact that very few fundamental and macroeconomic events are planned for this week, we also do not expect strong and trending movements. Moreover, the pair has been trading with clearly reduced volatility for more than a week, which does not exceed 50 points per day. On Monday, February 15, an absolute anti-record was set - 28 points per day. Thus, traders should also understand that now is not the most favorable time for active trading. You can trade, as the movements are calm, but the profit can be low, as the movements themselves are extremely weak.
The volatility of the euro/dollar currency pair as of February 17 is 46 points and is characterized as "low". Thus, we expect the pair to move today between the levels of 1.2066 and 1.2158. The reversal of the Heiken Ashi indicator back to the top may signal the resumption of the upward movement.
Nearest support levels:
S1 – 1.2085
S2 – 1.2024
S3 – 1.1963
Nearest resistance levels:
R1 – 1.2146
R2 – 1.2207
R3 – 1.2268
Trading recommendations:
The EUR/USD pair has adjusted to the moving average and may try to resume its upward movement. Thus, today it is recommended to open long positions with targets of 1.2146 and 1.2158 in case of a new rebound from the moving average line. It is recommended to consider sell orders if the pair is fixed below the moving average with targets of 1.2066 and 1.2024.
The material has been provided by InstaForex Company - www.instaforex.com