4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -103.0492
The EUR/USD currency pair continued its rather weak downward movement on Monday, breaking the moving average line on Friday. Thus, for now, the new downward trend continues, however, it still looks somewhat uncertain. Bears are clearly afraid of serious purchases of the US currency while the "coronavirus", economic and political crises continue to rage in theUnited States themselves. Thus, despite the fact that the strengthening of the dollar has been brewing for a long time, it is likely that the bulls will soon return to the market, which will lead to a new round of growth of the European currency. At the moment, the pair's quotes have not even managed to work out the previous local minimum. Trading on the first trading day of the week was quite boring and low-volatility. There were no macroeconomic statistics scheduled for this day in either the European Union or the United States.
But there was news of a political nature, just what America has been missing since the time when Trump became President. Last weekend, it became known that Donald Trump signed executive orders that provide financial assistance to the American population affected by the pandemic. At first glance, what's so strange about this news? But this is only at first glance. In fact, Trump went against the US Congress. Any resolution, law, or decree must be approved by a majority vote of Congress before being signed by the President. Thus, the documents signed by Trump have no legal force. In this way, the President of the United States can sign any regulations and laws that he wants every day, and in January 2021, he can simply re-appoint himself President and refuse to leave the White House in the event of an election defeat. However, this is only one side of the coin. The most interesting thing is that one of Trump's executive orders involves paying Americans who lost their jobs due to the "coronavirus", bonuses to unemployment benefits in the amount of $ 400 a week. It was around these "coronavirus allowances" that the debate between Democrats and Republicans was going on. Democrats insisted on keeping $ 600 a week, and Republicans wanted to reduce it to $ 200, since for many Americans, the total benefits payments exceeded wages, which completely deprived them of motivation to look for a new job. The disputes went on for several weeks, however, the parties failed to reach a compromise. However, the last proposal of the Democrats suggested lowering the volume of the package of assistance to the American economy by 1 trillion dollars (which meant reducing the amount of payments to Americans), if the Republicans also raised their offer by 1 trillion. By and large, in this case, the parties could agree on about 2 trillion aid packages. However, instead, Trump rejected such a proposal and signed an executive order that implies not only an increase in "coronavirus allowances" (relative to the original proposal of the Republicans), but also a tax holiday on income tax for all Americans whose earnings are less than $ 100,000 a year. According to experts, more than 90% of Americans fall into this category. In fact, for them, Trump canceled income tax before the end of the year and promised new tax breaks if he is re-elected President. It is unclear how Trump is going to fill the budget if taxes are not paid by almost all US citizens. The national debt is already inflated to 26 trillion dollars, and by the end of the year it may reach 30 trillion. However, most of all, what will the Democrats do now? After all, in fact, Trump's rulings can easily be overturned through the courts, since Congress did not approve them. Yes, it will take some time to consider this case, however, there is little doubt that the outcome will be successful for the Democrats. We believe that with this step, Trump wanted, as usual, to increase his political ratings, "taking care of the American population, which is waiting for help now" (a few weeks ago, "coronavirus payments" were stopped, as the previous package of assistance to the economy banally ended). Nancy Pelosi and Chuck Schumer immediately accused Trump of trying to distract the attention of the electorate from his own failed policies during the pandemic.
Well, while Donald Trump is at war with the Democrats and waiting for their response, China has imposed retaliatory sanctions against the United States. Under them were 11 officials from America. Beijing said that the return of Hong Kong to China was met with universal approval, and Hong Kongers themselves received a number of unprecedented rights. There was no other news on the first trading day of the week.
On Tuesday, August 11, the European Union will release several secondary reports that are unlikely to interest traders. We are talking about the indices of economic sentiment in Germany and the EU from the ZEW Institute. In the United States, no publications are planned for today, but at the same time, new data on the confrontation between Democrats and Republicans may be received. The US President gave the opportunity to start a new trial against himself, and accuse himself once again of abuse of power. The US dollar is still very indirectly related to this information. He is more interested in data on the "coronavirus" epidemic. There are certain positive aspects here, as the number of people infected daily has decreased by about 10-15 thousand. At the same time, we cannot say that the pandemic has receded.
From a technical point of view, the downward movement can continue, however, it can also be interrupted at any time, since the bears are extremely weak at the moment. In some ways, we are again faced with a paradoxical situation, since the euro currency grew for almost three months (with small interruptions) and managed to add about 12 cents. Thus, there should be a correction now, however, buyers do not close long positions, and sellers do not open short ones. All this leads so far to a sluggish decline in quotes.
The volatility of the euro/dollar currency pair as of August 11 is 97 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.1654 and 1.1848. A reversal of the Heiken Ashi indicator upward will signal a round of upward correction within the now downward trend.
Nearest support levels:
S1 – 1.1719
S2 – 1.1597
S3 – 1.1475
Nearest resistance levels:
R1 – 1.1841
R2 – 1.1963
Trading recommendations:
The EUR/USD pair may have started a new downtrend, breaking the moving average. Thus, at this time, it is recommended to sell the currency pair with the goals of 1.1719 and 1.1654 before the Heiken Ashi indicator turns upward. It is now recommended to open buy orders no earlier than the pair is re-anchored above the moving average line with the first targets of 1.1911 (the previous local maximum) and 1.1963.
