The EUR/USD currency pair "calmed down" on Tuesday after the extractive first trading day of the year, week and month. The downward slope of the pair's movement persisted throughout the day. However, the price was again trading inside the side channel between the Murray levels "0/8" - 1.1230 and "2/8" - 1.1353. For some time on December 31 and January 3, the quotes went above this channel, which should have meant a violation of the sideways trend. However, we tend to believe that it was in some way an accident in honor of the holidays. At this time, it is clear that the channel in which the euro/dollar pair has been trading for more than a month is almost perfectly lateral. And even if it is still "minimally ascending", this does not change the essence of the matter at all, since the price is almost in the same range. Even if there is a slight increase in the euro currency over time. Thus, we believe that now we need to conclude the preservation of the flat. And to make the reverse conclusion, a new fixation is required above or below the side channel. From a fundamental point of view, there is not much to say right now. What can I say if there have been no particularly important news and publications for two weeks? This is not surprising, since all government and statistical agencies also do not work during the holidays. This week, the calendar of macroeconomic events is slowly filling up day by day, and by the end of the week, there will be really important statistics. However, so far we cannot say that the "foundation" or "macroeconomics" have at least some influence on the movement of the pair. And it is even impossible to conclude that the lack of a "foundation" is the main reason for the flat in the last month since there were a sufficient number of important events and reports in the first half of this period. What are at least the meetings of the ECB and the Fed in mid-December worth?
Nonfarm payroll is the main event of the week.
With some delay, we still need to consider the current week for fundamental and macroeconomic events. Some kind of preview. In the first two days of the new week and year, there was practically nothing interesting, except for a couple of business activity indices in the EU and the USA. However, they were as boring as possible and did not provoke any reaction from traders. Today, on Wednesday, January 5, there will already be something interesting. First, the ADP report on the change in the number of employees will be published. Second, the minutes of the last Fed meeting will be published, at which it was decided to increase the pace of curtailing the quantitative stimulus program. The first indicator has rarely caused at least some kind of reaction lately. However, in the conditions of a "thin" market, it can still follow. The Fed protocol is a bit more complicated. It also rarely provokes the movement of the US currency, but still, at the last meeting a rather important decision was made, and the regulator itself is moving towards accelerating the tightening of monetary policy. Therefore, if the protocol contains any "hawkish" information that the market is not yet familiar with, it may help the US dollar to grow a little. Nothing interesting is planned for Thursday in the European Union, and in the States, we can highlight the ISM business activity index in the service sector. The most interesting thing is scheduled for Friday. As always, on the first Friday of the month, the Nonfarm Payrolls indicator is published, which is now very important for both the Fed and the US dollar. At the end of November, the value of Payrolls was low, much lower than forecasts. However, the Fed still increased the pace of curtailing the QE program. And it seems that at this time it no longer matters the number of new jobs outside the agricultural sector – the QE program will continue to decline at a high rate. However, this does not mean that the markets will not react to the report itself. As always, if the actual value is high, it will be a bullish factor for the US currency.
The volatility of the euro/dollar currency pair as of January 5 is 79 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1213 and 1.1371. The upward reversal of the Heiken Ashi indicator signals a new round of upward movement in the limited range of 1.1230 - 1.1353.
Nearest support levels:
S1 – 1.1292
S2 – 1.1230
S3 – 1.1169
Nearest resistance levels:
R1 – 1.1353
R2 – 1.1414
R3 – 1.1475
Trading recommendations:
The EUR/USD pair continues to be located inside the 1.1230 - 1.1353 channel. Thus, the movement now remains as lateral as possible and inconvenient for trading. We expect that today there may be an upward reversal and a new round of upward movement. It is good if it will be preceded by a rebound from 1.1230.
Explanations to the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which to trade now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
