4-hour timeframe

Technical details:

Higher linear regression channel: direction - sideways.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 153.9948

The EUR/USD currency pair continued its upward movement for most of the third trading day of the week as if nothing had happened. We have been talking about this scenario continuously in recent days. At this time, it is the US dollar that looks least attractive to traders and investors, which results in its fall in the foreign exchange market. Still, we can't say that only mass riots in more than 40 cities in the United States are the reason for the unrestrained fall of the dollar. There are quite a lot of reasons now. Another thing is that there are no fewer of them in the Eurozone. But since no currency can become more expensive or cheaper indefinitely, it seems that now is the "golden hour" for the European currency. The only question is, how long will it last? We can assume that as long as there will be unrest in the US, the dollar will continue to fall in price. However, this is not the case. What if the unrest persists for 2 or 3 weeks? 2 or 3 weeks of continuous growth of the euro currency only on the basis of one non-economic factor? So far, this is hard to believe. We believe that this week the buyers' fervor may run out and at least a downward correction will begin. We recommend that traders do not forget about stop loss and do not mindlessly buy the euro currency, which in recent years has often become cheaper in pair with the US dollar.

Macroeconomic statistics for June 3 were ignored by traders. In the European trading session, the euro/dollar pair showed slight signs of a correction, which were completely leveled after a few hours. The unemployment rate in Germany rose to 6.3% in May, and the number of applications for unemployment benefits for June was 238,000, slightly higher than forecasts. The unemployment rate in the European Union unexpectedly fell at the end of April and amounted to 7.3% with forecasts of 8.2%. Thus, given that there was no other news yesterday morning, we can conclude that the entire package of statistics was positive for the euro. However, it was at this time that a small pullback occurred. However, the macroeconomic statistics from overseas were much better than traders expected. The ADP report on private sector employment showed just -2.7 million workers in May, although a reduction of 9 million was expected. Markit and ISM business activity indices in the US services sector exceeded the forecast values and amounted to 37.5 and 45.4, respectively. Thus, the really important report of yesterday can only be called the ADP report, which did not help the US currency at all. In general, we conclude that market participants again ignored all statistics. This is exactly what we warned you about the day before.

By the way, today market participants can get the same factors to stop buying the euro currency. Today, the results of the next meeting of the European Central Bank will be summed up, during which it may decide to expand the program to counter the consequences of the economic crisis caused by the "coronavirus" pandemic. The PEPP program can be expanded by 500 billion euros, and its term can be extended for 6 months. Initially, the pandemic emergency purchase program was designed to buy assets worth 750 billion euros, and its expiration date is December 2020. However, Christine Lagarde has repeatedly stated that the economy is not coping with the consequences of the pandemic and requires significant new monetary stimulus. So the PEPP program will most likely actually be expanded. It is also reported that more than 210 billion euros out of 750 have already been spent on buying bonds of Eurozone countries. And Italy received the most, which sold almost 40 billion euros worth of securities to the ECB. Thus, the ECB in some ways violated the rules that do not allow it to buy bonds for an amount greater than the country's share of the EU economy. In addition to changes in QE programs, traders expect a significant deterioration in the ECB's official GDP forecasts today. Past forecasts indicated an increase of 0.8% by the end of 2020. It is now obvious that there will be no increase at all. Christine Lagarde last week announced possible losses of 8% to 12%. The ECB is also expected to lower its inflation forecasts for 2020. The only thing that will remain unchanged is the key rate, which the ECB has not touched since the beginning of the epidemic and crisis. However, the factors listed above may be enough to reduce the demand for the euro currency.

Also, on June 4, the publication of retail sales in the European Union is planned, which may decrease by another 22%-24% in annual terms by the end of April. In the United States, the next report on applications for unemployment benefits for the week of May 30 will be released. Forecast + 1.8 million primary applications and 20.7 million secondary applications (for the week of May 23). However, we recommend paying more attention to the press conference of the European Central Bank, where really important statements can be made. Ordinary reports are mostly ignored and there is no reason to assume that today's reports will have an impact on the pair.

While rallies against the government and police actions continue in America, the majority of Americans (64%) who do not take part in the protests, sympathize and experience their participants. This is evidenced by the results of opinion polls conducted on June 1 and 2. 55% of the American population does not approve of Donald Trump's reaction to the protests. Only 39% approve of his work in general, and 33% approve of his actions during mass protests and riots. In general, these numbers mean that Trump does not have the necessary support for himself and his activities. But Donald Trump is great at praising himself. This time, the American leader praised himself for maintaining law and order in the capital, Washington. "There were no problems in the district of Columbia last night. Lots of arrests. Wonderful work that everyone has done. Invincible force. Domination. Just as it was beautiful in Minneapolis (thank you, President Trump!)," Trump himself wrote on Twitter.

The average volatility of the euro/dollar currency pair as of June 4 is 79 points. Thus, the value of the indicator is still characterized as "average". We expect the pair to move between the levels of 1.1157 and 1.1315 today. The reversal of the Heiken Ashi indicator downwards signals a round of downward correction, which is expected for several days in a row.

Nearest support levels:

S1 – 1.1169

S2 – 1.1108

S3 – 1.1047

Nearest resistance levels:

R1 – 1.1230

R2 – 1.1292

R3 – 1.1353

Trading recommendations:

The EUR/USD pair continues its strong upward movement. Thus, after overcoming the psychological level of 1.1000, buy orders remain relevant, at this time - with the goals of 1.1292 and 1.1315, which are recommended to hold until the Heiken Ashi indicator turns down. It is recommended to return to selling the pair not before the price is re-anchored below the moving average line with the first goals of 1.1047 and 1.0986.