4-hour timeframe
Technical details:
Higher linear regression channel: direction - upward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: 3.9799
On Monday, June 7, the EUR/USD currency pair was trading very calmly against a complete lack of macroeconomic statistics and any other fundamental background. It is a bit strange because the markets rarely paid attention to the "macroeconomics" last year. However, at the end of last week, the markets are starting to pay more attention to the statistics. However, all these statistics still do not affect global trends. We have already said that there is a local impact, but what dividends can the US dollar make from this, falling in price for 15 months in a row? And the euro does not need support at all since this currency has been quietly rising in price in the last 15 months, without any macroeconomic or fundamental support. Thus, for the time being, everything remains in its place. We have already said that as long as the US government continues to pour trillions of dollars into its economy, it is unlikely that the dollar will be able to breathe freely. The money supply continues to increase, and it does so much faster than in the European Union or the UK. Therefore, the euro and the pound feel very different, no matter how the market participants themselves behave. For example, the latest COT report showed that professional traders were actively building up short positions. So what? Has the pound fallen in the price? No, it continues to trade near its 3-year highs. And it retains excellent chances for continued growth.
The situation is the same with the euro. Statistics in the US have long been much better than European statistics, but what does this mean for the euro/dollar pair? Nothing. The central banks of the EU and the United States are beginning to think about curtailing the quantitative stimulus program slowly, but so far, no concrete signals have been given. Conversely, Christine Lagarde has repeatedly noted that before March 2022, there is no question of completing monetary stimulus. The latest Nonfarm Payrolls report disappointed traders and probably the Fed. Therefore, it is unlikely that Jerome Powell and the company will talk about curtailing the QE program in the coming months.
Moreover, US Treasury Secretary Janet Yellen said in an interview with Bloomberg during the G7 meeting in London that the Joe Biden administration continues to adhere to the new plan to save the US economy. And continues to insist on spending $ 4 trillion, previously described as two stimulus packages: "social" and "infrastructure." In addition, Janet Yellen believes that "if the year ended with a higher rate, it would be a plus from the point of view of society and the Fed." Yellen also said that inflation is not a problem and is most likely temporary. The world is just recovering from the pandemic crisis, and supply chain disruptions are yet to be addressed. "Any price spike triggered by the stimulus will disappear next year," Yellen said. "The current rate level is very low today. We believe that it is time to return to normal rates," the finance minister added. Thus, the States do not intend to abandon fiscal stimulus programs. Recall that the 2022 fiscal year budget implies spending of more than $ 6 trillion, which is almost three times more than the budget for 2021 signed by Donald Trump. However, on raising rates and curtailing the quantitative stimulus program, everything depends on the current head of the Fed, Jerome Powell. Powell, in turn, said that monetary policy would begin to tighten when there is significant progress in inflation and employment. Unfortunately, the latest Nonfarm report showed that the forecasts are not yet coming true. Therefore, we continue to believe that the Fed will not limit the QE program in the coming months. However, for the US currency to fall further, it is precisely necessary that the incentives continue to operate for as long as possible. Suppose the budget for the 2022 fiscal year is adopted. In that case, additional money will flow into the American economy, which will only increase the money supply, which will most likely lead to a new depreciation of the US currency. So far, we can only draw the same conclusion as before. The US dollar continues to be at a very disadvantage due to the actions of the US authorities and the Fed. However, at the same time, the States benefit from the cheapest possible dollar, as Donald Trump has repeatedly stated. Especially now, when the national debt has grown to almost $ 30 trillion. Debts need to be serviced, and the cheaper the dollar, the easier it is to do it.
Therefore, the euro/dollar pair remains close to its 3-year highs and can not even really adjust. From a technical perspective, the European currency cannot now go even below the 21st level. Therefore, the upward trend can resume at any time. We have already said that the global "dollar" trend may have been completed in 2017 and, if this is indeed the case, then the current upward trend cannot be completed so early.
The volatility of the euro/dollar currency pair as of June 8 is 70 points and is characterized as "average." Thus, we expect the pair to move today between the levels of 1.2125 and 1.2265. A reversal of the Heiken Ashi indicator back down will signal a new round of downward movement.
Nearest support levels:
S1 – 1.2146
S2 – 1.2085
S3 – 1.2024
Nearest resistance levels:
R1 – 1.2207
R2 – 1.2268
R3 – 1.2329
Trading Recommendations:
The EUR/USD pair has started a new round of upward movement. Thus, today it is recommended to open new short positions with a target of 1.2125 if the Heiken Ashi indicator turns down. It is recommended to consider buy orders not earlier than fixing the price above the moving average line with a target of 1.2265. The pair continues to be in a flat, which should be considered when opening any positions. We also give recommendations for trading on lower timeframes.
