Hello, dear colleagues!
Following the results of yesterday's trading, the main currency pair of the Forex market significantly strengthened, confirming the implementation of the upward scenario, which was discussed the day before. Before proceeding to the analysis of price charts, I would like to recall yesterday's events, one of which was the report of the European Central Bank (ECB) on financial stability. Naturally, in the current context, the main focus of the document was on COVID-19. In particular, the report says that the coronavirus epidemic has caused a very serious crisis in Europe, the way out of which will be very difficult and will require a sufficient amount of time. But it is not specified exactly how long it will take for the recovery of the Eurozone economy, it will be determined by the effectiveness of previously adopted monetary policy measures in different EU countries. In fact, it turns out that everyone is for himself, and the loud name "Union" is nothing more than an empty word. Even though Germany and France plan to create a 500 billion euro bailout fund for the EU economy, the EU still lacks the cohesion and unity that is especially needed in the face of a pandemic. The wealthier and least affected countries are not eager to help the poorer states that have been most affected by COVID-19. I believe that much of the solution to this and other pressing European problems will depend on the position of Germany, namely on the political will of German Chancellor Angela Merkel. French President Emmanuel Macron will play second fiddle. This is quite natural because the French economy is second only to the German one. It's up to them.
The timing of the economic recovery is the most pressing and urgent issue, not only for Europe, but also for the United States, as well as almost all other countries. Few economies are immune to the negative effects of a new type of coronavirus infection. In this regard, it will be interesting to know what ECB President Christine Lagarde will say, whose speech will be held today at 08:30 (London time).
Yesterday's data on consumer confidence in the US was worse than economists' forecasts. I don't know if this affected the dynamics of the US currency. In recent times, the market often ignores macro-economic statistics, and even the most important.
Daily
As noted at the beginning of the article, yesterday the EUR/USD pair showed quite strong growth. Tuesday's trading closed at 1.0980, i.e. within the Ichimoku indicator cloud and above the 89 exponential moving average. Thus, the main currency pair has every chance to once again test the strength of the most important technical and psychological level of 1.1000 and gain a foothold above this landmark mark.
However, at the moment of writing, there is a corrective pullback to yesterday's growth, and trading is conducted near 1.0958. I assume that a pullback will be given to the broken 89 EMA, which is held at 1.0940, after which the euro/dollar may turn around to resume the upward dynamics. In the case of such a scenario and the census of yesterday's highs of 1.0995, testing of a strong and important resistance zone of 1.1000-1.1020 will become inevitable.
H4
The assumption that the moving averages used (200 EMA, 50 MA, and 89 EMA) will support the quote and send it up was fully justified. The pair returned above the cut gray resistance line of 1.1146-1.11017 and is currently preparing to give it a pullback. If this happens, and a reversal bullish candle appears near 1.0930, this will be a signal to open purchases. A little lower, you can look at the opening of long positions on EUR/USD after a short-term decline in the area of 1.0915-1.0900.
H1
On the hourly chart, the resistance is clearly visible in the price zone of 1.0995-1.1008. In the case of a census of yesterday's highs at 1.0995, the growth is likely to continue. However, given the strong resistance in the area of 1.1000-1.1020, I consider it risky to buy at the breakdown of 1.0995. In my opinion, it is less risky to buy from the depth, after the pair's decline to the area of 1.0940-1.0930.
Technically, there is every reason to expect the main currency pair to continue to rise, but if there are reversal patterns of Japanese candles in the price area of 1.0990-1.1020 on the 4-hour and (or) hourly charts, you can try opening short positions with small goals in the area of 1.0940. However, in the author's personal opinion, the ascending scenario looks more relevant, which means purchases.
Today, there are no important statistics from the US, so the price dynamics of EUR/USD will be determined by technical factors. Perhaps the impact on the exchange rate of the single currency will have a speech by Christine Lagarde, who can clarify some points about the fund to help the European economy.
Good luck!
