Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: 176.8477
The EUR/USD currency pair was trading more than calmly on Monday. The US currency increased, however, the overall volatility remained very low. Thus, there was no question of working out Friday's reports from the United States on Monday. Recall that on Friday, data on Nonfarm Payrolls and unemployment were published in the United States, however, there was almost no reaction to them. Both major pairs were trading with a volatility of 40 points. Thus, many experts concluded that it was all the fault of Good Friday. However, as we can see, there was no "wagering". Consequently, it was not the Catholic Good Friday at all, but the general disregard of macroeconomic statistics by the markets. And, from our point of view, this moment again begins to strain. Traders have started paying attention to the statistics in the last few months. The most important and strongest reports were ignored. This suggests that the markets are again beginning to pay attention to other global factors and they are not interested in ordinary statistics. However, Friday's reports directly related to the recovery of the American economy, which is one of these global factors. It turns out that the recovery of the US economy is not bothering traders now. Well, the markets forgot that Nonfarm Payrolls was published on Friday. We believe that the fate of the euro/dollar pair for the next few months may be decided in the coming days. Either the planned decline in quotes will continue, which we continue to interpret as a technical correction in the global plan. Or the correction will end and a new long-term upward trend will begin. On Monday, the price continued to remain below the moving average line, thus, the downward trend remains until it is overcome.
Meanwhile, most journalists and analysts have somehow overlooked one important piece of news. We recall that in the European Union last summer, all 27 EU member states approved a $ 750 billion economic recovery plan. However, the European Union is not the United States, where the stimulus package was approved and implemented as soon as possible. This is what it means when one of the parties or political forces has total control. All the most important issues are resolved very quickly, and specific politicians or parties are responsible for them. To begin with, at the moment, the recovery fund has not even been formed, as 11 of the 27 countries have not even ratified the relevant legislation at the domestic level. Moreover, if there were no delays, then it would be possible to accept it. After all, the European Union is a union of as many as 27 countries, thus, the interests of each member of the alliance should be taken into account. However, it became known that the German Constitutional Court considers that the financing of some EU member states through the issuance of loans is contrary to EU law. The court in Karlsruhe considers it unacceptable to finance the countries that suffered the greatest losses during the pandemic and crisis at the expense of all others and even using grants. We are not talking about the refusal of an entire country or its government to form a recovery fund and its further distribution. In each country, there are several parties or several dozen parties that make up the government. Thus, in Germany, the group "Alliance of the Will of Citizens" filed a lawsuit with the court, complaining that European statutes do not allow the bloc to form debts on behalf of all countries. As a result, the court in Karlsruhe suspended the law that allows the necessary funds to be sent to the European Commission for further distribution. The German Constitutional Court also explained that it understands that the recovery fund is already a political and economic project, but given the high risks, the government must make sure that European borrowing will not become a permanent solution for any crises. The most interesting thing is that both houses of the German Parliament approved the adoption of the relevant legislation. And, in principle, all countries approved the formation of this fund last summer. However, as it turns out, any group of people can go to court and suspend the most important process for the entire Eurozone, because the European Union, with the consent of all its members, violates its statutes and regulations.
It should also be noted that the European Commission wants to start raising funds this summer and start distributing them in the second half of 2021. Thus, the countries most affected by the pandemic and the crisis will need to wait for their loans and grants at least until the autumn of this year. All this can only affect the pace of recovery of the European economy even more because without this money, it will be very difficult for Italy, Spain, Portugal, and others to demonstrate strong economic growth. Well, let's also remember that at this time in the European Union, the third wave of "coronavirus" has begun, which can be no less destructive than the previous two, since at the moment only 10% of the EU population received a dose of the vaccine, and both doses were received by no more than 4% of residents, so the virus can spread almost as easily as during the first two "waves". All this news can potentially continue to put pressure on the European currency.
The volatility of the euro/dollar currency pair as of April 6 is 63 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1752 and 1.1878. The reversal of the Heiken Ashi indicator downwards signals a possible round of a downward correction.
Nearest support levels: S1 – 1.1780 S2 – 1.1719 S3 – 1.1658
Nearest resistance levels: R1 – 1.1741 R2 – 1.1902 R3 – 1.1963
Trading recommendations:
The EUR/USD pair has started a strong upward movement. Thus, today it is recommended to stay in long positions with targets of 1.1841 and 1.1878 until the Heiken Ashi indicator turns down. It is recommended to consider sell orders if the pair is fixed at the bottom of the moving average line with targets of 1.1719 and 1.1658.
