Overview for the EUR/USD pair on April 24th. The EU services sector has pushed the euro upwards
April 24, 2024 10:22 am
The EUR/USD currency pair continued to correct on Tuesday. More precisely, it continued to trade within the sideways range of 1.0620–1.0681 for most of the day. During the day, there was a slight increase, which was provoked by business activity indices, which will be discussed below. Overall, it can be noted that the pair’s volatility remained low. As shown in the illustration below, there were two volatile days last week that gave hope to traders for the end of the “low volatility period.” However, as it is evident now, these hopes were not destined to materialize. Excluding those two days, the pair’s volatility has been consistently between 40 and 60 points for the past few months. Market movements, if present, could be stronger.
Yesterday, business activity indices in the service and manufacturing sectors were published in the EU and separately in Germany. We warned earlier that market reactions should be expected if the actual values of the indicators significantly differ from the forecasts. In both cases, the service sector business activity indices turned out to be significantly higher than expected, which provoked a rise in the euro by about 50 points. However, this increase practically did not affect the overall technical and fundamental picture. And the euro managed to lose most of the gains “earned by hard work” during the remaining part of the day.
The technical picture has not changed, as the price remains within the sideways channel, within a limited price range. The downward trend persists, and after the current pause, the decline of the euro should resume. The overall fundamental background could not be affected by the business activity indices. Currently, inflation figures and the prospects of the ECB and the Fed’s monetary policies are crucial for the market. These two factors exert up to 90% influence on market sentiment.
As we have repeatedly mentioned, market sentiment is becoming more “hawkish” regarding the Fed’s rates and more “dovish” regarding the ECB’s rates. It is now clear that the Fed will begin the cycle of easing monetary policy not just later than the market expected at the beginning of the year but much later than those expectations. And much later than the first rate cut in the EU. Naturally, with such a fundamental background, demand for the euro should only decrease, as we have been discussing since the end of last year. Therefore, we still expect the pair to decline to the range of 1.00–1.02. Of course, this does not mean that the pair will now decline every day, but any instrument cannot show a trending movement every day.
The macroeconomic background, despite relatively positive business activity indices in the EU, has long been much weaker than that of the US. It cannot provide any significant support for the European currency. Therefore, no matter how you look at the overall picture of the situation, only one conclusion suggests itself – a further decline of the euro to parity.
The average volatility of the EUR/USD currency pair for the last 5 trading days as of April 24 is 54 points and is characterized as “low.” We expect movement of the pair between the levels of 1.0651 and 1.0759 on Wednesday. The senior linear regression channel has turned downward, and the global downward trend persists. The CCI indicator entered oversold territory, but we expect only a slight upward correction.
Nearest support levels:
S1 – 1.0681
S2 – 1.0620
S3 – 1.0559
Nearest resistance levels:
R1 – 1.0742
R2 – 1.0803
R3 – 1.0864
Trading recommendations:
The EUR/USD pair has resumed and continues its downward trend, as we expected. The European currency should continue to decline almost in any case, so we continue to consider sales with targets at 1.0602 and 1.0559. Buying is considered impractical, even if the price is above the moving average line. The current fundamental background suggests that only a rise in the dollar can be expected. Corrections are possible on technical grounds, but selling now is the most reasonable option.
Explanation of illustrations:
Linear regression channels – help determine the current trend. If both are directed in the same direction, it means the trend is strong.
The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted.
Murray levels – target levels for movements and corrections.
Volatility levels (red lines) – the probable price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator – its entry into oversold territory (below -250) or overbought territory (above +250) means that a trend reversal in the opposite direction is approaching.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD currency pair continued to correct on Tuesday. More precisely, it continued to trade within the sideways range of 1.0620–1.0681 for most of the day. During the day, there was a slight increase, which was provoked by business activity indices, which will be discussed below. Overall, it can be noted that the pair’s volatility remained low. As shown in the illustration below, there were two volatile days last week that gave hope to traders for the end of the “low volatility period.” However, as it is evident now, these hopes were not destined to materialize. Excluding those two days, the pair’s volatility has been consistently between 40 and 60 points for the past few months. Market movements, if present, could be stronger.
Yesterday, business activity indices in the service and manufacturing sectors were published in the EU and separately in Germany. We warned earlier that market reactions should be expected if the actual values of the indicators significantly differ from the forecasts. In both cases, the service sector business activity indices turned out to be significantly higher than expected, which provoked a rise in the euro by about 50 points. However, this increase practically did not affect the overall technical and fundamental picture. And the euro managed to lose most of the gains “earned by hard work” during the remaining part of the day.
The technical picture has not changed, as the price remains within the sideways channel, within a limited price range. The downward trend persists, and after the current pause, the decline of the euro should resume. The overall fundamental background could not be affected by the business activity indices. Currently, inflation figures and the prospects of the ECB and the Fed’s monetary policies are crucial for the market. These two factors exert up to 90% influence on market sentiment.
As we have repeatedly mentioned, market sentiment is becoming more “hawkish” regarding the Fed’s rates and more “dovish” regarding the ECB’s rates. It is now clear that the Fed will begin the cycle of easing monetary policy not just later than the market expected at the beginning of the year but much later than those expectations. And much later than the first rate cut in the EU. Naturally, with such a fundamental background, demand for the euro should only decrease, as we have been discussing since the end of last year. Therefore, we still expect the pair to decline to the range of 1.00–1.02. Of course, this does not mean that the pair will now decline every day, but any instrument cannot show a trending movement every day.
The macroeconomic background, despite relatively positive business activity indices in the EU, has long been much weaker than that of the US. It cannot provide any significant support for the European currency. Therefore, no matter how you look at the overall picture of the situation, only one conclusion suggests itself – a further decline of the euro to parity.
The average volatility of the EUR/USD currency pair for the last 5 trading days as of April 24 is 54 points and is characterized as “low.” We expect movement of the pair between the levels of 1.0651 and 1.0759 on Wednesday. The senior linear regression channel has turned downward, and the global downward trend persists. The CCI indicator entered oversold territory, but we expect only a slight upward correction.
Nearest support levels:
S1 – 1.0681
S2 – 1.0620
S3 – 1.0559
Nearest resistance levels:
R1 – 1.0742
R2 – 1.0803
R3 – 1.0864
Trading recommendations:
The EUR/USD pair has resumed and continues its downward trend, as we expected. The European currency should continue to decline almost in any case, so we continue to consider sales with targets at 1.0602 and 1.0559. Buying is considered impractical, even if the price is above the moving average line. The current fundamental background suggests that only a rise in the dollar can be expected. Corrections are possible on technical grounds, but selling now is the most reasonable option.
Explanation of illustrations:
Linear regression channels – help determine the current trend. If both are directed in the same direction, it means the trend is strong.
The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted.
Murray levels – target levels for movements and corrections.
Volatility levels (red lines) – the probable price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator – its entry into oversold territory (below -250) or overbought territory (above +250) means that a trend reversal in the opposite direction is approaching.
The material has been provided by InstaForex Company – www.instaforex.com
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