Yesterday’s trading on the foreign exchange market was again influenced by risk sentiment, which means that the US dollar continued to remain under selling pressure. Expectations of the adoption of fiscal stimulus in the United States, as well as the continuation of soft policy by the Federal Reserve, give market participants hope that the situation with the spread of the COVID-19 pandemic will begin to improve or at least stabilize. Let me remind you that the US Congress must pass a bill by the end of this year aimed at helping from the ill-fated COVID-19 pandemic in the amount of $ 900 billion.
Investors are particularly hopeful about the start of mass vaccination against coronavirus. In particular, in the European Union, this issue is being intensively studied, and, according to the latest data, vaccination will begin in Germany within the next ten days. In the meantime, the leaders of some European countries are forced to isolate themselves. Thus, French President Emmanuel Macron tested positive for coronavirus and the French leader will spend at home for the next seven days, from where he will lead the country. The leaders of Luxembourg, Belgium, Spain, Portugal, and the president of the European Union Charles Michel are forced to resort to the same step because they were in contact with Macron at the EU summit. However, Angela Merkel and Ursula Von der Leyen tested negative, which allows them to avoid self-isolation and perform their duties as usual.
Yesterday’s data showed that the number of Americans who filed initial applications for unemployment benefits increased more than the forecast value of 800 thousand and amounted to 885 thousand people. These statistics also added to the pressure on the US currency. At his last press conference, Fed Chairman Jerome Powell complained that the labor market is showing a slower recovery than it was recently. If you look at today’s economic calendar, you should pay attention to the three IFO indices for Germany, which will be published at 10:00 London time. There are no statistics from overseas today, however, at 17:00 (London time), there will be speeches by Evans and Brainard, members of the US Federal Reserve Open Market Committee.
Yesterday, the main currency pair continued to grow and ended Thursday’s trading with the formation of a large bullish candle with a closing price of 1.2266. Today, at the time of writing, a rollback to 1.2238 was already given, after which there are attempts to resume the rise of the quote. Given the fundamental background, market sentiment and the overall technical picture, the main trading recommendation for EUR/USD is still buying after small corrective pullbacks.
Looking at the hourly chart, the most relevant for today is purchases from current prices or at the breakout of yesterday’s highs of 1.2272. After the opening of today’s trading, the pair have already tried to update yesterday’s high, however, the volume was not enough, after which there was a pullback to 1.2238. Other options for opening long positions will be a rollback to the broken resistance of sellers at 1.2272 (if the breakdown takes place), as well as purchases at lower prices, in case the pair falls into the price zone of 1.2245-1.2225. At the same time, I do not recommend setting large goals. It is better to close all open trades today and quietly leave for the weekend. On Monday, taking into account the actual closing of weekly trading, we will analyze the technical picture in more detail and highlight trading recommendations for EUR/USD.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.