On Thursday, the EUR / USD currency pair broke off the series of four trading days closed with growth. The development of a correctional wave was due both to purely technical issues and to the influence of certain fundamental factors.
First, many investors began to partially fix long positions on EUR / USD after updating weekly highs. The global trend remains bearish, so traders are not yet ready to keep buying for a long time.
Secondly, important economic reports were not published on the market yesterday, which allowed the dollar to recover some of the previously lost positions. It is the data of internal statistics that were the main reason for the weakening of the dollar at the end of the past and the beginning of the current week.
Third, the dollar was supported by weak economic statistics from China, which weakened the position of the currencies of developing economies. The dollar strengthened by more than 0.8% against the Brazilian real and by 0.5% South Korean won.
Today, the market situation has changed somewhat, the dollar is trading again with a decrease. At the beginning of the day, the dollar index lost in price about 0.15%, which contributes to the recovery of the EUR / USD pair. But, in our opinion, the prospects for the recovery of this currency pair remain very limited. Like yesterday, the pressure on the dollar today will be very limited, since there are again no statistical reports in the US economic calendar that could have a significant impact on the market. From the entire statistics block, only industrial production data can be distinguished. At the same time, the European currency is now virtually devoid of any support factors. The economic and domestic situation in the region remains tense. The past this week’s parliamentary vote did not bring much clarity to Brexit-related issues. The inflation report published today also carries certain risks for the European currency, as preliminary data published at the beginning of the month indicated a decrease in the base figure compared to the previous reporting period.
Yesterday, the currency pair bounced down from the previously noted resistance area of 1.1330-1.1350. This price pullback is the first signal of a possible completion of the corrective movement and the formation of a reversal in order to continue the global bearish trend. But, the fact that yesterday the price could not push through support at 1.1300, leaves buyers with chances of another attempt to retest of the range 1.1330-1.1350.
· Resistance levels: 1.1330, 1.1350, 1.1400.
· Levels of support: 1.1300, 1.1245, 1.1200.
The main scenario - a decline to 1.1245.
An alternative scenario - consolidation above 1.1350 and growth to 1.1400.
The market situation remains uncertain. On the chart, there are no signals confirming the reversal of the local upward price movement. At the same time, it is already quite dangerous to consider longs at current levels.