4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The lower channel of linear regression: direction – upward.
The moving average (20; smoothed) – sideways.
CCI: -149.2205
The key event of the last trading day was the speech of Mario Draghi, who is retiring on October 31. It brought the euro currency down when it became clear that no positive changes in the EU economy had occurred since the last ECB meeting. Draghi once again spoke about the problems of low inflation, weak business activity in the manufacturing sector, high geopolitical risks and threats of protectionism. Also, a lot of macroeconomic statistics from the States and the European Union were published, which, for the most part, disappointed, leveling the negative effect from each other. According to some experts, at his last press conference, Mario Draghi did not answer too willingly, didn't answer some questions at all, but in general, his rhetoric was consistent with his usual speech. Traders who have repeatedly gathered to change the direction of trading over the day ultimately focused on selling the euro. Although in general they cannot be called massive, and yesterday – highly volatile. Still, market participants showed the most restrained reaction to all the events of Thursday, October 24. Most interestingly, traders ignored data on orders for durable goods in the United States, although this is a very strong and important indicator of the state of the economy.
What next? This is the main issue that will be in the air among the trading community until the Fed meeting itself. On the one hand, the euro/dollar pair consolidated below the moving average, showing a desire to resume the downward trend. On the other hand, if the Fed lowers its key rate, then the US currency will also experience pressure on itself and the euro/dollar will no longer be sold as eagerly as yesterday. However, the Fed meeting will take place only next week on Wednesday. At this time, the pair will also move and we need to figure out how and where it will move.
The last trading day of the week in terms of macroeconomic data will be empty, as the first three days of this week. All the most interesting events have already happened yesterday. Today, the consumer confidence index in Germany and a similar index from the States. All. Thus, it is safe to assume that today's volatility may decrease again to the values of 40-50 points, and traders are unlikely to conduct active trading. After yesterday's downward movement, there is no need to adjust, it was not so strong. Based on the above, today technical factors will come first, but in general, the forex market will be calm and prepare for the weekend. Of course, surprises are always possible, but today we do not expect them either.
As for the Fed and the possible decisions that will be announced on Wednesday, October 30, we believe that this will be a very interesting meeting since it is here that surprises will be possible. The probability of a rate cut in October is now 50/50, as macroeconomic statistics in America over the past month showed even more disappointing data, so Jerome Powell and the company have reasons for a new easing of monetary policy. At the same time, the Fed has already cut the rate two times, stubbornly declaring every time that no one can exert political influence on the organization, nevertheless, following the fact of the orders of Donald Trump. What will happen this time? Third decline or break? It is after summing up the results of the American Central Bank that it will be possible to conclude the further dynamics of the currency pair. One thing is for sure, the easing of the monetary policy of the Fed will cause the purchase of the euro and the sale of the dollar, and this will be the next chance the euro does not slide to two-year lows, from which it is still not far from.
Until next Wednesday, we believe that a not too volatile movement with a downward bias will continue. From a technical point of view, the pair overcame the moving average line, so the trend in the instrument changed to a downward one. The potential downward movement is supported by the older linear regression channel, which is still directed downward. On the last trading day of the week, bears need to build on the success achieved the day before so as not to lose the initiative. Well, in the case of a reversal of the Heiken Ashi indicator up and overcoming the moving below, the trend will again be "bullish" and, most likely, it will remain until the Fed meeting itself.
Nearest support levels:
S1 – 1.1108
S2 – 1.1047
S3 – 1.0986
Nearest resistance levels:
R1 – 1.1169
R2 – 1.1230
R3 – 1.1292
Trading recommendations:
The euro/dollar pair, against the background of yesterday's macroeconomic statistics, most of which were not taken into account, consolidated below the moving average line. Thus, today it is recommended to sell pairs with the aim of Murray's level "5/8" – 1.1047. The goal is 50 points, which is quite within the power of traders to pass in one trading day. It is not recommended to buy Euro currency until the price is fixed above the moving average with the goal of Murray level "7/8" – 1.1169.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue lines of the unidirectional movement.
The lower channel of linear regression – the purple lines of the unidirectional movement.
CCI – the blue line in the indicator window.
The moving average (20; smoothed) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.