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After falling to 1.1525, the downward movement on the main currency pair stopped, and the quote shows signs of recovery. We will consider the technical picture of EUR/USD in more detail a little later. However, let us talk about the main events that affect and can affect the euro/dollar exchange rate. The Open Market Committee (FOMC) minutes published on Wednesday did not support the US dollar; its exchange rate significantly decreased against the single European currency. First of all, this was because the Federal Reserve’s hopes for a temporary increase in inflation have not yet been justified. Against the background of the COVID-19 pandemic, the supply disruption continues, and this is one of the main factors of sharp spikes in inflation.
This situation is likely to force the Fed to take certain steps to curb inflationary pressure. In my opinion, this is a double-edged sword that can both strengthen the US currency and weaken it. A separate article will be required for a complete description of such an important topic. Several events are planned in the economic calendar today, which are worth paying attention to. At 10:00 London time, data on the trade balance will be received from the eurozone without seasonal adjustments. Later, at 13:30 (London time), reports on retail sales will be released from the USA. At 15:00 (London time), we will learn about inventory in warehouses, as well as about the consumer sentiment index of the University of Michigan.
As already noted in the article, after the decline to 1.1525, the euro/dollar began to recover and is trying to return above another important level of 1.1600. So far, it’s not working out too well. However, the euro bulls are determined to continue trying to restore the exchange rate. The nearest resistance zone is around 1.1625-1.1640. It was here that the maximum trading values were shown on October 4 and 14 of this year. If the players manage to overcome the 1.1640 mark, the most important level of 1.1700 will loom on the horizon. If it is not possible to raise the rate above the designated zone, most likely, the pressure on the pair will resume, and the bears on the instrument will again try to push through the support level of 1.1525, after which the sellers will focus on the important technical and psychological level of 1.1500.
At today’s trading, the EUR/USD exchange rate is strengthening and moving towards the maximum values of yesterday’s session of 1.1625. If reversal patterns of candle analysis appear near this level on this or four-hour timeframes, we will receive a signal to open short positions. To open purchases, we are waiting for similar signals from Japanese candlesticks after a decline in the price zone of 1.1600-1.1590. Do not forget that today is the last day of the five-day trading week. Against this background, profit-taking is possible, which means unpredictable price movements. In my personal opinion, there are more chances for the growth of the exchange rate, which implies opening long positions, but with small goals. On Monday, taking into account the closing of weekly trading, we will conduct a more detailed analysis of the main currency pair of the Forex market.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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