Trading recommendations
Sell in the market. Stop-Loss 1.0690. Targets 1.0600, 1.0550, 1.0530
Buy Stop 1.0695. Stop-Loss 1.0630. Targets 1.0710, 1.0795, 1.0840, 1.0900, 1.0975, 1.1050, 1.1110
Overview and Dynamics
Today, with the opening of the trading day the dollar continued to decline after nearly three weeks of growth. However, during the European session, the negative trend caused by the earlier profit-taking on long dollar positions, stopped, and the dollar returns lost earlier position. Today at 14:00 (GMT) begins the performance of the ECB chairman Mario Draghi at the European Parliament.
As expected, M.Dragi in this speech can already begin to form before the meeting of the ECB's position on the bank's monetary policy, scheduled for December 8th. While the Fed is on the verge of the next interest rate increase, the ECB is still going to stick to a soft monetary policy. Most of the recent ECB statements point to continued asset purchases program, which now amounts to 80 billion euros (88 billion US dollars).
Since last week, a senior official of the ECB Benoit Ker, which is one of the six ECB board members, said that the European Central Bank will not cut until its program of purchases of bonds. "As long as we have a very low and long growing inflation," said Ker. Despite all the efforts made by the ECB, inflation in the euro area for a long time remain near zero value, which is below the ECB's target level of 2%, and most economists expect the central bank will extend the program for at least another six months.
Earlier, Mario Draghi has stated that the rates in the Eurozone will be raised when the accelerated economic growth, will increase inflation. And yet before the ECB in full growth stands the threat of deflation. In this situation, one of the tools to contain it is to expand the QE program in the euro area and deepen the basic rates in negative territory.
The main ECB interest rate (the refinancing rate for commercial banks) is now at 0.4%. Expectations of such a decision by the ECB are putting pressure on the euro.
Thus, the different direction of the ECB and the Fed in monetary policy is the main driver of the pair EUR / USD. The EUR / USD continue to decline toward euro parity with the dollar.
Technical analysis
The EUR / USD at the beginning of the European session rose to the level of 1.0685. The EUR/USD remains within the descending channel on the weekly chart with a lower limit, passing near the level of 1.0500. The EUR / USD remains under strong negative momentum against the background of large-scale strengthening of the dollar in the foreign exchange market and a weak macro of Statistics of the Eurozone. On the daily chart of the EUR / USD is also in the downlink.
Indicators OsMA and Stochastic on the weekly, monthly charts defected to the sellers, indicating strong downward momentum. On the 4-hour chart indicators are also unfolding in short positions, signaling upward correction is completed.
Only in case of breakdown of the level 1.0710 could be seen further growth of resistance levels 1.0795, 1.0840 (last month's lows), 1.0900 (lows achieved in the referendum on the day of publication Brexit). To consider long positions on the EUR / USD pair and increase the level of 1.1100 (EMA200 on the daily chart, and EMA50 top line of the descending channel on the weekly chart) could be revisited at consolidating above the level 1.0840 (EMA200 on 4-hour chart).
This could trigger a further increase in the EUR / USD to the level of 1.1285 (Fibonacci 23.6% retracement level of the last wave decline from 2014 highs of the year). But it is only as an alternative scenario of further reduces pair EUR / USD. The pressure on the
EUR / USD pair is stored. More preferably still look short positions, and any increase in the EUR / USD should be considered is that, as a corrective.
Support levels: 1.0600, 1.0580, 1.0530
Resistance levels: 1.0710, 1.0795, 1.0840, 1.0900, 1.0975, 1.1050, 1.1110
