Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - upward.
CCI: 204.0521
The EUR/USD currency pair remained in one place on the 4-hour timeframe for most of the day on Tuesday. In the first half of the day, there were no macroeconomic publications, and in the second - inflation in the United States. There were no other important events scheduled for the day. Thus, in part, it is even possible to logically explain what happened yesterday on the currency market for the euro/dollar pair. The only problem is that the pair stood in one place for five days and showed growth yesterday in the afternoon. You can't tell judging by the 4-hour timeframe, however, when you switch to a lower chart, it is noticeable to the naked eye. Thus, we now need to understand why the activity of traders has declined sharply and what to expect from the pair in the near future.
Despite the five-day outage, global technical factors and global fundamentals have not changed. From a purely technical point of view, the euro/dollar pair simply corrected against the strong upward trend that was observed in 2020. Thus, if this was a normal correction, then on March 31 (very symbolically - the second quarter of 2021 began), a new round of the upward trend began. As for the global fundamental factors, for the euro/dollar pair, in contrast to the pound/dollar pair, there are only two of them: the factor of pumping the US money supply and the factor of the ratio of the recovery of the US and EU economies after the crisis. We have already said that we consider the factor of the money glut in the US to be more important. In this case, in the next few months, the pair will seek to update the previous high around the 23rd level, which is also a 2.5-year high. The factor of the recovery of the US and EU economies should support the US currency, but for this (from our point of view), a certain balance of money in dollars and euros must first be established. And only after that, the "first fiddle" will again pass into the hands of traders, who can then begin to move the pair in one direction or another, based on the strength of a particular economy.
All other factors, no matter how important they may seem, we consider secondary. This includes the growth factor in the yield of 10-year treasuries in the United States, the different rates of vaccination of the population in the United States and the European Union, and the problems with the approval, formation, and distribution of the economic recovery fund in the European Union. Recently, a fairly large number of news and reports on the last two topics are available to traders. It is not clear what to do with them and how to use them. Experts still note that Brussels has much fewer doses of vaccines at its disposal than, for example, Washington. Moreover, the vaccines that are still available are distributed unevenly among the EU countries. Therefore, for example, in Denmark, about 20% of the population is already vaccinated, and in Bulgaria - only 7%. Experts also noted the inappropriate altruism of the European Union in the first months of vaccination. Instead of primarily caring for its population, Brussels has helped many countries around the world through the COVAX program, as well as allowing European pharmaceutical companies to sell the vaccine outside the EU. For example, the United States and the United Kingdom were practically not engaged in exporting the vaccine, but at the same time, they imported it to the maximum. Thus, those countries that have focused on time and formed strong orders for the supply of vaccines from all the leading manufacturers in the world (the United Kingdom, which began taking orders in September last year and ordered a total of 4 times more doses of vaccines than the size of its population), or that have their production of drugs and do not export vaccines abroad, are now leading the world in terms of the percentage of the vaccinated population. But vaccination has more than just a medical aspect. The faster the entire population of the country is vaccinated, the faster the country itself will return to normal life, its population will get money for a "rainy day" from under the pillow, economic and business activity will recover, the most problematic sectors (such as tourism and air transportation) will begin to recover. Thus, vaccination is primarily an economic issue at this time. And the European Union is seriously lagging behind its main competitors in the international arena.
Also, more than one conflict situation is maturing within the EU itself. Last year, not all countries agreed with the formation of a single economic recovery fund. Then, not all countries agreed to grant aid to the most affected countries (the "stingy four" and the spendthrift countries), and now there are tensions over the distribution of available vaccines. Many countries have already accused the EU authorities of primarily sending vaccines to the wealthiest EU countries, while the weakest get nothing, forcing them to buy the vaccine at their own risk in Russia, India, or China. For example, Czech Prime Minister Andrej Babis said that the EU authorities are not able to provide all the countries of the alliance with vaccines. Thus, according to Babis, "It is not surprising that Austria is going to buy 1 million doses of the Sputnik V vaccine, and Slovakia has already bought two million doses of the Russian vaccine." The Czech Prime Minister also noted that his country would like to deal only with vaccines tested and approved by the European Medicines Agency, however, it faces a lack of solidarity within the bloc and is forced to turn to buy vaccines abroad.
Also, more than one conflict situation is maturing within the EU itself. Last year, not all countries agreed with the formation of a single economic recovery fund. Then, not all countries agreed to grant aid to the most affected countries (the "stingy four" and the spendthrift countries), and now there are tensions over the distribution of available vaccines. Many countries have already accused the EU authorities of primarily sending vaccines to the wealthiest EU countries, while the weakest get nothing, forcing them to buy the vaccine at their own risk in Russia, India, or China. For example, Czech Prime Minister Andrej Babis said that the EU authorities are not able to provide all the countries of the alliance with vaccines. Thus, according to Babis, "It is not surprising that Austria is going to buy 1 million doses of the Sputnik V vaccine, and Slovakia has already bought two million doses of the Russian vaccine." The Czech Prime Minister also noted that his country would like to deal only with vaccines tested and approved by the European Medicines Agency, however, it faces a lack of solidarity within the bloc and is forced to turn to buy vaccines abroad.
Nearest support levels: S1 – 1.1902 S2 – 1.1841 S3 – 1.1780
Nearest resistance levels: R1 – 1.1963 R2 – 1.2024 R3 – 1.2085
Trading recommendations:
The EUR/USD pair maintains an upward trend. Thus, today it is recommended to stay in long positions with targets of 1.1963 and 1.2002 until the Heiken Ashi indicator turns down. It is recommended to consider sell orders if the pair is fixed back below the moving average line with targets of 1.1841 and 1.1719.
