July 8, 2021

Overview of the EUR/USD pair. July 7. Existing vaccines are not very effective against the "Indian" strain of COVID.

 Technical details: 

Higher linear regression channel: direction - downward. 

Lower linear regression channel: direction - downward. 

Moving average (20; smoothed) - downward. 

CCI: -185.8845

On Tuesday, July 6, the EUR/USD currency pair continued to trade calmly, although the movements of yesterday look more active than the movements on Monday. However, this is not surprising, since, on Monday, the volatility was only 30 points. We can't even say when the last time there was such a meager value. However, the celebration of Independence Day in the United States played a role. Thus, the pair's quotes worked out the moving average line quite calmly yesterday, bounced off it, and are now trying to resume the downward movement. Recall that the situation for the euro/dollar pair is not quite unambiguous right now, since many types of analysis and timeframes predict different scenarios. Let's start with the most long-term. The upward trend remains on the 24-hour timeframe, so we are waiting for the resumption of the upward movement in the long term. However, at this time, the pair is being adjusted on the same timeframe, so in the medium term (several weeks), we assume that the pair's quotes will continue to decline to the level of 1.1700 or slightly lower. However, there is not much left for the bears to go to this level. At the same time, on the 4-hour timeframe, the pair made an unsuccessful attempt to overcome the moving average, but at the same time, it is very difficult for sellers to find new reasons and grounds for opening short positions in the last week. Consequently, fundamental and macroeconomic factors do not provide clear support for the US currency at the moment. But at the same time, the global fundamental factor of injecting trillions of dollars into the American economy, from our point of view, will continue to create pressure on the US currency in the long term. Thus, combining all these factors into one picture, we get the following: quotes are likely to continue falling to the area of 1.1600-1.1700 until the price is fixed above the moving average line. If the area of 1.1600-1.1700 is worked out, and then there is an overcoming of the moving from the bottom up, it will mean that the chances of resuming the upward trend on the 24-hour timeframe will increase sharply.

Meanwhile, we received the information that we feared to receive. However, it was voiced by the Israeli Ministry of Health. But given that Israel has one of the highest levels of medical development in the world, it is possible and necessary to listen to their opinion. So, according to research, in the last month, the effectiveness of Pfizer's vaccine against the "coronavirus" has decreased from 94% to 64%. The Ministry concluded that the drop in efficiency is due to the spread of the "delta" variant of COVID, which is also called the "Indian" strain. It turns out that the most well-known and effective vaccine in the world shows very mediocre results against a new strain. Moreover, this data is only for the first month of the confrontation with the "delta strain". This indicator can only decrease further. It turns out that other vaccines can also ineffectively resist new strains of "coronavirus". It turns out that new strains may constantly appear in the world, which will require new vaccines or improvements to existing ones. The World Health Organization has previously warned that the "coronavirus" can now become an eternal companion for humanity, which will not go anywhere and will continue to infect people despite vaccines. Thus, the WHO has prepared for the "coronavirus", which infects a huge number of people every year. Of course, the "coronavirus" is unlikely to have the status of a pandemic anymore. After all, vaccination continues all over the world, and sooner or later everyone in need receives the vaccine. Thus, we only need to wait and continue to produce vaccines. However, the struggle against the "coronavirus" itself can drag on for many years and even decades. How can we not remember the UK, where at the moment 64% of the adult population has already received both doses of the vaccine, but at the same time, the fourth "wave" of the pandemic has already begun in the country. The Israeli Ministry of Health, however, also noted that vaccination with Pfizer still has a positive effect in any case, since it prevents most cases of a complex course of the disease. However, this information still requires proof and confirmation. Some scientists believe that it is the "Indian" strain that will mainly infect people, starting in the autumn of 2021. Thus, it is still very early to talk about a victory over the pandemic.

At the same time, ECB President Christine Lagarde said that the European economy continues to recover. However, it has not yet passed half the way, and the recovery process itself is too unstable. Some representatives of the ECB believe that it is time to end monetary stimulus since the economy is already able to stimulate itself independently. However, Christine Lagarde has made it clear that she is not ready to give the "green light" to reduce or end the PEPP program earlier than March 2022. Thus, both the Bank of England and the ECB, as we can see, have officials who are in favor of curtailing the stimulus program. But the majority of the members of the relevant committees are against it. By the way, there is hardly any need to fear inflation in the European Union and the UK. Since both barely accelerated to 2%. However, quite recently, Andrew Bailey allowed an acceleration of inflation to 3%, but even such an increase is called a "temporary phenomenon". Thus, there should be no problems with the continuation of incentives in the EU and Britain. Especially now, when not only the economy is recovering quite unsteadily, and we would say that it is also weak, but the whole world is also facing the threat of the fourth "wave" of the pandemic. As for the prospects of the dollar and the euro in connection with the new threats of the fourth "wave", then everything will depend on how much the new strain of the virus will affect the European Union and the United States, and whether it will be necessary to introduce a new quarantine.

The volatility of the euro/dollar currency pair as of July 7 is 60 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1755 and 1.1875. The upward reversal of the Heiken Ashi indicator will signal a new round of corrective movement.

Nearest support levels: S1 – 1.1780 S2 – 1.1719 S3 – 1.1658 

Nearest resistance levels: R1 – 1.1841 R2 – 1.1902 R3 – 1.1963

Trading recommendations:

The EUR / USD pair resumed its downward movement. Thus, today it is recommended to stay in short positions with targets of 1.1780 and 1.1755 until the Heiken Ashi indicator turns up. It is recommended to open buy orders now no earlier than fixing the price above the moving average line with the targets of 1.1902 and 1.1963.