Review and dynamics
Macro-economic indicators of Eurozone show that Europe is facing a threat of deflation.
However, recent developments in the banking sector of the Eurozone and the critical statements of the ECB representatives can halt the decline in the interest rate (current basic rate is 0.0%; deposit rate is 0.4%). This measure may have a negative impact on the stock market but will support the Euro, which is a funding currency.
A new descending channel has been formed on the weekly chart with a lower limit, below the level of 1.0710 (annual lows). The pair EUR / USD failed to consolidate above the key resistance level of 1.1285 (Fibonacci 23.6% to the decline from the highs of 2014 and the upper limit of the channel on the weekly chart).
In the past three months the pair EUR / USD is moving mainly in the range of 1.1430 and 1.0975. A narrower range between the levels of 1.1350 and 1.1045 has been formed in August.
Important macro-economic statistics of Eurozone and USA will become known today, which will affect movement of the USD and the Euro. Fundamental factors often affect trades and may the technical patterns. On the 4-hour, daily and weekly charts the indicators OsMA and Stochastic give signals for short positions.
However, taking into account that today is the end of the month and the week, traders may not wish to increase trading volumes. During the period of the news releases volatility in the market may increase, however, it is expected that trading will be speculative on low volumes. it is likely that at the end of the day the pair EUR / USD will go back to the current level and line balance of 1.1185 (EMA200, EMA144 on the daily chart). Investors’ attention will turn news of the next week. Next Friday (15:30 GMT + 3) US key labor market data for September will be published.
Breakout of the resistance level of 1.1285 and the upper limit of the range 1.1350 may trigger further rise in the pair EUR / USD.
In case of breakdown of the support levels and lower limits of the range 1.1120 and 1.1045 the pair may decline.
In any case, Fed's monetary policy aimed at gradual tightening of the monetary policy will add pressure on the pair EUR / USD in the medium-term.
Support levels: 1.1185, 1.1120, 1.1045, 1.0975, 1.0915, 1.0865 and 1.0825.
Resistance levels: 1.1285, 1.1350, 1.1400, 1.1430, 1.1485 and 1.1535.
Sell Stop: 1.1160. Stop-Loss: 1.1210. Targets: 1.1120, 1.1045 and 1.0975.
Buy Stop: 1.1230. Stop-Loss: 1.1180. Targets: 1.1285, 1.1350, 1.1400, 1.1430, 1.1485 and 1.1535.
At the balance line of 1.1185
Indicators give signals for short positions