Review and dynamics

The pair EUR/USD failed  to continue upward movement after breaking out of the resistance level 1.0830 (ЕМА50 on the daily chart) caused by the decision of the ECB to keep interest rates at the current levels and a speech by Mario Draghi. The decline in the pair continued. Yesterday, volatility reached 275 points. However, this week’s volatility has reached 365 points.

The pair started this week with a gap down of 100 points after the failure of the Italian referendum and yesterday the pair EUR/USD has grown to the level of 1.0870 on the ECB decision.

The pair EUR/USD remains in the descending channel on the daily chart with the lower limit near the level of 1.0530. The low of 2014 (Fibonacci 0%) is slightly below this level.  

Our opinion

Today, the pair EUR/USD is traded in the narrow range near the level of 1.0610. The USD continues to rise in the market. However, it is possible that the pair EUR/USD will slightly go up too at end the week due to profit taking and uneventful economic calendar.

Market volatility may increase at 12:30 (GMT+3) after the release of the Bank’s of England consumer price forecast.  

From a technical point of view the decline in the pair EUR/USD is likely to continue.  On the daily, weekly and monthly charts the indicators OsMA and Stochastic give sell signals.

It is unlikely that short-term upward correction will go above the level of 1.0770 (ЕМА200 on 4-hour chart). Probability of the short-term correction is shown on the 4-hour chart, as the indicators on this chart give signals for long positions.

However, the pair EUR/USD is under strong pressure from the significant rise in the USD, weak European macro-economic statistics and the difference of the monetary policies of the ECB and the US Fed.

If the price consolidates above the levels of 1.0770 and 1.0830, the pair may rise up to the resistance level of 1.0900 (lows on the day after Brexit referendum), 1.1040 (ЕМА200 on the daily chart, ЕМА50 on the weekly chart).

Short positions are preferable.

Support levels: 1.0570, 1.0530 and 1.0485.

Resistance levels: 1.0720, 1.0770, 1.0830, 1.0900, 1.0975 and 1.1040.

Trading tips

Sell Stop: 1.0580. Stop-Loss: 1.0620. Targets: 1.0530 and 1.0485.

Buy Stop: 1.0620. Stop-Loss: 1.0580. Targets: 1.0720, 1.0770, 1.0830, 1.0900, 1.0975 and 1.1040.

EU-d

In the descending channel

EU-h4

Rebound from the levels of 1.0830 and 1.0770




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