Technical Analytics Report

EUR/USD: Fundamental Analysis Report

EUR/USD: Fundamental Analysis Report 19 May 2021

 

This week, the EUR/USD pair resumed its growth and is now trading in the area of 1.2220. Today’s April data on EU inflation rose by 1.6% YoY and by 0.6% MoM. The increase in indicators was provided by the growth in prices for electricity services. However, this data did not have a significant impact on the price, as inflation has not yet reached the European Central Bank’s target of 2.0%. Also, even in this case, the regulator promised not to rush to change monetary policy. 

American investors are waiting for the central event of the day – the publication of the minutes of the last meeting of the US Federal Open Market Committee (FOMC) and are not too active yet. Traders are waiting for new information on the timing and conditions of the start of rate hikes but, according to most experts, they are unlikely to succeed in this. Earlier, officials of the regulator have repeatedly stated that the current rise in inflation was temporary, and, therefore there was no need in tightening the monetary policy. Also, the second key parameter of great importance is employment, the growth of which significantly lags behind the necessary. Currently, the American economy is not gaining 8M jobs, and until the situation improves, the regulator won’t increase rates. 

Support and Resistance

Technically, the price has broken through the upper border of the Murrey trading range (1.2207) and may continue to rise to the area of 1.2330 (Murrey [+2/8]). In case of a breakdown of 1.2146 (Murrey [7/8]), a decline to the levels of 1.2085 (Murrey [6/8], middle line of Bollinger bands) or 1.2023 (Murrey [3/8]) is expected. 

The indicators generally confirm the continued upward trend: Bollinger bands are directed upward, the MACD histogram is increasing in the positive zone, and Stochastic is directed upward but is approaching the overbought zone.

·         Resistance levels: 1.2268, 1.2330.

·         Support levels: 1.2146, 1.2085, 1.2023.

Trading Tips

Long positions may be opened from 1.2240 with the target at 1.2330 and stop loss 1.2190. Implementation period: 5–6 days. 

Short positions may be opened below 1.2146 with the targets at 1.2085, 1.2023, and stop loss 1.2190. 

Scenario

Timeframe: Weekly

Recommendation: Buy Stop

Entry Point: 1.2240

Take Profit: 1.2330

Stop Loss: 1.2190

Key Levels: 1.2023, 1.2085, 1.2146, 1.2268, 1.2330 

Alternative scenario

Timeframe: Weekly

Recommendation: Sell Stop

Entry Point: 1.2140

Take Profit: 1.2085, 1.2023

Stop Loss: 1.2190

Key Levels: 1.2023, 1.2085, 1.2146, 1.2268, 1.2330


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