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flag ★ Overview of EUR/USD on September 11th. Forecast according to the "Regression Channels". Mario Draghi is preparing to bring the rates to "ultra-low"

Forex Analysis:::2019-09-11

Overview of EUR/USD on September 11th. Forecast according to the "Regression Channels". Mario Draghi is preparing to bring the rates to "ultra-low"

4-hour timeframe


Technical data:

The upper channel of linear regression: direction – down.

The lower channel of linear regression: direction – down.

The moving average (20; smoothed) – sideways.

CCI: 85.1013

The EUR/USD currency pair stood in one place for the first two trading days of the week. But the bulls still managed to stay above the moving average line in the complete absence of a fundamental background, which can be considered a small victory for the euro. The market is still waiting for the announcement of the results of the meeting of the European Central Bank and shows its unwillingness to take action before this event. And the announcement of the results will take place only tomorrow. Today, we are waiting for another boring and uninteresting day, as no important macroeconomic publications are planned today – neither in the States nor in the European Union. A minor producer price index in the US is unlikely to generate any interest among traders.

Tomorrow, in addition to summing up the ECB meeting, there will be an important publication of the consumer price index in America. According to experts, inflation in the US will not change in August and will be 1.8% y/y. Most likely, this figure will also have no special impact on the market. Only if there is a serious mismatch between the actual and forecast value. Thus, everything comes down to the results of the ECB meeting, as well as Mario Draghi's press conference. Most traders agree that monetary policy easing from the European regulator will follow, opinions differ only on the "volume of easing".

At the same time, many experts note that the reduction of the deposit rate will be discussed at the next meeting and this is not a panacea for Mario Draghi. Most experts agree that the rate on the depot can be reduced one, two or three times, but this tool will cease to work or become counterproductive to stimulate the economy. It is also expected that Draghi's actions in the last two months of his work at the ECB will tie Christine Lagarde's hands for years to come, as Draghi may indeed lower rates to the "ultra-low" level at the last two meetings. It will no longer make sense to reduce them further when they have to support the entire banking system, which will incur huge losses due to the ultra-low deposit rate. Naturally, in the conditions of a weak economic state, Lagarde will not be able to raise the rate. It turns out that the new head of the ECB will have few instruments of influence on monetary policy.

Well, what about the technical picture? Euro bulls still manage to hold the positions won back from bears with great difficulty. However, the closer Thursday gets, the more certain it is that the bulls will eventually give up. There is too little chance that Draghi and the company will abandon the easing of monetary policy. Thus, the main hopes of the euro are connected with the meeting of the Fed, at which the US regulator is also preparing to reduce the rate.

Nearest support levels:

S1 – 1.1017

S2 – 1.0986

S3 – 1.0956

Nearest resistance levels:

R1 – 1.1047

R2 – 1.1078

R3 – 1.1108

Trading recommendations:

The euro/dollar pair is trading slightly above the moving average line, maintaining a weak upward trend. Thus, formally, it is now possible to buy a pair with the targets of 1.1078 and 1.1108, but there are no fundamental grounds for this, and from a technical point of view, there is now a kind of flat or just low activity of traders due to the complete lack of news and reports.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line of the unidirectional movement.

CCI – the blue line in the indicator window.

The moving average (20; smoothed) – the blue line on the price chart.

Support and resistance – red horizontal lines.

Heiken Ashi is an indicator that colors bars in blue or purple.

Paolo Greco
Analyst InstaForex
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