The single European currency was growing pretty well over the course of almost all of yesterday, largely due to the growing concern over the coronavirus. Say what you like, but a record number of new cases of coronavirus infection was recorded in the United States last Friday. This became known only during the weekend. In general, the world saw the real prospect of a second wave of the coronavirus epidemic. And it seems that it starts in the United States. So trading on Monday opened with the dollar's fall.
However, the dollar quite actively began to recoup its losses closer to the end of Monday. The reason was the incredibly good data on the real estate market. The pace of decline in pending home sales transactions slowed from -33.8% to -5.1%. This happened due to the fact that the number of these transactions soared by 44.3% in May. Only 18.0% growth was forecasted. This means that by the end of June we will see an impressive growth in the real estate market.
Pending Home Sales (United States):
Today, much will depend on preliminary data on inflation in Europe. And apparently, they won't bring anything good to the euro. The fact is that inflation in Europe should slow down from 0.1% to 0.0%. At the same time, deflation is already in full swing in a number of European countries. This will not end there, and most likely, deflation will soon become a reality for the entire eurozone. In turn, this may force the European Central Bank to either lower the refinancing rate to negative values or expand the quantitative easing program even further. And it is clear that if these forecasts are confirmed, the single currency will be forced to give up its positions.
From the point of view of technical analysis, we see a downward pace, in which there are current fluctuations in the structure. The main point of support is still the range level of 1.1180, which restricts market participants from falling further. Relative to the previous day, local long positions were recorded, which did not lead to anything drastic, and the quote returned to the limits of last Friday's stagnation. In terms of volatility, there is a slight acceleration, but the speed in which price will change is still limited.
Looking at the trading chart in general terms (the daily period), the first thing that catches your eye is the inertial upward movement from May 18, which is an integral part of the market, at the top of which there were price fluctuations.
We can assume that if the price is consolidated below 1.1220, the quote will move towards 1.1190, where in case there is another slowdown, the amplitude of 1.1190/1.1240 will still remain relevant. For significant changes, the quote must be consolidated below 1.1165, in this case, we will open the way to the values of 1.1100-1.1080.
From the point of view of a complex indicator analysis, we see that the indicators of technical instruments relative to hourly and daily periods reflect a sell signal by focusing the price within the bottom of the descending clock cycle.