Hello, dear colleagues!
Yesterday's trading was mostly dominated by risk sentiment, which allowed the EUR/USD currency pair to continue its growth, which was resumed a day earlier. Market participants expect that the stimulus measures taken by the largest central banks will contribute to the rapid recovery of the world economy after the devastating consequences caused by the outbreak of the COVID-19 pandemic. Investors also have strong expectations that an effective and fully tested vaccine against a new type of coronavirus infection will be available in the coming months.
If you go back to yesterday's statistics, in my opinion, the most important were the employment reports from ADP, which were significantly worse than the previous figure of 2369 and amounted to only 167 thousand. As you know, the change in the number of employees from ADP is considered a leading indicator of official data on employment in non-agricultural sectors of the American economy. In this regard, tomorrow's Nonfarm Payrolls may surprise you and turn out to be very, very weak. If it happens, the US dollar is in danger of falling under another and a rather strong wave of sales. Let's see what really happens. It won't be long now. Let me remind you that tomorrow at 13:30 London time, the official labor statistics from the United States will be published.
Another of yesterday's events is the speech of Vice-Chairman of the Federal Reserve System (FRS) Richard Clarida. According to this senior monetary official of the Federal Reserve, economic growth will begin to recover in the third quarter, and by the end of next year, the US economy will return to the levels that were observed before the COVID-19 epidemic.
Looking at today's economic calendar, you can see that there are few important and significant events that can affect the price dynamics of the euro/dollar. Including only initial claims for unemployment benefits in the USA, which will be published at 13:30 (London time), and a little later, at 15:00 (London time), a speech by a member of the Federal Open Market Committee Robert Kaplan will take place.
As noted at the beginning of the article, yesterday's trading ended with a growth for the EUR/USD currency pair. Attempts by bears to lower the price below the important level of 1.1800 did not lead to anything, and already from 1.1793, the pair began to rise, showing maximum values at 1.1904 and ending Wednesday's session at 1.1862.
Despite the fairly long upper shadow of yesterday's candle and the inability to finish trading above another important mark of 1.1900, the euro bulls do not think to retreat. Today, at the moment of completion of this article, the pair is again testing a strong resistance level of 1.1900 sellers for a breakdown, and judging by the insistence of the players to increase, this level can be broken. However, we will make final conclusions about the breakdown of this mark after the end of Friday and weekly trading. Given that today the pair has already updated previous highs and visited 1.1915, it is reasonable to assume an ascending scenario as the main one.
However, looking at the picture that is observed on the hourly chart, we see that everything is not so difficult. The resistance of sellers near 1.1900 once again demonstrates its strength. It is possible that overcoming this barrier may require a strong driver, which may be tomorrow's reports on the US labor market.
Conclusion and trading recommendations for EUR/USD:
Given yesterday's weak data from ADP and, in this regard, the nervousness of investors ahead of tomorrow's official labor reports from the US, the US currency is likely to continue to remain under pressure. The technical picture on the considered timeframes also, with a greater probability, indicates the growth of EUR/USD. Thus, the main trading idea for this currency pair is buying. However, as has been repeatedly noted in previous articles, buying at the peak of the market, and even near such a strong resistance, is impractical and risky enough.
To open long positions on EUR/USD, I suggest waiting for a short-term decline in the price zone of 1.1835-1.1800 and from here make a decision to open buy deals with the nearest goals of 1.1900.
If the pair fails to overcome the resistance of sellers in the area of 1.1900-1.1915 and there will be bearish reversal patterns on the four-hour and (or) hourly charts, you can try to short sell with the nearest target at 1.1860.
Good luck with trading!