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EUR / USD demonstrated an impressive bearish move last week, during which the quote managed to decrease from 1.2000 to 1.1790 / 1.1800.
Reaching it did not only signal the resumption of short positions, but also indicated a change in the local trend, which may lead to a full-fledged resumption of the sideways channel that took place in August.
Thus, if we look at the M15 chart for Friday's trading, we will see that short positions surged at 13:30 - 15:00, while long positions arose at 16:30 and lasted until 19:30.
Such gave volatility equal to the average level, but if we analyze the dynamics relative to the minute period, we will see that the acceleration is mainly caused by high speculation in the market.
This is because as discussed in the previous review , activity surged in the market when traders set up local short positions, targeting the levels 1.1840 / 1.1865.
So, in the trading chart, the upward movement slowed down, but still managed to renew local highs.
With regards to news, very good data was released on the US labor market last Friday, which resulted in an inevitable increase in dollar demand in the market.
The report said that unemployment rate dropped by 8.4% in the US, largely due to the return of self-employed and contracted workers to their works, as well as 1.4 million new jobs created outside of agriculture.
Unfortunately, the joy over this event did not last long as at 16:00, ECB member Philip Lane made a speech and said that the ECB's target inflation will remain at 2%, but hinted a possible change of approach to monetary policy. It resulted in a reversal in EUR / USD, bringing the quote back to its previous level.
Meanwhile, Fed Chairman Jerome Powell released a statement regarding low rates.
"Recovery continues, but we really think it will be harder from now on. In some ways, it will be harder for Americans to find work because some areas of the economy will take longer to recover. We think the economy will need a low interest rate to sustain economic activity over a long period of time, "he said.
This hints that low rates may last for more than one year.
Today, the economic calendar is empty and trading volumes have been reduced due to the weekend and holiday in the United States.
Further development
As we can see on the trading chart, the quote continues to focus at 1.1800, forming a low-amplitude swing. Trading is expected to remain within 1.1780-1.1865, so the best option is to overcome the limits of this range.
Indicator analysis
Looking at the different time frames (TF), we can see that the minute and hourly periods emit various signals due to the quotes trading in a range, while the daily period has an unstable sell signal and is waiting for a consolidation below 1.1780.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.
(The dynamics for today is calculated, all while taking into account the time this article is published)
Thus, volatility is at 24 points today, which is considered an extremely low value for the indicator. And since the United States is on a holiday (Labor Day), volatility is expected to remain low, and maybe even undergo a local slowdown.
Key levels
Resistance zones: 1.1910 **; 1.2000 ***; 1.2100 *; 1.2450 **; 1.2550; 1.2825.
Support Zones: 1,1800; 1.1650 *; 1,1500; 1.1350; 1.1250 *; 1.1180 **; 1.1080; 1.1000 ***.
* Periodic level
** Range level
*** Psychological level
Also check trading recommendations for the GBP/USD pair here, or brief trading recommendations for the EUR/USD and GBP/USD pairs here.
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