23.03.202006:48 Forex Analysis & Reviews: Overview of the EUR/USD pair. Preview of the week. The first reports will show a serious slowdown in the economy in the United States

4-hour timeframe

Technical details:

Higher linear regression channel: direction - sideways.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - downward.

CCI: -115.2364

For the EUR/USD pair, the new trading week will be extremely interesting in terms of macroeconomic statistics. Unfortunately, there is still panic in the markets, so there may not be a proper reaction to all the macroeconomic reports. There may be no reaction at all. However, we must note that the first reports for March will begin to arrive this week. For a month, when the "coronavirus" epidemic began in full scale in the European Union and the United States. Thus, this week can show how much the state of the economy has deteriorated in both the United States and the eurozone. Several reports for March have already been published. For example, the ZEW Institute's indices of economic activity and investor sentiment for Germany and the EU. All three indices fell, which is not surprising. What can be the mood of investors if there is an epidemic raging in the European Union, and quarantines have been introduced in all countries? A report on applications for unemployment benefits in the US was also published last week, according to which the number of applications increased in the week of March 13. Their total number was immediately 281,000, while the normal value of the indicator was 210,000-220,000. Thus, we can already imagine how bad the March figures will be...

All this week's macroeconomic publications can be divided into two categories. The publication of economic indicators for February and the publication in March. The first category is almost 100% - however, it will not cause any reaction among traders. Simply because the situation in all markets has changed so much due to the global epidemic that the February figures no longer matter. It is impossible to track the current trend or make a conclusion about the current state of a particular sector of the economy. We will consider them in any case, but they will be purely formal.

We'll start right away on Tuesday, as no publications are scheduled for Monday. On March 24, Germany, France, the European Union, the United Kingdom, and the United States will publish data on business activity in the services and manufacturing sectors for March (preliminary value). From our point of view, these data will be the most important and significant for traders. These data are the data of the "new time". These indices require careful consideration, so a separate article will be devoted to them.

On Wednesday, March 25, Germany will publish an insignificant index of economic expectations, assessments of the current situation and business optimism from the IFO for Germany for March. It is easy to guess that these indicators are likely to fall down.

In the United States, the publication of orders for durable goods for February is scheduled today, as well as derivatives of the main indicator. In normal times, this is a very significant indicator, since this category of goods is expensive in itself, and consequently has a high impact on the economy and GDP. However, these reports are likely to be ignored at this time. However, the main indicator is forecast to decline by 0.7% m/m.

The figure excluding defense orders is likely to lose 2.7% compared to January.

And the indicator excluding transport is likely to decrease by 0.3% m/m. As we can see, all indicators are projected to reduce volumes.

On Thursday, all the most important data will be published in the States. First, this is the final value of GDP for the fourth quarter of 2019. Here, no surprises are expected and according to experts' forecasts, the value will be 2.1% y/y. The same as in the third quarter.

The main surprise for traders may be the number of applications for unemployment benefits in the US for the week of March 20. That is, when the epidemic was already in full swing. According to preliminary forecasts, we should expect from 750 to 775 new applications for benefits, which means a sharp increase in job losses among the American population. The reasons are clear and obvious to all of us. However, for the American economy, which aims to achieve a strong labor market and low unemployment, such data may be another shock. However, it is unknown how this almost 100% probability of failure data will affect the exchange rate of the US currency. In the last 2 weeks, there was plenty of news that could cause a sale of the dollar, but it continues to grow strongly. However, this report could potentially cause the dollar to weaken.

On Friday, March 27, the United States will publish data on changes in the level of income of Americans for February with a forecast of +0.3% - +0.4%...

...and the level of expenditures with a forecast of +0.2% - +0.3% m/m. However, these data are of no interest now.

The latest report this week will be the consumer confidence index from the Michigan Institute, which experts predict will fall from 101 to 90 in March. And this value may be the minimum for the last few years.

The last thing I would like to note in this article is that the total number of people infected with "coronavirus" in the world over the weekend increased to 319,000. In the United States - 27,000 cases, in the EU - more than 140,000. As we can see, it is not possible to stop the growth rate of the epidemic, despite all the quarantine measures, so there is no reason for the markets to calm down. We still believe that the panic in all world markets may persist, so the movements may still be highly volatile and sharp.

From a technical point of view, the downward movement of the EUR/USD pair continues, as the Heiken Ashi indicator turned down again after a minimal correction up. This week, much will depend on the state of the US stock markets and the commodity market, but for now, the dollar maintained its leading position. Almost the main factor in favor of strengthening the euro is the impossibility of the constant growth of one of the currencies. In our case, the US dollar...

The average volatility of the euro/dollar currency pair remains at record values and continues to grow day by day. At the moment, the average value for the last 5 days is 230 points. The growth rate is not as high as it used to be. Markets continue to be in an agitated state. There is no logic in the movement now, the markets just collapse and collapse every day. Thus, on Monday, we again expect a decrease in volatility and movement within the channel, limited to the levels of 1.0464 and 1.0924.

Nearest support levels:

S1 - 1.0620

S2 - 1.0498

Nearest resistance levels:

R1 - 1.0742

R2 - 1.0864

R3 - 1.0986

Trading recommendations:

The euro/dollar pair continues its strong downward movement. Thus, traders are still recommended to sell the euro with the targets of the Murray levels of 1.0620 and 1.0498 before the Heiken Ashi indicator turns up, which will indicate a round of upward correction. It is recommended to buy the EUR/USD pair not before fixing the price above the moving average line with the first target of the Murray level of "3/8"-1.1108. When opening any positions, we recommend increased caution, since the market is now in a frank panic.

Explanation of the illustrations:

The highest linear regression channel is the blue unidirectional lines.

The lowest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

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

Possible variants of the price movement:

Red and green arrows.