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Forex Traiding

EUR / USD. New week preview. Next week will be very important for the dollar. The number of factors influencing it has grown.

DATE OF PUBLICATION: 2021-02-28 10: 47: 03 A new work week begins, and we need to figure out what to expect from it. The most important question is this: was the downward movement at the end of last week an accident caused by several coincidental factors, or was it the beginning of a new, long-term downtrend? We believe that there is a fair amount of coincidence in the drop that happened on Thursday and Friday. There is no denying that macroeconomic statistics from the US on Thursday were strong, but how many such strong statistics have been ignored by traders over the past year? Escalating military conflict in the Middle East? The tense state of war in the region has persisted for decades. And there were no more, even hypothetical, reasons for the growth of the US dollar. Yes, we can, of course, assume that a new round of technical correction is ripe, but in this case it should end on Monday-Tuesday. In general, we still remain with our initial opinion: in 2021, the US currency will continue to decline in the long term. We have already spoken a hundred times about the main factor that, from our point of view, influences the movement of the pair in the last year. But, since he is the main one, it will not be a sin to repeat itself. We continue to believe that the drop in the US dollar in the past 11 months was fueled by a sharp increase in the money supply in the United States. Accordingly, if this process continues (and it will continue almost guaranteed), then the US currency will continue to depreciate. Of course, there are many other potentially important factors that affect the movement of the pair. For example, in the European Union, programs to stimulate the economy may also be increased. We remind you that the notorious 750 billion Euro Economic Recovery Fund has not even been formed and certainly not distributed. Thus, formally, with the arrival of this money in the economy, the EU money supply can also grow. However, so far it still seems that it is not as strong as the money supply in the United States. Since the traders last Thursday (if this is, of course, not an accidental coincidence) worked out the American statistics, then you should pay more attention to the publication of reports next week. … What can you pay attention to? On Monday, the European Union will publish an index of business activity in the manufacturing sector. However, this indicator last month was at a very high value and it is unlikely that it will collapse below 50.0. On Tuesday, the European Union will publish a report on inflation for February, which may accelerate further and reach 1.0% in annual terms. On Thursday, the unemployment rate will be published, which in the European Union is at a fairly high level of 8.3%, but may increase even more. Also on this day, retail sales will be published, which by the end of January may decrease by 1.1% – 1.4% compared to January. On Friday, in the European Union, the calendar of macroeconomic events will be empty. Thus, according to forecasts for next week, statistics from the Eurozone may be rather weak. That could lead to a new strengthening of the American currency. However, we believe that the factor of tension in the Middle East will be of greater importance. In the event of new conflicts, new attacks and attacks, anti-risk sentiment in the market may increase even more, which will provoke an increase in demand for the dollar. The factor of approval of a new stimulus package for the American economy is also of great importance. On Saturday, February 27, it became known that the US House of Representatives approved this bill, so now the matter remains small – the approval of this bill by the Senate, where the formal majority is also in the hands of the Democrats. Thus, while a new batch of dollars has not yet poured into the economy, nevertheless, in the coming weeks, the dollar may begin to experience a new portion of pressure in connection with this event. Technically, on the 24-hour timeframe, everything looks very strange … The fall in quotes of the pair on Thursday and Friday turned out to be too strong. It is unlikely that such a strong downward movement will continue next week. The price remains within the Ichimoku cloud and above the 50.0% Fibonacci level, from which we proceed in our forecasts for the future of the pair. Thus, everything looks like a slightly stronger round of correction than the one that would be quite enough, but the technical and fundamental picture for the EUR / USD pair has not changed dramatically. Therefore, from our point of view, it is still inappropriate to talk about a change in the global trend to a downtrend. The bears may even try to pull the pair towards 50.0% Fibonacci or 61.8% levels in the coming weeks, but even that will not break the 11-month uptrend. Trading recommendations for the EUR / USD pair: Technical picture of the EUR / USD pair at 4 The hourly chart, of course, shows a trend reversal from an upward to a downward trend. The price has consolidated below all the important lines of the Ichimoku indicator. However, after a two-day drop in quotations, we expect to see at least an upward pullback of points by 50-70. After this pullback, the downside movement may resume in the short term. Thus, in the short term, it is recommended to trade down in the near future, but at the same time, it should be remembered that from a fundamental point of view, there are few reasons for further strengthening of the dollar. You should also remember that any fundamental hypothesis requires specific technical confirmation. Material provided by InstaForex – Source – InstaForex

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