Euro Undergoes A Brief Bullish Correction
InstaForex Group | Apr 21, 2022 04:59AM ET
Yesterday, the euro displayed a significant rise supported by quite positive macroeconomic data. On a yearly basis, industrial production increased by 2.0% after a drop of 1.5%. However, just after the beginning of the US trade, the market started reversing.
This fact proved that the jump in the euro was just a local rebound after long-lasting depreciation. In addition, there is no use in taking into account the industrial production report as it reflects the situation in February. In March, the indicator is likely to slump.
Today, the eurozone is going to disclose its inflation figures. According to the forecast, the growth in consumer prices may accelerate to 7.5% from 5.9%. However, the data will hardly affect the market. It is a final report expected to meet the preliminary estimates priced long ago.
Meanwhile, data on the US unemployment claims may boost the greenback. The fact is that the number of initial jobless claims may inch down by 5k, whereas the number of continuing claims may drop by 15k.
During the rebound, the euro/dollar pair advanced above 1.0800 without violating the structure of the downtrend. That is why market participants consider the current situation a change in the market sentiment ahead of a slump.
On the four-hour chart, a moving average of the RSI technical indicator upwardly crossed line 50, thus proving the recent rebound. On the daily chart, the indicator is located in the lower area of 30/50.
During the four hours, moving averages of the Alligator indicator intersect each other, thus reflecting the rebound. This signal is likely to be short-lived. On the daily chart, the Alligator indicator points to a mid-term downtrend.
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Once the price drops below 1.0800, traders will receive the first sell signal. In this case, the volume of short positions may increase. However, the main short signal will appear if the price settles below 1.0750 on the four-hour chart. Until then, the pair has every chance to enter a sideways channel.
In terms of the complex indicator analysis, technical indicators are signaling mixed opportunities in the short-term and intraday periods amid a slowdown in the rebound. In the mid-term period, technical indicators provide sell signals as the pair is still trading near the bottom of the downtrend.
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