EUR/USD. November 21. Results of the day. The "first phase" of the trade agreement between China and the United States is

Source: Forex Analysis

4-hour timeframe


Amplitude of the last 5 days (high-low): 39p – 42p – 40p – 21p – 28p.

Average volatility over the past 5 days: 34p (low).

The EUR/USD currency pair was still bored and uninteresting on the penultimate trading day of the week. This is due to the same lack of any macroeconomic reports in the United States and the European Union. If you look at the pair’s movement chart, you get the impression that today there was quite a frisky movement, but in fact the pair’s volatility remains ultra-low and today is no exception. Yesterday’s publication of the minutes of the last meeting of the Federal Reserve’s monetary committee did not cause any reaction today, either at the European trading session or at the US one. The US currency slightly strengthened in the second half of the day, but it does not mean anything at all and does not specify the current picture for the euro/dollar pair. The euro bulls managed to update the highs of two days ago with grief in half, but, as usual, they did not have enough strength. At the moment, quotes have again returned to the Kijun-sen critical line.

Meanwhile, headlines regarding the topic of the trade conflict between the US and China do not disappear from the tabloids. We have already written in recent days that the main snag at the moment is the overstated requirements of both parties. China is demanding the abolition of almost all duties, and the United States is demanding that China buy agricultural products from American farmers by no less than $50 billion a year, and also solve the main problems related to intellectual property. In addition, today it became known that the US Senate is considering a bill that provides support for activists in Hong Kong who are protesting against the new policy of China regarding the extradition of Hong Kong residents. At the moment, Hong Kong has a special autonomy status and some Chinese laws do not apply to it. China decided to pass an appropriate law allowing it to control Hong Kong more, and so mass protests began and have not stopped for several months. The US Senate decided to enact the Hong Kong Human Rights Act to curb violence against protesters. If China does not stop the violence, the United States will impose new economic sanctions. That is, if Hong Kong’s autonomy continues, then a special trade status and trade preferences remain, if not, a new round of economic pressure on China will begin. It is clear that the Chinese government does not like such interference in internal problems by America and the country has already made an official statement warning the White House that any serious adoption of laws on Hong Kong will be followed by a serious response. As you can see, in this situation we are not talking about the movement of the parties towards each other.

Yesterday, US President Donald Trump said: “I do not think that they (negotiations) are moving to the level that I want.” Earlier, the odious US leader also said that it was China that should make concessions and sign the agreement that is beneficial to the United States. Based on the fact that the parties are not ready to meet each other’s requirements, the signing of the agreement can be postponed to 2020. And, from our point of view, it is not worth expecting a deal before 2020. Now it is already a matter of preventing the parties from introducing new portions of duties and economic sanctions. If the US Senate approves the Hong Kong Act, Beijing is unlikely to stand aside and will certainly take countermeasures. This means a new round of escalation of the trade conflict, which this time can no longer be identified as a trade. All this potentially means new problems for the global economy, as well as for the economies of the US and China. And in terms of the euro/dollar currency pair, this means a possible new slowdown in economic indicators and the growth of the US economy, but also of the European Union, whose economy is closely connected with both the Chinese and the American. It is unlikely, of course, that this will happen in the near future, but in the future it is quite possible to expect such a scenario.

So far, the parties are continuing a verbal skirmish. Chinese Foreign Minister Geng Shuang said: “We urge the United States to sort out the situation and stop its illegal activities before it is too late, not allowing this act to become law and immediately stop interfering in Hong Kong’s affairs and China’s internal affairs.” So now everything is Donald Trump, who can either sign the law or veto it. However, according to experts, even a veto may not save the situation if more than two-thirds of the Senate supports the bill.

Thus, traders can only follow the development of events and hope that the trade conflict does not escalate even more. The currency pair has not yet responded to news on this topic, but in the future, everything may change. And in the case of the introduction of new sanctions or the abolition of trade preferences to Hong Kong, this will again be reflected in the slowdown in the global economy. At the moment, the euro/dollar is again adjusted. A price rebound from the Kijun-sen critical line could trigger a new round of upward movement. But given the low volatility, the trading pair is now extremely uncomfortable anyway.

Trading recommendations:

The EUR/USD pair has started to correct again. Thus, it is now recommended to wait until the completion of the current correction, and then consider the pair’s purchases, but only in small lots, since the current movement is still identified as corrective. We recommend that you wait until the level of 1.1101 is overcome for euro purchases. It is recommended to return to the pair’s sales no earlier than consolidating the euro/dollar pair below the critical Kijun-sen line with the target level of 1.1033, but also with very small lots.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A – light brown dotted line.

Senkou Span B – light purple dashed line.

Chikou Span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

The material has been provided by InstaForex Company –