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19.11.202403:41 Forex Analysis & Reviews: Overview of EUR/USD Pair on November 19: A Calm Start to the Week

Exchange Rates 19.11.2024 analysis

The EUR/USD pair mainly remained stagnant throughout Monday. This is unsurprising since no macroeconomic events except European Central Bank President Christine Lagarde's speech were scheduled for the day. However, as anticipated, Lagarde delivered no significant or impactful statements. Lagarde has made several public appearances recently, offering no new insights for the market. The latest ECB meeting occurred not long ago, so any shift in sentiment or rhetoric from ECB representatives would require fresh data.

With no substantial news to drive the market, EUR/USD maintained its downtrend, and we expect further declines. This could mark the beginning of a new leg in the global bearish trend. A quick look at the weekly timeframe reveals that the pair's upward movement over the past two years has merely been a correction. Since there are no indications that the long-term bearish trend has ended, a significant and prolonged decline remains plausible.

And there are still a considerable number of fundamental reasons for this. The most crucial factor is the market working through the entire cycle of easing the Fed's monetary policy. The second most important factor is the market's complete ignoring of the ECB's monetary policy easing in 2024. The third factor is the illogical rise of the euro in 2024, which requires balancing the pair's exchange rate. The fourth factor is Donald Trump's rise to power, under which inflation in the United States may be higher, requiring a more hawkish monetary policy from the Federal Reserve. The fifth factor is possible trade wars between the United States, the EU, and China. We are not very interested in China, but the EU economy has hardly grown in the last two years, even without trade wars. Therefore, its chances of growth in the coming years are also minimal.

With these factors in play, the U.S. dollar maintains a strong advantage over its competitors. This explains why bullish divergences and oversold indicators have failed to work, and the dollar continues to strengthen. Corrections can occur unpredictably, but the price currently struggles to consolidate above the moving average, limiting the potential for meaningful corrections.

Exchange Rates 19.11.2024 analysis

The average volatility of the euro/dollar currency pair over the last five trading days as of November 19 is 78 pips, characterized as "medium." We expect the pair to move between the levels of 1.0507 and 1.0663 on Tuesday. The higher linear regression channel points downward, confirming the global bearish trend. The CCI indicator entered oversold territory, warning about the beginning of a new round of correction, but the round of correction turned out to be weak and has already been completed. A new bullish divergence is forming, yet the price remains below the moving average.

Support Levels:

S1: 1.0498

S2: 1.0376

S3: 1.0254

Resistance Levels:

R1: 1.0620

R2: 1.0742

R3: 1.0864

Trading Recommendations:

The EUR/USD pair continues its downtrend, which aligns with our medium-term bearish outlook. We believe that the market has already priced in most, if not all, future Fed rate cuts. As such, the dollar has little reason for a sustained medium-term decline, although there were few before. Short positions can still be considered with a target of 1.0498 if the price remains below the moving average. If you are trading on a "pure" technique, long positions can be considered when positioned above the moving average, with targets at 1.0663 and 1.0742. However, long positions are not recommended under current conditions.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2024
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