Last minute forecast for EUR / USD from 05/21/2021

Due to the fact that the number of applications for unemployment benefits in the United States did not decrease, but increased, the single European currency was able to return to the values ​​at which it was before the publication of the text of the minutes of the meeting of the Board of the Federal Open Market Commission. It’s all about repeated requests, the number of which increased by 111 thousand, while a decrease by 40 thousand was expected. In this situation, a decrease in the number of initial requests by 34 thousand, with a forecast of 27 thousand, no longer matters. It turns out that the total number of applications for unemployment benefits, instead of decreasing by 67 thousand, increased by 77 thousand. In general, it is already difficult to talk about a further recovery of the labor market, and apparently, this process has not just slowed down, but there are also risks of worsening the situation. This is what caused the dollar to weaken.

Repeated Unemployment Insurance Claims (United States):

Today, the single European currency may build on its success thanks to preliminary data on PMIs. And while the manufacturing index is set to decline from 62.9 to 62.2, the service sector is likely to rise from 50.5 to 52.6. As a result, the composite PMI should rise from 53.8 to 54.5.

Composite PMI (Europe):

At the same time, the position of the dollar will be further aggravated by American business activity indices. Apparently, the preliminary estimate will show a decline in the manufacturing index from 60.5 to 59.8, and in the service sector from 64.7 to 64.0. All this will lead to a reduction in the composite PMI from 63.5 to 63.0. In general, today the dollar has few chances to grow.

Composite PMI (United States):

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During the last trading day, the EURUSD currency pair closed the horizontal amplitude 1.2165 / 1.2185 with a breakdown of its upper border, which resulted in an increase in the volume of long positions. Market dynamics continues to show signs of accelerating volatility, which is confirmed by the structure of price candles, as well as the growth of speculative transactions in the market.

If we proceed from the current location of the quotes, we will see the return of the euro to the area of ​​variable resistance at 1.2250.

In this situation, it can be assumed that holding the price above the 1.2250 coordinate may well lead to a subsequent increase in the volume of long positions, which will lead to the price convergence with the local maximum of the medium-term trend – 1.2349.

From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments are again signaling to buy, due to the resumption of the upward cycle.

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The ECB puts an end to the growth of the European currency in the near future. Mario Draghi and his 16-item plan

Today’s decision by the European Central Bank had a negative impact on the European currency, as, in fact, traders have not received any new guidelines to continue buying the euro at current highs. Most likely, the pressure on the euro will gradually return, but the bears need to try very hard technically. We will talk about this below. For now, let’s look at the outcome of the European Central Bank meeting.

During a regular meeting on monetary policy, the European regulator left interest rates and the asset purchase program unchanged. Rising coronavirus infections and continuing lockdowns have weakened prospects for economic recovery later this year, the ECB said. The governing council, chaired by ECB President Christine Lagarde, kept the key interest rate unchanged at a record low near zero and the deposit rate at -0.50 percent. The ECB also maintained the size of the PEPP bond purchase program at € 1,850 billion. The central bank said interest rates will remain at or below current levels until inflation forecast approaches a level close enough to 2 percent.

The bank confirmed that the purchase of assets will continue at least until the end of March 2022 or when the phase of the coronavirus crisis ends. In addition, the ECB reaffirmed its position on the increased volume of bond purchases under the PEPP. This will keep the growth in bond yields at an acceptable level. ECB economists also decided to continue providing liquidity through the long-term refinancing operations of TLTRO III.

In general, nothing new and unusual for the market. After the publication of the monetary policy report, traders began to closely follow Christine Lagarde’s speech. During a press conference, the President of the European Central Bank said that she and her colleagues did not discuss the phasing out of emergency bond purchases, although she sees signs of economic recovery. Lagarde said that the medium-term risks to the economy are balanced, but she opposes any suggestions for a reduction in stimulus measures, as she considers this idea premature.

“Incoming economic reports, polls and indicator data suggest that economic activity may have slowed again in the first quarter of this year, but indicate a resumption of growth in the second quarter,” Lagarde said. “Overall, while risks to the eurozone’s growth prospects continue to decline in the short term, medium-term risks remain more balanced,” the ECB President added.

As for the technical picture of the pair EURUSD, then it has not undergone major changes compared to the morning forecast, since the trading instrument did not go beyond the side channel. Only a confident breakout of the level of 1.2025 will lead to new active sales of the euro, counting on a decline to a minimum of 1.1975. A further target is the area of ​​1.1925. It will be possible to say that the bulls have taken the market under their control only after the breakout of the level of 1.2080, to which the buyers of risky assets have not even reached today. However, as long as trading is carried out above the 1.2025 range, the advantage will still remain on the side of the buyers of risky assets.

For the availability of a vaccine against Covid-19

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News broke today that the Biden administration is seriously considering calls from progressive Democrats to accelerate global access to Covid-19 vaccines. At the same time, the White House needs to support the abandonment of intellectual property protection, which is opposed by major drug manufacturers. In a nutshell: Last week, lawmakers led by Senators Bernie Sanders and Elizabeth Warren called on President Joe Biden to back a proposal made to the World Trade Organization that seeks to broadly waive obligations to protect intellectual property rights, including patents, copyrights and commercial the secret about the coronavirus vaccine. The main goal is to simplify regulations regarding the production and export of vaccines and other essential medical products needed to combat the Covid-19 virus. Experts believe supporting this plan will help save many lives in South Africa and India, as well as in over 50 other countries. Last October, the Trump administration blocked the proposal.

Not very important fundamental statistics for France and Italy were released today, but in the light of important decisions of the ECB, traders did not pay attention to these numbers. In short, confidence in the French manufacturing sector improved in April this year. According to the statistics bureau Insee, the index of sentiment in the manufacturing sector rose to 104 points in April from 99.0 points in March. Economists had forecast that the index would remain at 99.0. Industrial production in Italy grew at a weaker pace in February. In a report by the Istat Bureau of Statistics, production rose 0.2% in February after rising 2.6% in January.

Mario Draghi and his 16-item plan

Even in the morning I talked a little about the fact that Italy, although it has not yet coped with the coronavirus pandemic, is confidently moving along this path. The details of how Prime Minister Mario Draghi will save the Italian economy with the money of the European Union became known today. It is expected that the new plan will immediately appear 16 categories of expenses that will help Italy get out of the debt trap. The country’s new reconstruction plan consists of 200 pages and 500 diagrams detailing how officials want to distribute the money. Draghi’s plan is to receive about 200 billion euros from the EU Stabilization Fund. Quite simply, the funds allocated in the form of grants and loans (which hardly anyone will give) will allow Italy in this century to turn the page after two decades of stagnation. About 40% of the costs will go to revitalize southern Italy.