Forex analysis review |
- AUDJPY reacting below descending trendline resistance! Further drop expected!
- GBP/USD. Preview of the week. Traders await US ADP report, as well as a new report on unemployment benefits
- EUR/USD. Preview of the week. Will Donald Trump stop quarantine in the United States and what will be the consequences?
- GBP/USD. Results of the week. Bank of England has exhausted all the main tools for influencing the economy
- EUR/USD. Results of the week. United States came first in the world in terms of the number of people infected with the coronavirus
| AUDJPY reacting below descending trendline resistance! Further drop expected! Posted: 29 Mar 2020 08:49 PM PDT
Trading Recommendation Entry: 66.634 Reason for Entry: Descending trendline resistance, 61.8% Fibonacci retracement Take Profit : 64.170 Reason for Take Profit: -27.2% Fibonacci retracement Stop Loss: 67.744 Reason for Stop loss: 88% Fibonacci retracement, Graphical swing high The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 29 Mar 2020 06:29 PM PDT The British pound is likely to remain in the turbulence zone in the new week. The reason is not in the macroeconomic statistics, but in the coronavirus raging around the world, which continues to affect everyone without exception. It is good that in 80-90 percent of cases, it does not cause complications, and the patient does not need hospitalization. However, as we have repeatedly said, the main danger of the virus is that there is no vaccine against it, it spreads extremely quickly and it is difficult to contain it even with the help of quarantine measures. For the world economy and the economy of each individual country, the epidemic is much more dangerous than any financial crisis. Because the epidemic, as it turned out in 2020, simply paralyzes the work of most businesses. Accordingly, the economy of any country simply begins to contract. As they say, "to break-not to build". The economy will shrink very quickly, but it will take a very long time to recover. Thus, we believe that the whole world has entered a stage of prolonged crisis. And we don't know how long the pandemic will continue, much less how long the global economy will recover. However, it is already clear that a rapid recovery is not expected. In fact, all of the above applies to both the UK and the United States. A large amount of macroeconomic information will be published in both countries in the new week. As before, the main focus will be on data for March. We will try to figure out which reports this week are worth paying increased attention to by traders. There will be no important publications in either the United States or Britain on Monday, March 29. Thus, this day can be considered a semi-weekend. This does not mean that volatility will fall to normal values, as markets remain in a state of panic. On Tuesday, much more interesting reports will be at the disposal of traders, although by and large there is only one question - GDP in Britain for the fourth quarter. Since the fourth quarter does not include March 2020, this indicator has practically no value in these conditions. The forecast is 1.1% in annual terms and 0% in monthly terms. The index of business activity in the UK manufacturing sector will be published on Wednesday morning, the forecast is 47. The hour of America will come in during the second half of the day... First, the ADP report on changes in the number of employees in the private sector for March will be released. The reduction is expected to be 150,000 – 170,000. The last time in the last ten years the reduction was by 30-40 thousand was at the end of 2017 . This is the only case since the 2008 crisis. But since the current state of things in the world is comparable to that crisis, we will turn to those figures to try to predict the current ones. So, during the mortgage crisis in the United States for 1.5-2 years, every month recorded a drop in the number of employees in the private sector. The maximum reduction was equal to 800,000, on average, each month the indicator lost 400,000. Thus, we believe that the real losses of indicators such as NonFarm Payrolls and ADP reports will be much greater than experts predict... And it is these failed reports that can be important for traders. Later in the day, the Markit manufacturing PMI will be released with a forecast of 49.2 and the ISM PMI with a forecast of 44.3. There will be another crucial report for the United States on Thursday, and a report for further actions by their government - applications for unemployment benefits a week before March 27. Forecasts this time are more real - 3 million. However, in reality there may be even more of them, since the epidemic in mid-March has already gained momentum and began to progress at an exponential rate of growth. Thus, if a week earlier there were 3.3 million applications, then last week there could be 5-6 million. On the last trading day of the week, data on business activity in the UK services sector with an "excellent" forecast of 35.7 are planned, and reports on NonFarm Payrolls (forecast -100 to 150 thousand) and unemployment in March (forecast: increase from 3.5% to 3.9-4%), indexes of business activity in the US services sector from Markit and ISM with forecasts "below the plinth" and the most "safe" data on average wages. Considering how many reports from the US this week may turn out to be disastrous and comparable with the crisis figures of 2008, both the euro and the pound can continue to grow. However, we recall that market participants can ignore all reports in the current state, so the technical picture remains the most important. Recommendations for long positions: The pound/dollar continues a fairly strong upward movement, and the levels of volatility remain panic. We recommend that you pay attention to the fundamental background, especially those reports that relate to March data for the United States. Nevertheless, more attention should be paid precisely to technical factors. There are no signs that a correction will begin at the moment, and the targets for long positions at the beginning of the week will be 1.2695 and 1.2785. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 29 Mar 2020 06:29 PM PDT The new trading week promises to give traders the information they need to finally make a more or less clear conclusion. What specific cuts are waiting for each of the economies we are interested in? This week, official data on macroeconomic indicators for March will finally begin to arrive from the UK, the European Union and the United States. What can I say as a preliminary word? First, we are still not sure that market participants will pay attention to any statistics. Thus, most or all of the statistics can be ignored. Second, it is not clear what the real changes in each economy will be. We could see this from the forecasts of business activity indices last week and apotheosis - applications for unemployment benefits in the United States, the number of which was predicted at one million, but in fact it turned out to be 3.3 million. Thus, it is unclear whether market participants will be impressed by the discrepancies between forecasts and actual figures. However, we can definitely say that macroeconomic statistics will arouse interest. We'll start on Monday. On this day, the most interesting reports will be published in Germany. More precisely, one report. Inflation in the preliminary value for March. The consumer price index is expected to slow to 1.4% yoy from 1.7%. Spain will also publish an inflation indicator. Based on experts' forecasts, the indicator will decrease from 0.7% yoy to 0.5%. And from our point of view, these are still optimistic forecasts. Several secondary indicators will be released from the European Union today, such as the level of consumer confidence and the index of sentiment in the economy, which did not cause any reaction from the market even in quiet times. The preliminary value of inflation for March in the European Union will be published on Tuesday, which should fall to 0.7% per annum from the current +1.2%, as well as more important indicators of the unemployment rate in Germany for March with forecasts of growth from 5% to 5.2% and the number of applications for unemployment benefits with a forecast of 28 to 34 thousand. We believe that these forecasts are too optimistic and the real figures will be much worse. Wednesday will be quite an interesting day, but most indicators can already be easily predicted. On this day, business activity indices in the manufacturing sectors of the EU and separately Spain, Italy, Germany, France and the UK will be published. Most likely, they will not differ too much from the preliminary values that were published last week. Thus, we are only waiting for a small reduction in business activity in production. The unemployment rate in the European Union is forecast to remain unchanged in February at 7.4%. However, this is in February... Everything will be relatively calm on Thursday, since only the publication of the EU producer price index will be released on this day, which almost never causes any reaction from the markets. Business activity in the service sectors for March in Germany, Italy, Spain, France and the EU will be published on Friday, which is likely to fall to completely indecent values, as well as retail sales in the European Union for February. What can I say about this week's European news package? In principle, no surprises are expected. Approximate values of business activity in various sectors are already known. All data related to February will not arouse any interest among traders. Thus, the most interesting reports will be German unemployment data for March. It is based on this report and the number of applications for benefits that we will be able to get an approximate picture of what is happening in the EU countries. We believe that the picture may strongly disappoint market participants. We have not listed in this article all the reports scheduled for release in the United States this week, they will be covered in the article "Preview of the GBP/USD pair". However, looking ahead, we can say that the greatest attention will be focused on macroeconomic statistics from overseas. In addition, there are a lot of different interesting processes going on in the United States, and there is Donald Trump, who even during the epidemic remains the main newsmaker in the world, regularly distributing comments on absolutely different issues and expressing his opinion on the topic of the epidemic in the world. We have already discussed Trump's opinion regarding the quarantine measures in the United States. Thus, one of the main intrigues now is whether the president will actually be able to lift the quarantine. Or will he try to do this? And if he does, what kind of resistance will the Democrats face? After all, the presidential seat is at stake now (elections in November this year), and the health of the US nation, and the American economy, which can significantly suffer, given the number of patients with coronavirus and the increase in their number exponentially. In general, we believe that all the most interesting things will happen in the United States. Recommendations for the EUR/USD pair: Based on the listed fundamental data, we believe that the influence of the fundamental background will not be too strong. Thus, more attention should still be paid specifically to the technical picture of 4-hour timeframes. For both trading systems that we represent, longs are now relevant with targets around 1.1230 and 1.1307, but there are no signs of the beginning of a corrective movement. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 29 Mar 2020 02:37 AM PDT 24-hour timeframe In our article on the EUR/USD pair, we said that a strong fall in the euro currency, and now an equally strong growth which has not even ended, is difficult to call reasonable and logical. Things are even worse in the GBP/USD pair. The pound has fallen 16 cents in ten days, and is now up ten cents in the past six. Thus, such levels of volatility are the best way to signal the panic state of the market. And of course, the main cause of panic is the coronavirus epidemic all over the world. The UK is no exception. The country has officially registered 17,000 cases of the disease, including Prince Charles and Prime Minister Boris Johnson. There is no question of any localization of the disease now. And how can you localize a virus that has already been detected in every European, British and American region and city? Thus, we now believe that the British pound can fully recover all the losses that it has suffered over the past month. The question is, what happens after? It is unlikely that after reaching the levels of 1.2800 – 1.3100, where, in fact, everything started, traders will calm down, and volatility will fall to the usual values. Most likely, either the strong growth of the pair will continue, or a new downward trend will begin. As we have repeatedly said, it is extremely difficult to predict the movement of the pair in the current conditions, so it is best to follow the trend on the 4-hour chart, where it is easier and faster to track all price reversals,which are now, fortunately, a little. Last week, several more or less significant macroeconomic reports were published in the UK. The biggest surprise, perhaps, was the data on business activity in the services and manufacturing sectors. If the PMI for the services sector fell much more than experts predicted, immediately to 35.7 points, then in the manufacturing sector, the slowdown in business activity was only 3.7 points, to 48.0. Almost all other events and news of the week did not arouse any interest among market participants. For example, the next meeting of the Bank of England was held this week. Next - because recently the central banks of the leading countries of the world like to hold unscheduled and emergency meetings. However, no major decisions were made at this meeting. In principle, this fact did not surprise traders at all, since the BoE was not initially set to reduce rates below zero, and the asset purchase program was only recently expanded to 645 billion. Thus, no changes in monetary policy parameters were expected. Furthermore, the consumer price index in Britain for February was published this week, which is predicted to slow down to 1.7% yoy, but this data did not cause any interest among traders. Thus, we believe that now more important events are taking place in the United States, where the number of people infected with the coronavirus is growing, but in addition to this, there is also the "Trump factor". We remind traders that US President Donald Trump, despite the fact that the epidemic is spreading rapidly throughout the country (30% growth would have been recorded yesterday), believes that all Americans should go to work after April 13. According to Trump, "the cure for the disease should not cost more than the disease itself." Probably, Trump believes that if the epidemic is allowed to spread freely in America, the population will sooner recover from the disease and recover faster. This cannot be said about the US economy, which contracts the more, the longer the period of quarantine is in the country. Fortunately for Americans, Trump cannot make decisions alone. There is Congress, Senate, and Democrats who are already in a state of open war with the current president. However, Trump's intention to end quarantine in spite of the fact that the epidemic can cover from 60% to 80% of the country's population looks at least strange. The economy is unlikely to accelerate if more than half of Americans leave on sick leave. However, we believe that this story is not yet complete. For Trump, for whom the economy is really most important, there is nothing left to do but look for ways to revive it. Otherwise, his political ratings may begin to decline in anticipation of the 2020 elections. Although, on the other hand, it should also be noted that we regularly write about a possible decrease in Trump's ratings, however, according to various opinion polls and studies, the ratings of the US president are growing, despite the epidemic. However, we would not make unambiguous conclusions that Trump would be re-elected. Now the situation in the world is changing too dramatically, and no one can predict what will happen in the world in a few months. From a technical point of view, the pound/dollar pair starts a highly volatile swing. Since now it is impossible to say unequivocally that "the dollar is weaker than the pound" or vice versa, the direction of movement can constantly change. However, data for March will begin to be available to traders in April. That is, we will finally be able to estimate the losses suffered by the British, American and European economies over the past month. We will be able to assess the scale of the contraction in the economies of these regions, and if in a particular region the contraction is especially greater, this could be a factor in pressure on the national currency of this region. Recommendations for long positions: The pound/dollar started a strong upward movement and overcame the critical Kijun-sen line on the 24-hour timeframe. Thus, the upward movement may continue with targets 1.2626 and 1.2912 (immediate goals), but it is best to track the technical picture on a 4-hour chart. Recommendations for short positions: It will be possible to sell the British pound no earlier than the price consolidating below the Kijun-sen line. New targets for sell orders will be formed for the 24-hour timeframe on April 1. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 29 Mar 2020 02:07 AM PDT 4-hour timeframe If you look at the chart of the movement of the EUR/USD pair for the period from February 20 to today, and compare it with almost any period before February 20, you can clearly understand what panic is. In principle, markets continue to remain in this state, as volatility remains not just high, but very high, traders still ignore most of the macroeconomic statistics, and trading decisions are made based on their conclusions and reasoning, which often do not correspond to facts and logic. For example, the US dollar is getting much cheaper. In total, the euro has risen in price by 500 points over the past six days. Is there any reason for this? Some might say: in the United States, the government has decided on an unprecedented package of assistance to the economy; stock markets have collapsed by 30% over the past month; oil has fallen to multi-year lows; and the number of people infected with the COVID-2019 virus has come to the top in the world. However, when the US dollar was actively rising in price six days ago, the situation was approximately the same. The US stock market has already fallen by 30%, oil prices have already fallen to lows, there were already quite a large number of infected people in America, the Federal Reserve has already lowered the rate to zero and resumed the quantitative stimulus program. Thus, we can say that there were no reasons for the dollar to firmly grow. Simply, traders believed that the American economy would remain "on the horse" in any case, and the US dollar would remain forever. But as practice shows, the situation in the United States is now the same as around the world, and maybe even worse. The eternal American essence of "living in debt" can turn the country into a new debt crisis and collapse of the entire financial system. After all, all companies and businesses, and even ordinary Americans are closely connected to each other through loans. Therefore, when one sector of the economy falls, all the others start to fall as well. Thus, it seems that market participants realized about a week ago that everything is also bad in the United States and began to get rid of the dollar. That's all the logic of the currency market over the past month and a half. Unfortunately, the coronavirus epidemic is still the main topic for the whole world. The COVID-2019 virus, although not a disease with a high mortality rate (no more than 5%), nevertheless, has an amazing survivability and a high degree of transmission. In fact, any quarantine measures are designed to slow down the spread of the virus, not completely stop it. In order to completely stop the spread, measures are needed approximately, as in China or South Korea. In other words, infected areas should be completely isolated without any exceptions. No one should be able to enter or leave. However, in democratic and liberal states and the European Union, this is nearly impossible. People will still move around cities and between regions. That is, the virus will spread almost in any case, the only question is how fast. For example, there are already 92,000 infected people in Italy, despite the fact that the country has long been under strict quarantine. But, as we can see, the doctors were right when they said that the number of infected people may already be much higher than officially stated. The problem is that the coronavirus can have a long incubation period, or it can pass in individual people without symptoms at all. At the same time, the infected person still continues to transmit the virus to other people, even if he does not feel any discomfort. Thus, if about 665,000 cases are officially reported worldwide, the real numbers are likely to be 3-5 times higher... Last week, there were quite a lot of interesting fundamental events. However, unfortunately, it is impossible to say with certainty that any of them had an impact on the foreign exchange market. We would like to celebrate two events, both in the United States. First, the US Congress encouraged the decision to provide a 2-trillion package of assistance to the economy. This suggests that the American economy needs this help, and that the market will receive another 2 trillion in cash, and the US government's debt will grow by another two trillion dollars. Second, the report on applications for unemployment benefits, which showed an increase of 3.3 million. And it is unemployment that now causes the greatest concern in every country in the world. It is unemployment that can bury the economy. If people don't work, the economy doesn't work. And the economy is not a thing that can be put on pause, and when the epidemic is defeated, just resume its work. The economy will shrink and fall. Yet it is still possible to stimulate and to slow down the pace of the fall, but at a certain point, no monetary incentives will not have a positive effect. Recommendations for long positions: The euro/dollar has consolidated above the critical Kijun-sen line on the 24-hour timeframe. Thus, longs are now relevant with the goal of resistance level of 1.1282. However, it should be remembered that the market remains in a state of panic, which means that a downward turn can occur at any time. Recommendations for short positions: Euro-currency sales with a target support level of 1.0838 can be considered no earlier than closing quotes under the Senkou Span B and Kijun-sen lines. The material has been provided by InstaForex Company - www.instaforex.com |
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