Forex analysis review |
- Forecast for AUD/USD on May 25, 2020
- Forecast for USD/JPY on May 25, 2020
- GBP/USD. Preview of the week. 90% probability of no deal with the EU. Britain is waiting for an economic disaster
- EUR/USD. Preview of the week. US GDP, Donald Trump's new policy and his confrontation with China, the side channel of the
| Forecast for AUD/USD on May 25, 2020 Posted: 24 May 2020 08:00 PM PDT AUD/USD The Australian dollar continues to reverse from they May 20 peak, realizing the technical potential of the double divergence on the Marlin oscillator on the daily chart. The closest support is the embedded price channel line at 0.6482. Overcoming the level opens the possibility of a decline to the next line to the area of 0.6335. The MACD line is located just below this mark - the area of the second target acts as strong support. The price overcomes the support of the MACD line on the four-hour chart, the Marlin oscillator is falling in the negative area. We look forward to continued price reductions, but the main development may be tomorrow, since it is a public holiday today in the US and Great Britain.  |
| Forecast for USD/JPY on May 25, 2020 Posted: 24 May 2020 08:00 PM PDT USD/JPY The Japanese yen is consolidating between the support of the trend line of the price channel (107.42) and the resistance of the balance indicator line with the growing line of the Marlin oscillator for the fourth session. This is a sign of continued price growth at the end of the current consolidation. The first growth target of 108.30 is the February 3 low. Consolidating above the level will continue to grow to the second target level of 109.50. This is the main scenario. The price has more work to do to develop the downward movement: overcome support 107.42 and MACD 107.20 line. In this case, the decline may increase to 106.45. The price is developing above the indicator lines on the four-hour chart, the Marlin oscillator is already in its growing half. Consolidating will likely continue today, because it is a public holiday in the United States and the United Kingdom. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 24 May 2020 03:19 PM PDT The British pound continues to experience self-inflicted market pressure against the US dollar. We have repeatedly noted that if the EUR/USD pair is trading in the side channel and this is logical and justified by technical reasons and a common fundamental background, then the British currency is not in demand due to the huge number of problems that the UK has already encountered and will certainly face in the near future. In the euro/dollar article, we noted how important the issue of choosing a government is, because the life of the country and its citizens in the coming years will depend on it, and the consequences of the government's mistakes can be seen for a decade. So, we recall that Boris Johnson won the election at the end of last year, when the British did not care who to vote for, if only the saga with Brexit ended quickly. As it turns out six months later, this was not the wisest decision of the British. The person who won the post of prime minister is not the person who thinks for the future, who very carefully and responsibly approaches every step and decision, won the "mini copy of Donald Trump" in the British version. That is, the promises and loud statements of Johnson really made him believe that he was able to withdraw the country from the EU after three years of failure. However, at what cost? The British pound has become cheaper against the dollar since 2014, and over the past three years has accelerated the pace of decline. The UK economy is losing a hundred billion pounds annually "thanks" to Brexit, and the absence of a trade and general agreement with the European Union puts London, not Brussels, in the first place, uncomfortable. The European Union is not even considered in this article. Even if both the EU and Britain suffer from a lack of agreement, the British economy will suffer again in addition to all previous falls and problems. And in comparison with the dollar, the pound will continue to fall, since the only problem in the US is caused by the pandemic, and in the UK - the crisis, Brexit and the absence of trade agreements. Thus, the situation for the British pound will simply not change either in recent months, or even in recent years. Obviously, not a single currency can continuously fall. Therefore, the British currency also has periods of growth, which usually end in a new and stronger fall. Formally, negotiations with Brussels continue, but at the beginning of this year we repeatedly focused our readers' attention on the fact that it took 7-8 years for the European Union to conclude agreements similar in scope and scale with Canada or Australia. Thus, those ten months that Johnson had allotted for negotiations from the very beginning fueled, if not laughter, then skepticism. As you can see now, all the skeptics were right. Three rounds of negotiations were completed, and the parties did not advance in resolving key issues and differences. Experts stick with their opinion: the parties will not be able to come to an agreement either on July 1 or December 31. Alex De Ruyter, a professor at the University of Birmingham, also, like many, believes that there will be no deal. "I do not think that there are chances to conclude an agreement before the end of 2020. It took Canada nine years to negotiate a free trade agreement with the EU and Japan. In our case, we have a country - not a member of the EU with an economy that is closely integrated with the European one. It will take years to resolve all legal issues related to this integration. And if you listen to the opinion of Michel Barnier, then at least three years," said the professor. The professor also believes that the option with the absence of a deal is the most probable, however, there are still low chances to extend the "transition period". De Ruyter also points out that key issues to come to an agreement on are fisheries in British waters, labor law, the judiciary and environmental standards. Many EU countries simply will not agree to an option in which their fishing vessels do not gain access to British waters. Therefore, London needs to make concessions. "I'm not convinced that the British government wants to make a deal: for ultra-right Brexit supporters who insist on an open market, Brexit itself has always been what was used to achieve a different regulatory environment from the EU. For them, I think, a break without an agreement would be preferable," says de Ruyter. As for the forecasts, Professor Birmingham believes that an agreement with the European Union like the Canadians will still bring London losses by 6%, the absence of an agreement - a loss of 9% of GDP. "If we take into account the problems caused by COVID-19, then all this is likely to destroy the British industrial production and agriculture," the professor said. Thus, the prospects for the pound remain far from bright. There will be virtually no major macroeconomic events and news in the UK next week. The calendar of macroeconomic events for the UK is completely empty. Thus, traders can only pay attention to data from the United States, which will not be too much next week. However, the macroeconomic background now in any case continues to be ignored by traders. We can say that only a general fundamental background now has some significance. And he, as we have already figured out, remains not in favor of the pound. Thus, the technical picture now reflects a downward trend, which coincides with the fundamental background. Over the past week, traders were unable to adjust the pound/dollar pair even to the upper border of the Ichimoku cloud. Thus, buyers now have practically no strength. So, the likelihood of continuing the downward track is extremely high. Over the next several weeks or months, we believe that the pair may fall to March 20 lows at around $1.14. In technical terms, the pair resumed the downward movement, as evidenced by all indicators of both trading systems, the Ichimoku (consolidating below the critical line) and linear regression channels (overcoming the moving average). Therefore, the highest that the pound can count on is just correctional growth. The potential for its fall is almost unlimited. The most likely target is the March 20 low at 1.1411. Recommendations for the pair GBP/USD: As the pound/dollar continues a new downward trend, we recommend that we continue to sell the British currency, using mainly the 4-hour timeframe. Volatility remains the same, about 100-130 points per day, there are no signs of a new panic. The first goals for short positions are levels 1.2085 and 1.1985. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 24 May 2020 03:19 PM PDT A new trading week will begin, as often happens, with a few practically empty days, in terms of macroeconomic statistics. However, closer to the end of the week, interesting and important news and reports will begin to be available to traders. Recall that everything revolves around the upcoming US presidential elections in November 2020 now in the world and in the foreign exchange market, as well as about a possible new confrontation between China and the US. Many traders underestimate the topic of US elections, considering it not too significant. However, we do not think so. The issue of choosing power in many countries where power at least sometimes changes is a very, very serious question. A striking example is the United Kingdom. Despite the fact that the conservatives after the last parliamentary elections and the prime minister remained in power, that is, in fact, nothing has changed, nevertheless, it was Boris Johnson's figure that greatly influenced many national and national processes. It will also affect the future of Great Britain. The most commonplace that comes to mind is the issue of the coronavirus pandemic in Britain, the issue of extending the transition period (especially during the epidemic), the issue of trade negotiations with the European Union and the United States. Indeed, these topics, in which Johnson has shown and is showing himself and his government are far from the best side, can go around with the British people for several years. Already, many experts note that a black hole is forming in the country's budget, which will need to be covered with something. And how to cover it? Only by credit money or tax increase. That is, in any case, ordinary Britons will pay for decisions or mistakes of the government. Approximately the same picture is observed in the United States. This is not to say that America under Donald Trump lived poorly or in a fundamentally different way than under other presidents. If not for the pandemic, Trump would really have something to boast at the end of his first presidential term, and the chances of re-election would have been much higher than 50%. However, Trump, from our point of view, made one serious mistake. He forgot that speaking from a position of strength and threats is possible and this is effective with those who cannot fully respond. America's ties with China are so strong that it is impossible to influence him with blackmail and threats. China simply has something to answer. And he answered this year, as no one in the world had expected. We, of course, do not say that Beijing intentionally released the virus into the wild, at that time itself was ready for this, therefore, with relatively small victims, it localized the epidemic. But if you do not consider this issue, but just look at the situation as a whole, then China dealt a blow to all its main competitors. In the European Union and the United States. The European and American economies will contract by record numbers in 2020, and that if there are no new waves of the epidemic, which cannot be ruled out either. The Chinese economy will also lose a few percent, as it depends on both the American and the European, but, nevertheless, at the end of the year will show minimal growth. Thus, it turns out that China will lose "a little" GDP, and the US and the EU with "a lot". Much more than the 200 billion for which Beijing is obliged to buy products in America, according to the January phase one trade agreement. China dealt a blow not only to the United States, but also personally to Donald Trump, who initiated a trade war with China two years ago. Now Trump's chances of not being re-elected are low, and the president himself makes statements every day that blames not only China, but everyone who succeeds in all mortal sins, forcing the media, Americans and everyone in the world to take his words less seriously. Thus, much for both the United States and the global economy will depend on Trump's further actions. Understanding that he will lose the election, Trump can go all-in, and what this will mean for China, the USA and the entire world economy, I do not want to think about it ... As for the ordinary macroeconomic statistics, the first quarter GDP and several indexes from the IFO Institute will be published on Monday in Germany, which reflect business optimism, economic expectations and an assessment of the current situation. GDP in Germany should fall by 2.3% in annual terms and this is one of the smallest reductions in the European Union. Unfortunately, this will not be of particular importance for the euro currency. In general, in the eurozone, a reduction of at least two times higher is expected in the first quarter. There will be no important publications in the European Union on Tuesday; several minor issues, such as the housing price index or consumer confidence level, will be released in the United States. Wednesday, May 27, will be even more boring, as the calendar of macroeconomic events on this day will be empty in the United States and the EU. More or less significant data will begin to be available to traders on Thursday. An inflation report will be released that day in Germany, which may slow down in May to 0.6% in annual terms. However, we have repeatedly said that the inflation rate at this time does not have much significance for market participants. In the United States on this day there will be data on orders for durable goods, which, after the disastrous March values, may continue to decline. It is expected that the main indicator will lose another 18.1%, and orders for goods excluding transport will be reduced by 14%. Next, annual GDP data for the first quarter will be published and, according to forecasts, the indicator will decrease by 5%. The next report on applications for unemployment benefits may show an additional two million unemployed Americans, and the total value of secondary applications may exceed 25 million. Reports on retail sales in Germany, inflation in the European Union and personal income and expenses of the American population are planned on the last trading day of the week. These reports are frankly secondary in these conditions and are unlikely to cause any reaction from traders. Not a single important and significant speech has been planned for this week, however, the heads of the central banks of the EU and the US have acted quite recently, market participants are fully aware of their possible actions and plans. No one is going to lower bets in the near future. Trading recommendations for the EUR/USD pair: The technical picture of the EUR/USD pair shows that the price worked perfectly and rebounded from the upper border of the side channel near the $1.10 level. Thus, now we expect continued downward movement with the target near the lower border of the channel, the 1.0750 level. All support and resistance levels will be rebuilt on Monday, but even without this, the goals are now clear and obvious. The most interesting thing is that despite the euro's decline, the Ichimoku indicator has not yet formed a new sell signal. However, this is the normal behavior of technical indicators in flat conditions. They are late and generate false signals. There may be several turns of upward correction during the downward movement to 1.0750. The material has been provided by InstaForex Company - www.instaforex.com |
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