The dollar is losing its gloss

The financial markets are again obeyed by the Fed, and any good news is overshadowed by a huge negative. Against this backdrop, the best weekly S&P 500 rally since 1974 should not surprise anyone. The stock index is rapidly reducing losses, ignoring the growth in the number of infected and died from coronavirus in the United States and in the world, the increase in the number of applications for unemployment benefits by 17 million in three weeks, the pessimistic forecasts of Wall Street Journal experts, who expect to see a 25% decline in US GDP in the second quarter, a rise in unemployment to 13% and a reduction in corporate profits by 36%. American stocks do not care, because if you do not have time to buy them now, you can be late.

History shows that stock indices usually recover faster than national economies, which is not surprising: GDP is a lagging indicator, and the S&P 500 is growing on expectations of a positive. According to the chief economic adviser to the US President Larry Kudlow, the US economy will need 4-8 weeks to return to normal operation at full capacity. Donald Trump would like to see its explosive growth. Together with moderate optimism from the New York city administration about the gradual release of coronavirus to the plateau, this creates a stir among buyers of equity securities. The growth of global risk appetite puts pressure on safe-haven assets, so we should not be surprised by the strengthening of EUR/USD.

Dynamics of the S&P 500 and EUR/USD

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The euro was supported by the decision of Eurozone Finance Ministers to collectively help the countries of the currency bloc affected by the epidemic in the amount of €500 billion, as well as a split in the ranks of the ECB. According to the minutes of the March meetings of the Governing Council, a number of officials opposed the lifting of restrictions on bond purchases under QE. They suggest launching a new direct funding program for OMT for individual states.

The idea of selling the US dollar in the long run looks interesting. The growth of the Fed’s balance sheet to $9-12 trillion by the end of 2020 and the expansion of the US budget deficit to $3.6 trillion in the current fiscal year, which will end on September 30, are “bearish” factors for the USD index.

On the short-term time horizon, against the background of good news from the Old World and the rally of US stock indices, the overall picture for the main currency pair is moderately optimistic. However, at any moment, the scales can swing in the direction of the “bears”. It is enough to know that the G7 countries did not support the efforts of OPEC+ to reduce oil production. The growth of Brent and WTI on expectations of a 15 million b/d decline supported the shares of US oil companies and the S&P 500. If it stops, the stock index will go down and pull EUR/USD.

Technically, the pair plays a combination of “Expanding Wedge” and “Rhombus” patterns. A break in the diagonal resistance near 1.0965 will be a signal to open long positions in the target by 127.2% using the AB=CD pattern. It is located in close proximity to the mark of 1.121. On the contrary, a successful storm of support at 1.0765 will cause the euro to sell against the US dollar in the direction of 1.05.

EUR/USD, the daily chart

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Weekly Ichimoku cloud analysis of Gold

Gold price remains in a weekly bullish trend according to the Ichimoku cloud. Gold price tested the weekly Kumo (cloud) and bounced strongly off of it providing us with a move that has reached 2020 highs. There are a lot of chances of breaking to new h…

EUR/USD analysis for 04.10.2020 – EUR/USD found resistance at the price of 1.0950, potential forr downside rotation towards

Corona virus news:

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A messy compromise to unlock €500bn (£438bn) of EU support for countries hit hardest by the coronavirus pandemic has been struck after Italy’s prime minister, Giuseppe Conte, warned that the existence of the bloc was at stake.

EU finance ministers on a video conference call struck a deal late on Thursday after the Netherlands shifted on a demand for “economic surveillance” of countries benefiting from €240bn of credit lines via the European stability mechanism, a bailout fund for struggling member states.

Technical analysis:

EUR/USD has been trading upwards. The EUR/USD found resistance at the price of 1.0950. I see chance for the downside rotation towards the levels at 1.0920 and 1.0890.

Trading recommendation:

Watch for selling opportunities on the EUR/USD with the stop above 1.0950 and potential downside targets at 1.0920 and 1.0890.

MACD oscillator is showing still rising curve and rising slow line.

Major resistance zone is set at $1.690-$1.700.

Support levels and downward targets are set at the price of 1.0890.

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Weekly analysis on EURUSD

EURUSD remains in a bearish weekly trend. Despite the try to break above 1.1150-1.12, bulls failed to maintain control of the break out and price got rejected. This failed break out continues to point to us the major resistance ahead.Red line – weekly …

Trading recommendations for EURUSD pair on April 10

From a comprehensive analysis, we see something more than just a correction. And now about the details. The current week’s correction had an upward mood, which arose after the quote approached the support area of 1.0775 during inertia. After that, the first upward turn appeared, which led the quote to the variable level of 1.0920 and everyone was already inspired by the possible recovery and return of the price back to the support point of 1.0775. However, the movement slowed down, during which a variable range of 1.0850/1.0885 was formed. The wobbly design from the range focused a considerable number of speculators, where there was just enough noise for market interest to form a local jump, overcoming the limits of the variable range. The noise was like the flow of the external background, during which speculators literally got what they were waiting for in half an hour, that is, a local surge in the activity.

I don’t think that the downward mood has fallen into being and everyone is already working on a purchase, since analyzing the fluctuations from the beginning of March, it is clearly visible in which direction the main positions are focused. The only thing that can be considered for sure is the slowdown, I do not mean variable ranges during a particular stroke, but in general in the market. Successive intentions have already signaled that activity decreases with each successive turn, and now a distinct zigzag-shaped model is visible. That is, theoretically, in the case of a decline in the downward mood, a wide flat may occur, approximately in the range of 1.0775/1.1000 (+/-50 p), but this conversation will come a little later in the case of the first signals of confirmation of the theory.

Analyzing the last trading day, we see that the main round of long positions appeared at the start of the American session, but it lasted a modest 1.5 hours, where the quote eventually moved to a new variable range of 1.0920/1.0950.

In terms of volatility, we see a characteristic acceleration relative to April 8, but on the general scale of the last two months, activity is within the norm.

Details of volatility: Monday-155 points; Tuesday-183 points; Wednesday-115 points; Thursday-278 points; Friday-166 points; Monday-151 points; Tuesday-234 points; Wednesday-243 points; Thursday-326 points; Friday-194 points; Monday-191 points; Tuesday-160 points; Wednesday-133 points; Thursday-188 points; Friday-194 points; Monday-134 points; Tuesday-127 points; Wednesday-136 points; Thursday-147 points; Friday-91 points; Monday-67 points; Tuesday-142 points; Wednesday-72 points; Thursday-110 points. The average daily indicator, relative to the dynamics of volatility is 107 points (see the table of volatility at the end of the article).

As discussed in the previous review, traders worked on the breakdown of one or another boundary of the variable range of 1.0850/1.0885, which resulted in a profit to the trading deposit.

Looking at the trading chart in general terms (the daily period), we see just the same sequential inertial fluctuations that are in the structure of the zigzag-shaped model, as we wrote at the beginning of the article.

The news background of the last day did not include data on the labor market in the United States, where once again everyone saw the real picture of the consequences of the COVID-19 virus. So, every week we record huge figures for the number of applications for unemployment benefits in the United States that have already recalled the crisis of 2008-2009, and the great depression. This time, repeated applications for benefits set an absolute record in the history of 7,455,000, but the primary surprisingly fell by 261,000, but in the past week their figure was 6,606,000.

The market reaction to the statistics this time was positive in terms of logic, the dollar locally began to lose its positions, forming impulses and breaking through just the same variable range.

At this point, the noise and pressure on the dollar did not stop, as the news that the Federal Reserve (FRS) announced $ 2.3 trillion in measures to support the economy in the midst of a raging coronavirus.

“The role of the Fed is to provide as much assistance and stability as possible during a period of limited economic activity. Our actions today will help ensure that the recovery that will ultimately happen is as energetic as possible,” Fed Chairman Jerome Powell said in a release.

In turn, the head of the European Central Bank, Christine Lagarde, calls on EU countries to support each other during this difficult period of time in order to develop the best policy to counter the shock of the coronavirus emergency.

Lagarde also reminded that there is no discussion of the widespread cancellation of debts incurred in connection with the coronavirus crisis. Now is not the time to ask about the cancellation, now we are focused on maintaining the economy, later we will consider how to pay off debts and how to manage public finances most effectively, the head of the ECB said.

Today, in terms of the economic calendar, we have data on inflation in the United States, where they record a slowdown from 2.3% to 1.5%, which may directly affect the Fed’s future decisions on actions on the refinancing rate, and more specifically, on its further reduction. At the same time, do not forget that today is a day off in many countries, including in Europe, the United States, and Britain, where good Friday is celebrated. Thus, trading volumes may be reduced.

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The upcoming trading week in terms of the economic calendar begins with a weekend in Europe, where trading volumes may be reduced. The main data stream starts on Wednesday, and the most relevant indicator will be released only on Friday – EU inflation.

The most interesting events are displayed below:

On Monday, April 13

Great Britain/EU – Bright Monday

On Wednesday, April 15

US 13:30 London time – retail sales volume

US 14:15 London time – industrial production

On Thursday, April 16

EU 10:00 London time – industrial production

US 13:30 London time – applications for unemployment benefits

US 13:30 London time – number of construction permits issued

US 13:30 London time – volume of construction of new homes

On Friday, April 17

EU 10:00 London time – Inflation

Further development

Analyzing the current trading chart, we see that the variable range (1.0920/1.0950) has been held on the market for more than 15 hours, which means that it was again noticed by speculators, during which a new local surge may occur. In fact, this is another position with a limited life span, but under the current circumstances, a small profit is also a profit.

It is too early to talk about the main directions now since there is no complete picture, but I think that next week we will get enough data to set the direction.

In terms of emotional mood, a high coefficient of speculative positions is recorded, which can play into the hands of volatility.

In turn, traders closely monitor the variable range, in particular, its borders.

We can assume that the fluctuation within the values of 1.0920/1.0950 will not last very long, and our main task is to make money on the local surge, and here the direction does not matter. The trading strategy is selected using the method of breaking through a certain accumulation limit.

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Based on the above information, we will output trading recommendations:

– Buy positions are considered higher than 1.0960, with the prospect of a move to 1.0980-1.1000

– Positions for sale are considered lower than 1.0910, with the prospect of a move to 1.0890-1.0850.

Indicator analysis

Analyzing different sectors of timeframes (TF), we see that by maintaining the upward movement and updating the maximum correction, the indicators of technical instruments relative to all periods signal a purchase. It is worth noting that the minute and hour periods are affected by deceleration, and the signal may be variable.

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Weekly volatility / Measurement of volatility: Month; Quarter; Year.

Volatility measurement reflects the average daily fluctuation from the calculation for the Month / Quarter / Year.

(April 10 was based on the time of publication of the article)

The current time volatility is 32 points, which is 70% lower than the daily average. We can assume that as soon as the variable range closes, the activity will grow 2-2.5 times.

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Key levels

Resistance zones: 1.1000***; 1.1080**; 1.1180; 1.1300; 1.1440; 1.1550; 1.1650*; 1.1720**; 1.1850**; 1.2100.

Support zones: 1.0850**; 1.0775*; 1.0650 (1.0636); 1.0500***; 1.0350**; 1.0000***.

* Periodic level

** Range level

*** Psychological level

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Technical analysis of EUR/USD for April 10, 2020

Overview:The EUR/USD pair continues to move downwards from the level of 1.1035. Yesterday, the pair dropped from the level of 1.0900 to the bottom around 1.0833. But the pair has rebounded from the bottom of 1.0833 to close at 1.0945. Today, the firs…

EUR / USD: finest hour of euro or temporary weakness of dollar?

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The EUR / USD pair rose to 1.0950 due to the fact that EU finance ministers have finally agreed on a new package of financial assistance to the economy.

They approved a package of anti-crisis measures worth € 540 billion to help the EU economy recover from the coronavirus pandemic.

According to Mario Centeno, chairman of the Eurogroup, € 100 billion will be allocated to the SURE program approved last week (which aims to support employment in EU), € 200 billion for the European Investment Bank (EIB) business lending program, and the remaining € 240 billion for the back up funds of the Eurozone.

Meanwhile, the minutes of the ECB’s meeting last March showed that some of its members expressed doubts about the launch of new bond purchases. Instead of expanding QE, they proposed launching OMT, a program developed in 2012 for direct financing of stressed eurozone countries with a credit line with ESM. This split decision of the ECB members helped in pushing the euro upwards.

However, the main reason why EUR / USD rose was the statement of Fed Chairman Jerome Powell. According to him, the regulator decided to allocate $ 2.3 trillion to support local governments and small and medium-sized businesses.

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“The Fed will continue to use all the tools at its disposal until the US economy begins to fully recover from the damage caused by the coronavirus outbreak,” said J. Powell.

Against this background, the USD index, which measures the strength of the US dollar against other major currencies, dropped to the weekly low of 99.50 points.

In March, the central banks of G7, led by the Fed, bought bonds worth $ 1.4 trillion. It is assumed that such enormous flows of dollar liquidity will affect the USD exchange rate negatively in the future, and increase the Fed’s balance sheet to $ 9-12 trillion by the end of the year. It is also expected to expand the US state budget deficit to $ 3.6 trillion this year, and expand it to up to $ 2.4 trillion in the next. In addition, according to JP Morgan, the US economy may be hit harder by the coronavirus pandemic than other countries. Thus, the dollar may be vulnerable in 2021.

At the moment, the dollar remains stable, even though the Fed has lowered interest rates to almost zero, resumed quantitative easing, and increased dollar liquidity to combat the deficit in the markets.

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Overview of the EUR/USD pair for April 10, 2020

The Fed announced the launch of a grand-scale program.
Hello, traders!
Today’s review of the main currency pair of the Forex market will start with the macroeconomic statistics that were published yesterday, and the releases expected on the last day of…

Bitcoin Halving: will it increase the price of the cryptocurrency?

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The problems brought by the coronavirus pandemic has put cryptocurrency issues at the back of traders’ minds. Now, because of the upcoming Bitcoin Halving in May, they have gained relevance, putting out the question: will bitcoin rise?

Earlier, in 2012 and 2016, Bitcoin Halving has become the catalyst of growth of BTC prices. It cuts down the supply of BTC, making the asset more scarce, so, if the demand is high, the price is likely to increase. However, experts draw attention to the fact that for a number of cryptocurrencies, halving did not work, and digital assets did not rise in price.

Currently, experts are not sure about the effect of halving on the dynamics of bitcoin. They made cautious predictions in connection with this procedure. According to analysts from Coincident Capital, in anticipation of halving, bitcoin will reach $ 8,000, and will grow a little more in the future. They focused on strengthening the correlation between the cryptocurrency and the stock market, so they believe that the upward trend recorded in the US and EU exchange markets will positively affect BTC.

Other strategists, on the other hand, although confident in the prospects of bitcoin and gold, are skeptical of the further growth of the global stock market. These include Mike Novogratz, CEO of Galaxy Digital, who spoke disapprovingly of the current monetary policy of the US Federal Reserve, believing that the regulator is pouring trillions of dollars into the economy in vain. Novogratz believes that these measures will not help restore the US economy much.

Meanwhile, according to crypto enthusiast Tim Draper, the coronavirus pandemic could be a turning point for BTC. If these measures implemented by the governments were not able to help mitigate the consequences of the pandemic, traditional protective assets (gold) and digital assets (bitcoin) will come to the rescue. According to Draper, in the near future, the advantages of BTC will become obvious, and the market will begin to turn to it again.

Some analysts also believe that incentive measures by the US authorities aimed at supporting the national economy will help boost the cryptocurrency industry. However, its effects will only become noticeable much later.

At the moment, many are betting on a surge in interest in bitcoin after the halving. If this happens, the demand for BTC will increase, and the price of other digital assets will also increase. Thus, some crypto enthusiasts put forward bold hypotheses regarding the prospects of bitcoin. One of them, Tommy Lee, ex-director of BTCC, is sure that halving will first push bitcoin to up to $ 10,000. Then, by the end of this year, it will skyrocket to $ 25,000. Such forecasts look overly self-confident, as the cryptocurrency has not left the range of $ 7,200– $ 7,300. On Friday, April 10, the digital asset fell a little and is now trading between $ 6,940– $ 6,950.

Many economists are confident that bitcoin will not turn into a full-fledged defensive asset and stand on a par with gold and dollar. They consider the cryptocurrency as a crisis decentralized asset created to make payments without the participation of banks and regulatory authorities. In the event of a global economic crisis, it will lose its original functions, retaining only the speculative component.

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Trading recommendations for GBP/USD pair on April 10

From the point of view of complex analysis, we see a round of long operations that led the quote to where it all began, and now let’s talk about the details. A full tact for four trading days suggests that activity is still high, and the wide flat 1….

USD/CAD unaffected by oil drop

The Loonie has rallied again versus USD despite some poor data from Canada. USD/CAD dropped only because the US dollar weakened once again amid the Fed’s measures. The US dollar has also retreated because there is some hope that the COVID-19 pandemic w…