Two directions for the euro

The 2019 USD index risks to end in the narrowest trading range since 1976 due to persistent reluctance of EUR/USD to determine the direction of its movement. Throughout the lion’s part of the year, the euro does not go beyond $ 1.09-1.14, however, if…

Euro Marks the Kings

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A chess game played on the financial field constantly keeps the EUR / USD pair in good shape. From time to time, victory remains for the dollar, then for the euro. This time, experts declare a possible victory for the “European”.

A significant day for the European currency will be this Friday, November 22, experts are sure. Today, two important events are expected: a speech by Christine Lagarde, the new chairman of the ECB, and the publication of data on business activity in the eurozone in November. The market froze in tension, especially before the speech of the new head of the ECB. Recall that K. Lagarde, like M. Draghi, is a supporter of fiscal stimulus, considering it a necessary element of maintaining the region’s economy. Experts admit that she may agree to strengthen incentive measures.

As a result, the situation may develop according to two scenarios, which will have a mutually exclusive effect on the dynamics of the euro. The first involves the hawkish, harsh rhetoric of the ECB. This will allow the EUR / USD pair to rise to the levels of 1,1100-1,1120. Recall that on Thursday, November 21, the European currency paired with the US dollar consolidated near the level of 1.1075. Analysts recorded the strengthening of the “European”. The growth driver was the news of a possible compromise during the negotiations between the United States and China. During yesterday’s trading, the EUR / USD pair rose to 1.1092, then fell slightly to the level of 1.1086. In the future, the growth of the tandem stopped.

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In the case of easing monetary policy, the European currency will be overwhelmed by a flurry of volatility, experts are sure. “Pigeon”, that is, the soft rhetoric of the regulator is able to lower the EUR / USD pair to 1.1000. The likelihood of such an outcome increases in the case of disappointing statistics on business activity indices. At the same time, experts admit that the optimistic tone of the speech by K. Lagarde will allow the tandem to reach a two-week high and exceed the bar at 1.1100.

The optimism regarding the euro is boosted by positive statistics about German GDP growth. This indicator exceeded the expectations of experts and encouraged investors. Experts believe that any changes in the strategy of the ECB management regarding monetary policy may lead to an explosion of volatility in the financial markets, especially in the EUR / USD pair. As already mentioned, softening the rhetoric will lead to the collapse of the euro, and tightening it will strengthen the position of the “European” and the growth of the EUR / USD pair.

It will be possible to count on the primacy of the single currency in the EUR / USD pair no earlier than the middle of next year, experts say. This is possible in the case of stabilization of the external background and clear progress in trade negotiations between the USA and China, as well as with a long-term improvement in business activity in Germany and the eurozone. In such a situation, the EUR / USD pair begins to grow, and the European currency receives a powerful boost.

Friday morning, November 22, the EUR / USD pair started quite cheerfully. The tandem rose to the level of 1.1073, but could not stay at this altitude for a long time.

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In anticipation of the speech by K. Lagarde, the EUR / USD pair began to decline, currently plying near the indicators of 1.1054–1.1055. Experts fear that in the wake of this nervousness, the tandem may fall even lower.

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The current dynamics of the “European” causes conflicting market sentiment. The further movement of the single currency will be determined by the speech of the head of the ECB and statistics on business activity in the eurozone, while experts are counting on a positive scenario. Analysts are also trying to predict the dynamics of the EUR / USD pair for 2020. Many experts rely on the European currency. This does not mean that the dollar will lose its position, but it can significantly weaken. Then the “European” will come on the scene, who has long sought to break out into the lead. Experts believe that in the long term, the euro will be able to implement its plan.

The material has been provided by InstaForex Company – www.instaforex.com

Technical analysis of NZD/USD for November 22, 2019

Overview: The NZD/USD pair continued moving upwards from the level of 0.6374. Righ ow the price is set at 0.6350. Immediate resistance is seen around 0.6455. A clear break above that area could lead price to the neutral zone in the nearest term. Pric…

What is preventing the pound from continuing its rally?

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After rising 5.3% last month, which turned out to be the largest since 2009, the GBP/USD pair was stuck in the range 1.2770–1.2970.

According to experts, the sluggishness of the pound has a direct reason: the British currency has already shown a stellar rally, rising by more than 8% from the three-year low of September. This means that most short-term traders are still satisfied with profitability.

Although Brexit’s threat has virtually disappeared without a deal, some analysts remain concerned that the weakening British economy and the prospect of complex trade negotiations between London and Brussels might restrain the strength of the pound.

The risks associated with early UK elections next month (especially the prospect of a “suspended” parliament or a coalition led by the Labor Party) are also seen as obstacles to the pound.

However, most preliminary polls about who wins the election indicate a stronger pound. This circumstance allows leading banks to issue “bullish” forecasts for the pair GBP/USD. Therefore, Bank of America Merrill Lynch promises a rally of almost 8% in response to the victory of the Conservative Party, which will end the impasse of Brexit. On the other hand, Morgan Stanley does not exclude the rise of GBP/USD to 1.4 in the first quarter of 2020. JP Morgan, in turn, expects to see the pair at 1.33 by the middle of next year, while Goldman Sachs believes that the pound will increase in price to $ 1.35 in a few months.

It should be noted that large banks are often mistaken in their forecasts. What is the recommendation of BofA Merrill Lynch at the end of 2017 to buy a pound, which in fact declined by 6% in 2018. However, if we assume that things will go towards an orderly Brexit, and the “bulls” on GBP/USD will be able to hold quotes above 1.2720–1.2760 until the middle of next month, the chances of continuing the rally to 1.35 will increase by leaps and bounds.

The material has been provided by InstaForex Company – www.instaforex.com

The Disappointment of the Pound: Victory was near

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The currency of Great Britain once again appeared on the price “swing”. Having risen a little, the pound fell again in the middle of the week but found the strength in itself to turn the tide and move up. Analysts recorded the correctional movement of sterling with a bias in the increase, but not yet overcome the attraction of the bottom.

This week, the pound was in a fever, and only at the auction on Thursday, November 21, this turbulence declined. Yesterday, the GBP / USD pair began its recovery after the fall, which occurred after the television debate between the leaders of the largest parties in the UK – Prime Minister Boris Johnson and the head of the opposition Conservative Party, Jeremy Corbin. According to polls conducted after the debate, the Conservative Party could receive strong support in the upcoming elections.

The positive attitude of the conservatives and the high likelihood of a second referendum provided significant support to the British currency. According to experts, this stopped the pound from further sales. In the course of yesterday’s correction, recorded after a two-day recession, the “Briton” confidently went up. GBP / USD rose to the level of 1.2961.

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The market did not ignore the upward trend of sterling. According to the observations of some experts, yesterday on the daily chart of the GBP / USD pair a rare reversal pattern formed – a potential “triple top”. Its implementation would be possible only after the breakdown of the level of 1.2760, but this did not happen.

The victorious aspirations of the British currency were interrupted. The tandem went down again, plying near the indicators 1.2948–1.2949.

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Experts have repeatedly paid attention to the psychologically important level of 1.3000 for the pound. Sterling was one step away from victory, overcoming the attraction of the bottom and actively rushing to this peak. However, the flight of the “Briton” was interrupted, although analysts are sure that yesterday’s positive recharge will help him rise. In the event of a rise to 1.3000, the British currency will exceed a six-month high, and then the victory will become a reality.

The pound completes the current week on a minor note. His fuse was almost exhausted, and the bearish mood took over. On Friday morning, November 22, the GBP / USD pair was trading at 1.2927 and then began to move down.

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Currently, the tandem runs in the low range of 1.2913–1.2914, again passing through the price “swing”. The dynamics of the pound is full of contradictions: ups are replaced by falls, and negative follows the positive, and vice versa. This confuses the market and requires close attention when working with a pair of GBP / USD.

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Nevertheless, analysts expect a successful outcome in relation to the pound, which may arise in the near future. The British currency, which at first lost the battle, is able to recover and conquer the next peaks. Experts believe that the further vector of its dynamics will be directed upwards, although they do not exclude slight drops along this path.

The material has been provided by InstaForex Company – www.instaforex.com

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