USD/JPY. Helpless yen and passive dollar

The yen continues to trade in a narrow price range against the dollar, despite the rapid news flow. The international scandal surrounding Hong Kong, the mutual threats of Washington and Beijing, the decline in oil prices, additional incentives from the Japanese authorities - these, and many other fundamental factors are ignored by USD/JPY traders. This is partly due to the fact that both the dollar and the yen enjoy the status of protective assets, and the pair de facto stands still amid general nervousness. But analyzing the behavior of the yen in cross pairs, we can conclude that traders are very wary of the Japanese currency. Even the latest news from Japan, which at first glance was supposed to support JPY, simply went unnoticed. This means that the pair retains the potential for its growth, and is now in standby mode, waiting for powerful information that would help the bulls gain a foothold in the 108th figure.

It should be noted here that the bulls ignored a really important fundamental factor. Yesterday it became known that the Japanese authorities allocated the largest package of financial assistance in the world: the total volume of injections will be more than $2 trillion, which is approximately 40% of GDP. In this case, only the United States is ahead of the Japanese, with a total of 2.3 trillion allocated. The structure of Japanese incentives also includes large direct costs, the total amount of which will be about 330 billion dollars. In addition, a package worth $1.1 trillion will be spent on financial assistance to factories and companies, subsidies for rent and medical assistance. This incentive program will be partially funded by the issuance of a public debt of nearly 32 trillion yen in the framework of the second additional budget of the country for the current fiscal year, which ends April 1, 2021.

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All this suggests that the Bank of Japan will continue to keep rates low, while continuing to aggressively buy bonds. Perhaps it was precisely these conclusions that cooled the ardor of bears, who actually ignored such record financial injections from the state. At the same time, similar intentions on the part of the European Commission caused a violent reaction from the European currency (which has significantly risen in price throughout the market). The dollar also rose in price at the relevant decisions of Congress. But the yen showed only a formal and very short-term reaction - the pair decreased by about 50 points only for a couple of hours.

It is also worth recalling that at the beginning of this week, traders calmly reacted to the results of an emergency meeting of the Bank of Japan. But here, the regulator itself did not provide any reasons for volatility: contrary to numerous rumors and fears, the BOJ did not expand the stimulus program and did not lower the interest rate. Kuroda only announced his intentions to extend the loan program from the previous three-month period to the current six-month period. The market was absolutely ready for the implementation of this scenario, and the regulator, in turn, did not bring any additional surprises.

But in general, ignoring the above fundamental factors is indicative. The Japanese economy is in the stage of a technical recession, and this fact, apparently, alarms traders, frightens them from the yen. The dolla behaves in different directions, temporarily becoming more expensive only on spurts of anti-risk sentiment in the market. These bursts are very short-term, so the dollar index over the past few days has fluctuated at the boundary of 98 and 99 figures. We can assume that the market is waiting for the Hong Kong issue to be resolved: in the near future, China should decide on a resonant bill that will strengthen Beijing's influence in Hong Kong, while in Washington they should decide on the response measures that Donald Trump has already announced. According to him, the White House is preparing "something powerful", without specifying what it is about.

But it is worth noting here that if the political conflict between the United States and China does not affect the trade deal that representatives of these countries concluded last year, the market reaction may be short-term. The pair can gain a foothold in the 108th figure, increasing the price level by only one step. But if the conflict goes into the economic plane, then in this case, buyers can count on the range of 109-110.

In other words, the prospects for the pair directly depend on the further steps of Beijing and Washington. And if the actions of China are very predictable (the Chinese parliament will probably adopt the above law), then the US is intriguing. The fate of the pair depends on its resolution.

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From a technical point of view, the situation is also uncertain: on the daily chart, the pair is in the Kumo cloud, between the middle and lower lines of the Bollinger Bands indicator and between the lines of Tenkan-sen and Kijun-sen of the Ichimoku indicator. The bulls need to exceed the upper border of the above cloud (108.50) in order to confirm the strength of the upward movement - until this moment all purchases will look risky. In turn, to confirm the downward movement, the bears need to gain a foothold below 107.00 (the middle line of the Bollinger Bands indicator is at D1), and for greater certainty - go to the middle of the 106th figure. In the meantime, the pair fluctuates between the above levels, any scenario has the right to life: everything will depend on the overall fundamental picture. If we talk about the short term, then on the 30-minute chart the pair will most likely push off from the lower border of the Kumo cloud (107.60) and test the high of 107.96 daily, attempting to storm the 108th figure. But to consolidate in this price area, a sufficiently powerful informational reason is needed, which is not yet available.

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EUR/USD: plan for the European session on May 28 (analysis of yesterday's deals). European Commission plan supported the

To open long positions on EUR/USD, you need:

The European Commission said that they plan to allocate EU assistance worth 750 billion euros, which has provided significant support to the European currency. However, the bears tried to turn the market in their direction when the US session was about to open, which caused the euro to quickly fall and test support at 1.0952, from which I advised opening long positions immediately for a rebound in yesterday's forecast. If you look at the 5-minute chart, you will see how after the breakthrough of support 1.0994 the pressure on the euro intensified, however, the test of 1.0952, which was not reached by just a couple of points, led to a new upward trend, which returned the pair above the 1.1000 area. However, to say that the bulls turned out to be stronger is not entirely true, since Donald Trump is set to announce his decision addressed to China this week, as well as the recent Commitment of Traders (COT) report dated May 19 indicates an increase in short positions, while long positions have partially declined. The report shows an increase in short non-profit positions from 93,840 to 95,194, while long non-profit positions decreased from 171,980 to 167,756. As a result, the positive non-profit net position also decreased and reached 72,562. versus 78,140, which indicates an increase in interest in selling risky assets at current prices. As for the current technical picture of the EURUSD pair, the bulls are aiming for a breakthrough of resistance 1.1030, consolidating on which will definitely lead to a new wave of growth in the region of high of 1.1063 and to the test of larger resistance 1.1093, where I recommend taking profit. Today's German GDP data in the morning can also confuse all cards, therefore, in case the euro falls, it is best to open long positions after forming a false breakout near the middle of the channel 1.0994, or to buy immediately for a rebound from a low of 1.0957 per 20- 25 points within the day.

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To open short positions on EUR/USD, you need:

Sellers failed to keep the pair below 1.0994 yesterday, although the attempts were quite good. Considering that traders only need good news on the next help plan, whether it is accepted or not is not very important for the bull market to continue, today's focus will shift to returning and consolidating below support 1.0994. This will reduce the ardor of buyers and lead to the return of EUR/USD to the low of 1.0952, and then to the test of larger support 1.0917, where I recommend taking profits. If demand for the euro continues in the morning, and this happens only with good data on German GDP, it is best to consider short positions after forming a false breakout in the resistance area of 1.1030, or sell the euro immediately for a rebound from a high of 1.1063.

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Signals of indicators:

Moving averages

Trade is conducted slightly above 30 and 50 moving averages, which indicates a possible continued growth of the euro in the short term.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

A break of the upper border of the indicator in the area of 1.1040 will lead to a new wave of euro growth. The first test of the lower border at 1.0975 may contain the pressure of sellers, but a breakthrough in this area will lead to a sell-off.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between short and long positions of non-profit traders.
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Forecast for EUR/USD on May 28, 2020

EUR/USD

The euro continued to grow due to information about the proposal of the European Commission a package of economic assistance worth 1.85 trillion. Euro (Next Generation EU) as part of the planned EU budget. Such news is enough for the euro to go another way.

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This path can correspond to the target of 1.1140 along the embedded line of the price channel on the daily chart. The price has overcome the upper limit of the two-month range of 1.0767-1.0995 and is ready to follow above.

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The price has already consolidated above the upper limit of the range on the four-hour chart, the price is above both indicator lines and the Marlin oscillator is growing in the zone of positive indicator values.

Possible purchases of EUR/USD from current levels with a signal on a five-minute timeframe, take profit below 1.1140, stop loss below 1.0995.

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Forecast for GBP/USD on May 28, 2020

GBP/USD

The British pound lost 70 points on Wednesday due to investors' concerns regarding the Bank of England's lower rates towards the negative area. The current rate of the BoE is 0.10%. In addition, UK Brexit negotiator David Frost announced the country's refusal to extend the transition period ending at the end of this year and actually reported the failure of the current stage of negotiations.

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The pound's growth on the daily chart was suspended on the balance indicator line. Currently, the price is at the Fibonacci level of 161.8%. But the price is higher than the MACD indicator line, consolidated above it, and if the signal line of the Marlin oscillator moves to the zone of positive values, the upward trend can be restored with the immediate target of 1.2540 at the Fibonacci level of 123.6%.

The price may return to the downward trend after the price goes below the MACD line (1.2165 - match with the April 7 low). Decreasing goals are also determined by Fibonacci levels: 1.1935, 1.1750.

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The price develops between two signal levels on the H4 chart: its exit above 1.2362 - yesterday's high, opens up the prospect of growth to 1.2540, consolidation below 1.2165 opens the first bearish target of 1.1935.

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Forecast for AUD/USD on May 28, 2020

AUD/USD

The Australian dollar completed another test of its first growth target of 0.6677, after which it closed the day with a decline of 30 points. The situation for the aussie remains twofold - if the first target of 0.6677 is overcome, the price will continue to rise to the second target 0.6820, and if it goes below yesterday's low at 0.6569 will again try to work out the lower price channel line in the region of 0.6470.

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The daily Marlin oscillator signal line is located between the border with the territory of negative values (tendency to fall) and its own forming resistance line, marked in turquoise color.

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The price found support on the MACD line on the four-hour chart yesterday. The signal line of the Marlin oscillator turned up from the border with the declining territory. Current conditions favor continued growth.

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