Indicator analysis. Daily review on EUR / USD for August 10, 2020

Trend analysis (Fig. 1).

The market may continue to move downward from the level of 1.1790 (closing of Friday's daily candle) with the target at the support level of 1.1692 (black bold line). If this level is reached, the downward movement may continue with the next target of 1.1631 - a 38.2% pullback level (red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly chart - down.

General conclusion:

Today the price may move downward with the target at the support level of 1.1692 (black bold line). If this level is reached, the downward movement may continue with the next target of 1.1631 - a 38.2% pullback level (red dashed line).

Another possible scenario is upon reaching the support level 1.1692 (black bold line), the price may move upwards with the target of 1.1823 - a 61.8% pullback level (blue dotted line).

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Trump proposes to reduce unemployment benefits

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On Saturday, Donald Trump bypassed lawyers, all the while claiming that he had the right to defer payroll taxes. And after negotiations with the Congress regarding a new stimulus package failed, he proposed cutting unemployment benefits.

Trump's recent orders have infringed the authority of the Congress with regards to its control on federal spending. However, the president called his action necessary, given that the Congress failed to come into an agreement in putting more money to the stumbling economy, which threatens his re-election.

Trump hopes that the four executive orders he signed will send a signal to Americans that he takes action when Congress is inactive.

But Joe Biden, Trump's Democratic opponent, called the orders "a series of unfinished measures", accusing him of jeopardizing social security as it is funded through payroll taxes.

Chairman of the House Committee on Ways and Means, Richard Neal, also accused Trump of "blatantly bypassing Congress to impose tax policies that destabilize social security," also referring to the threat to Medicare funding.

Republican Senator and Senate Judge Ben Sasse said that Trump "has no right to unilaterally rewrite payroll tax laws," as according to the Constitution, this power belongs to the American people, acting through the members of Congress.

Unfortunately, oftentimes, the stalemate in Washington is of little public concern.

Nonetheless, the breakdown of negotiations over the past few days has particularly grieved schools that have tried to reopen.

Meanwhile, Republicans in the Senate are divided, with about half opposed to the bailout bill.

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Hot forecast and trading recommendations for EUR/USD on 08/10/2020

Finally, we have seen a noticeable appreciation of the dollar, and all thanks to the content of the report of the United States Department of Labor. Of course, it is too early to talk about the beginning of a full-fledged correction, but the tension in the market has slightly decreased. Indeed, the market still remains significantly overheated, and the dollar is still oversold.

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The content of the report of the United States Department of Labor itself turned out to be significantly better than even rather optimistic forecasts. Most importantly, the unemployment rate fell from 11.1% to 10.2%. A decrease to 10.5% was expected. This became possible due to the fact that outside agriculture, 1,763,000 new jobs were created, instead of the projected 1,620,000. And even if this is still an incredibly high level of unemployment. The fact of its steady decline is in itself an extremely positive factor. And it is clear that investors only looked at these two indicators, but other parameters turned out to be quite nothing. In particular, the growth rate of average hourly wages slowed down from 4.9% to 4.8%, which is also quite good. After all, they expected a slowdown in growth rates to 4.5%. And in general, there were fears that the growth rate of the average hourly wage would drop to 4.2%. That is, it was expected that the labor market would recover amid a significant decrease in wages. But, apparently, so far this has been avoided. In addition, the average working week has been reduced from 34.6 hours, not to 34.4 hours, but to 34.5 hours. And the only indicator that was somehow disappointing was the level of economic activity, which should have remained unchanged, but it dropped from 61.5% to 61.4%. The reduction is not important, and the indicator itself is probably the most insignificant among all other indicators of the labor market.

Unemployment rate (United States):

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The only thing that is of any interest today is open vacancies in the United States, the number of which should be reduced from 5,397,000 to 4,900,000. indicating that the rate of decline in unemployment will only slow down. Thus, exacerbating the already difficult situation in the economy. However, after Friday's report from the Ministry of Labor, this will be seen as a consequence of a more dynamic reduction in the unemployment rate. So from the point of view of investors, such a decrease in the number of open vacancies is just another confirmation of the recovery of the US labor market. Which, without any doubt, will help strengthen the dollar.

JOLTS Open Jobs (United States):

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The euro/dollar pair managed to form a downward move last Friday, where the 1.1900 area played a role of resistance in the market. The outlines of the correction course were obtained, but the scale of the price change is extremely small when taking into account such a high value of the European currency. If we proceed from the dynamics of the period earlier, there is a chance for a further decline in the value of the euro. Relative to market volatility, there is a high dynamic that exceeds the average, which indicates speculative interest in the market.

Looking at the trading chart in general terms (the daily period), you can see that the current movement is a price fluctuation at the peak of the inertia course.

We can assume that if the price rebounds from the value of 1.1800 and consolidates lower than 1.1780, we will open a path in the direction of 1.1755-1.1720. An alternative scenario considers the absence of further adjustment to the euro's value, where consolidating the price higher than 1.1820 may lead to a reverse course.

From the point of view of complex indicator analysis, we see that the indicators of technical instruments at minute and hour intervals signal a sale due to Friday's rally. The daily indicator still signals a purchase against the background of the main inertia.

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Dollar's growth is just a correction and nothing more (resumption of growth in the EUR/USD and AUD/USD pairs is expected)

The markets have been eagerly waiting for the release of important data on US employment over the past week, which could show how deeply the US economy is getting stuck in the coronavirus pandemic and whether it will be able to recover strongly in the near future.

According to the data presented, the US economy received 1,763,000 new jobs in July, which was significantly worse than the June figures. After that, there was a sharp rebound in the growth of new jobs, which, although it was revised downward to 4,791,000 from 4,800,000, still remained noticeably high. At the same time, the released values exceeded the consensus forecast of 1,600,000. In addition, investors were pleased with the unemployment rate, which dropped more than expected by 10.5% to 10.2% from 11.1%.

On Friday, there were also other equally important values for the average hourly wages, which increased by 0.2% in July against the forecast of a decline by 0.5%. In annual terms, the average wage last month fell slightly compared to July 2019, showing a decline to 4.8% from 4.9%, while a decline to 4.1% was expected. The average length of the week in July also slightly decreased to 34.5 from 34.6, already revised downward. The indicator was expected to show a drop to 34.4.

The only noticeable negative was the data on the number of jobs in the manufacturing industry. The drop was significant to 26,000 from 357,000. The number of jobs was expected to decline, but not so much to 253,000.

As a result, global markets reacted ambiguously to the US statistics. The local stock market went into a negative zone after trying to grow up at the opening and the dollar in the currency market began to receive support against all major currencies, without exception. Its rise was supported by the growth of the yield on US Treasury bonds. Thus, the yield on the benchmark of 10-year Treasuries increased by the end of Friday to 0.566%, adding 0.66%.

The ICE dollar index rose 0.67% to 93.39 points. The dynamics of the dollar immediately forced the traders to think about whether it would turn out that further positive in the data of American economic statistics will lead to the fact that the Fed will not keep the current extremely soft monetary rate for a long time without changes.

In our view, this is groundless. The Fed itself, in the person of its leader, J. Powell has repeatedly stated that she will pursue a soft monetary policy for as long as it takes to restore the economy, as well as increase inflation to the 2.0% level, and more importantly. Powell said that the Central Bank will actually target the rate of inflation, and this is something new that has not been in recent years.

We view the current strengthening of the dollar as an overdue correction after its three-month decline against the basket of major currencies, which may transform into consolidation before a new stage in the weakening of the US dollar. We believe that the incoming positive news on the US economy will have a negative impact on it.

Forecast of the day:

The EUR/USD pair is consolidating, probably forming a trend continuation pattern. The prospective breakdown of the level 1.1900 may become the basis for the price rise to the level of 1.2000.

The AUD/USD pair is turning upwards. Now, breaking through the level of 0.7180 will get an opportunity to rise to the level of 0.7260.

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Analytics and trading signals for beginners. How to trade the EUR/USD currency pair on August 10? Plan for opening and closing

Hourly chart of the EUR/USD pair.

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The EUR/USD currency pair started a weak upward correction on Monday night trading. The MACD indicator turned up, however, the price also began to rise, so we managed to avoid "indicator discharge" (the indicator property, in which the price and the indicator move in opposite directions, happens when the price moves in one direction for a strong and long time). So, from a technical point of view, everything is beautiful. Now, traders should wait for the completion of this correction and it will be possible to resume trading on the downside at least until the level of 1.1696, which is the previous local minimum, is worked out. And only if this level is overcome, then it will be possible to assume the formation of a new downward trend. Until then, the pair's quotes may return to the level of 1.1903 at any moment.

On Monday, August 10, the European Union and America are not scheduled for any important macroeconomic publications. Thus, most likely, nothing will affect the tone of trading today. If this is the case, then traders can easily adjust the pair to certain levels and after a smooth turn down, resume the downward movement. We believe that this is the most likely option for today. Of course, the market can receive unplanned news. For example, an important and high-profile speech by Donald Trump, news about negotiations between Republicans and Democrats regarding the provision of a new package of financial assistance to the US economy, or data on "coronavirus" diseases in the US. Each of these topics can potentially change the mood of traders, which can lead to an increase in the movement or a reversal of the price. We remind you that the market is very sensitive to the topic of the COVID-2019 epidemic in the United States, and it does so with good reason. Since the epidemic slows down the recovery of the American economy after the "lockdown". And the American economy has already suffered almost the most in the world, losing 33% of GDP in the second quarter. And now we don't know what the data for the third quarter will be. As we have already said, the pandemic in America is "uncontrolled in its spread". Thus, many factors suggest that it is time for the dollar to become more expensive. But at the same time, almost at any moment, traders can refuse this option due to the weak fundamental background from America, and then the dollar will start to fall again.

On August 10, the following scenarios are possible:

1) Purchases of the pair are still not relevant, since the price left the ascending channel and could not overcome the level of 1.1903. There are no technical structures, such as trend lines or channels or other models that support the upward trend at the moment. Thus, we believe that it is not appropriate to trade for an increase at this time.

2) Sales of the currency pair are still more promising now. At the moment, the pair is being corrected, as indicated by the MACD indicator (the signal for correction is circled in red). Therefore, we now suggest waiting for the completion of this correction and a signal from the same MACD to sales. Then we recommend that you re-open sell orders with targets of 1.1732 and 1.1696. In principle, given the current average volatility of the pair (an indicator of the average number of points from the minimum to the maximum of the day), traders can reach the first goal today. However, the stronger the upward correction, the less time and effort will be left to work out the level of 1.1732 on August 10.

What's on the chart:

Price levels of support and resistance – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.

Red lines – channels or trend lines that display the current trend and indicate which direction it is preferable to trade now.

Up/down arrows – indicate when you reach or overcome which obstacles you should trade up or down.

MACD indicator – a histogram and a signal line, the intersection of which is a signal to enter the market. It is recommended to use it in combination with trend lines (channels, trend lines).

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp reversal of the price against the previous movement.

Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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