Euro agree on the truce

The positive macroeconomic statistics for the US, the "hawkish" rhetoric of the Fed, the probability of three increases in the federal funds rate in 2018 from 69% to 84%, four monetary restrictions from less than 30% to 42%, an increase in the yield of 10-year Treasury bonds up to 2.93%, the maximum mark since February, and finally, the expectations of the peaceful rhetoric of Mario Draghi at a press conference following the upcoming ECB meeting, what could be the best background for the bears' attack on EUR / USD? Dozing almost the whole week by April 20, the main currency pair at the end of it was quickened and confidently went down.

Dynamics of the yield of US Treasury bonds

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Theoretically, the divergence factor in monetary policy works as follows. An increase in the chances of a monetary restriction of the Fed, coupled with the ECB's leisureliness lead to an expansion of the yield differential between US and German bonds. The attractiveness of securities issued in the US is growing, which contributes to the flow of capital from the Old to the New World. The problem is that when investing money in the US bond market, Europeans hedge their currency risks by selling dollars. And the cost of such insurance reaches 2.3% -2.4%. I mean, in order for American bonds to look better than German bonds, the rate on them should tend to 3% or exceed this mark. It seems that the market believes that everything will happen, and starts buying the USD index.

The situation is exacerbated by low risks of hawks from the ECB following the meeting of the Governing Council scheduled for April 26. Sluggish inflation in the eurozone (+ 1.3% y / y in March), weak statistics on industrial production, retail sales, and business activity make the Central Bank think three times before normalizing monetary policy. Yes, ECB representatives consider the GDP block down in the currency block in the first quarter as a temporary phenomenon, the IMF is full of optimism and raises the forecast for economic growth in 2018 from 2.3% to 2.4%, but without improving the ECB statistics, nothing will happen.

Let us recall that in 2017, key drivers of the euro strengthening against major world currencies were a decrease in political risks, a rapid growth of the eurozone's GDP, rumors about the normalization of the monetary policy of the European Central Bank and capital flow to the Old World securities market. At least two of them do not work this year. Hence the weakness of the "bulls" for EUR / USD, yet unable to restore an uptrend.

Another thing is that the dollar can not boast of something serious. The normalization of the monetary policy of the Fed is at the end of the cycle, and in such circumstances, investors calmly react to an additional increase in the rate for federal funds. It is obvious that the Federal Reserve will bring it to 3%. The limit is known, you can switch to the monetary policy of the central banks-competitors.

Technically, the consolidation in the range of 1.22215-1.2475 within the "Expanding wedge" pattern continues. The breakthrough of its upper limit will strengthen the risks of recovery of the uptrend.

EUR / USD, the daily chart

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

Technical analysis of USD/JPY for April 20, 2018

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All our targets which we predicted in the previous analysis have been hit. USD/JPY is still trading higher and expected to continue moving higher. The pair keeps trading on the upside repeatedly striking the upper Bollinger band. Upward momentum is also evidenced by the relative strength index, which is well directed in the 60s. Meanwhile, the key support at 107.15 remains intact maintaining the intraday outlook bullish. Therefore, the pair is expected to be on track to reach upside target at 108.05 and 108.30.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates a bullish position, and the price below the pivot point indicates a short position. The red lines show the support levels, and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: BUY, stop loss at 107.35, take profit at 108.05.

Resistance levels: 108.05, 108.30, and 108.65

Support levels: 107.10, 106.85, and 106.55.

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

Technical analysis of USD/CHF for April 20, 2018

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All our targets which we predicted in previous analysis have been hit, USD/CHF is still trading highe and expected to trade with a bullish outlook. The pair is trading above its rising 20-period and 50-period moving averages, which play support roles and maintain the upside bias. The relative strength index lacks downward momentum. The downside potential should be limited by the key support at 0.9695. Therefore, as long as this key level is not broken, look for a new challenge with targets at 0.9765 and 0.9795 in extension.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates a bullish position, and the price below the pivot point indicates a short position. The red lines show the support levels, and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: BUY, stop loss at 0.9695, take profit at 0.9765.

Resistance levels: 0.9765, 0.9795, and 0.9835

Support levels: 0.9665, 0.9635, and 0.9600.

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

Technical analysis of GBP/JPY for April 20, 2018

GBP/JPY is under pressure and expected to continue the downside movement. The upward potential is likely to be limited by the resistance at 151.70. The declining 50-period moving average is playing a resistance role. The relative strength index is below its neutrality level at 50. Therefore, below 151.70, look for another decline with targets at 150.65 and 150.00 in extension.

Chart Explanation: The black line shows the pivot point. Currently, the price is above the pivot point which is a signal for long positions. If it remains below the pivot point, it will indicate short positions. The red lines show the support levels, while the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 152.00, 152.60, and 153.15

Support levels: 150.65, 150.00, and 149.50.

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

Technical analysis of NZD/USD for April 20, 2018

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All our targets which we predicted in yesterday's analysis have been hit, NZD/USD is still under pressure and expected to continue its downside movement. The pair accelerated on the downside along the lower boundary of Bollinger Bands. The downward momentum is further reinforced by both declining 20-period and 50-period moving averages. The relative strength index has broken down its oversold level at 30. Hence, below 0.7260, look for a further drop with targets at 0.7175 and 0.7150 in extension.

Chart Explanation: The black line shows the pivot point. Currently, the price is above the pivot point, which is a signal for long positions. If it remains below the pivot point, it will indicate short positions. The red lines show the support levels, while the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 0.7275, 0.7290, and 0.7335

Support levels: 0.7175, 0.7150, and 0.7100.

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