Forecast for EUR/USD on February 18, 2020

EUR/USD

Monday was quiet for the euro, since the United States had a public holiday. The price has gained some strength at the Fibonacci reaction level of 161.8% and today in the Asian session it is already deeper than yesterday's low. The immediate goal of the euro at 1.0745 is the underlying Fibonacci level of 200.0%. And since the embedded line of the blue price channel is already relatively close, we are waiting for the price to reach the second target level of 1.0680, formed by the reaction level of 223.6% and this line of the price channel. Probably, the 1.0650/80 range will be worked out, the lower boundary of which is formed by the reaction level of 238.2%.

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On a four-hour chart, the signal line of the Marlin Oscillator is turning from the boundary with the growth territory. The trend on the main work schedules is completely bearish.

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In addition, today, the ZEW Institute will release data on moods in business circles for the current month, the forecast is pessimistic: in Germany it is expected to decrease from 26.7 to 20.0-21.5 points, in the euro area a decrease from 25.6 to 21.3- 25.0 points.

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Forecast for GBP/USD on February 18, 2020

GBP/USD

The British pound fell 40 points on Monday. The price did not struggle with the resistance of the Fibonacci level of 76.4% (in fact, this is the correction level of 23.6%, since the Fibonacci retracement is upside down), and currently the signal line of the Marlin oscillator is in the decreasing trend zone, in the zone of negative values.

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The 1.2845 target at the reaction level of 110.0% is open, but there is a condition on the chart of a smaller scale.

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The price should overcome the MACD line on H4, below the level of 1.2968. The Marlin Oscillator is in the decreasing trend zone, which greatly increases the likelihood of successfully breaking support.

In addition, employment in the UK should be published today. An increase in applications for unemployment benefits in January is expected to be from 15 thousand to 23 thousand, the average level of wages including premiums for December is expected to be 3.0% against 3.2% earlier. The overall unemployment rate is so far projected unchanged at 3.8%. We are waiting for the pound to fall to the designated target. The second target 1.2758 is the Fibonacci level of 123.6%.

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Forecast for AUD/USD on February 18, 2020

AUD/USD

A minutes was issued from the last RBA meeting on monetary policy this morning. Committee members agreed that the economy will slightly decline in the medium term due to drought and the outbreak of SARS in China. By the end of the year, financial politicians are waiting for the economy to grow, pending the growth of investment in fixed assets. This made market participants doubt such optimism, since the IMF expects the global economy to weaken by the end of the year. It was also mentioned that the committee was considering options for lowering the rate, but decided to postpone and leave room for maneuver in the event of a worsening economic situation. In general, the rates are supposed to be kept at a low level for quite a long time.

This release, of course, did not contribute in any way to purchases of the Australian dollar and the aussie lost more than 20 points in the Asian session. The Australian dollar's technical reversal occurred from the Fibonacci level of 161.8% yesterday. The target is 0.6624 in terms of the Fibonacci level of 223.6% and the support of the price channel line is open. Perhaps there will be a breakout of the level, and the price will reach 0.6595 at the Fibonacci level of 238.2%. After this movement, a correction is likely.

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On the H4 chart, the price crossed both indicator support lines - the balance line (red) and the MACD line (blue). Marlin is declining in the negative trend zone. The Australian dollar will continue to decline.

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Fractal analysis of the main currency pairs for February 18

Forecast for February 18 :

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.0938, 1.0910, 1.0888, 1.0864 and 1.0827. Here, the price is near the limit values for the downward cycle, and therefore, we expect a correction. Short-term upward movement is expected in the range of 1.0864 - 1.0888. The breakdown of the last value will lead to the development of correction. Here, the goal is 1.0910. This level is a key support for the downward structure and its passage at the price will lead to the formation of expressed initial conditions for the upward cycle. In this case, the potential target is 1.0938.

The main trend is a downward structure from January 31, we expect a correction

Trading recommendations:

Buy: 1.0864 Take profit: 1.0887

Buy: 1.0888 Take profit: 1.0910

Sell: Take profit:

Sell: Take profit:

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3182, 1.3157, 1.3114, 1.3082, 1.3045, 1.2990, 1.2961 and 1.2928. Here, we are following the development of the ascending structure of February 10. The continuation of the movement to the top is expected after the breakdown of the level of 1.3045. In this case, the target is 1.3082. Short-term upward movement, as well as consolidation is in the range of 1.3082 - 1.3114. The breakdown of the level of 1.3114 will lead to a pronounced movement. In this case, the potential target is 1.3157. Upon reaching which, we expect a consolidated movement in the range 1.3157 - 1.3182, as well as a correction.

Short-term downward movement is possibly in the range of 1.2990 - 1.2961. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.2928. This level is a key support for the upward structure.

The main trend is the ascending structure of February 10.

The main trend is the rising structure of February 10th.

Trading recommendations:

Buy: 1.3045 Take profit: 1.3080

Buy: 1.3083 Take profit: 1.3112

Sell: 1.2990 Take profit: 1.2962

Sell: 1.2959 Take profit: 1.2930

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9858, 0.9826, 0.9810, 0.9787, 0.9771, 0.9743 and 0.9719. Here, we are following the local ascendant structure of February 12. Short-term upward movement is expected in the range of 0.9810 - 0.9826. The breakdown of the latter value will lead to movement to a potential target - 0.9857. We expect a pullback to the bottom from this level.

Short-term downward movement is possibly in the range of 0.9787 - 0.9771. The breakdown of the latter value will lead to the development of a downward structure. In this case, the first potential target is 0.9743. We expect expressed initial conditions for a downward cycle to the level of 0.9719.

The main trend is the local potential for the top of February 12

Trading recommendations:

Buy : 0.9810 Take profit: 0.9824

Buy : 0.9827 Take profit: 0.9856

Sell: 0.9787 Take profit: 0.9773

Sell: 0.9769 Take profit: 0.9745

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For the dollar / yen pair, the key levels on the scale are : 110.80, 110.47, 109.99, 109.62, 109.41 and 109.07. Here, we are following the development of the ascending structure of January 31. The continuation of the movement to the top is expected after the breakdown of the level of 110.00. In this case, the target is 110.47. Price consolidation is near this level. For the potential value for the top, we consider the level 110.80. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 109.62 - 109.41. The breakdown of the latter value will lead to an in-depth correction. Here, the goal is 109.07. This level is a key support for the top.

Main trend: upward structure of January 31

Trading recommendations:

Buy: 110.00 Take profit: 110.45

Buy : 110.49 Take profit: 110.80

Sell: 109.60 Take profit: 109.42

Sell: 109.38 Take profit: 109.10

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3303, 1.3281, 1.3267, 1.3228, 1.3201 and 1.3165. Here, the descending structure of February 10 is considered medium-term. The continuation of movement to the bottom is expected after the breakdown of the level of 1.3228. In this case, the target is 1.3201. Price consolidation is near this level. The breakdown of the level of 1.3200 will lead to the development of pronounced movement to the bottom. Here, the potential target is 1.3165. We expect a pullback to the top from this level.

Short-term upward movement is possibly in the range of 1.3267 - 1.3281. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3303. This level is a key support for the downward structure.

The main trend is the formation of medium-term initial conditions for the downward movement of February 10

Trading recommendations:

Buy: 1.3267 Take profit: 1.3281

Buy : 1.3283 Take profit: 1.3303

Sell: 1.3226 Take profit: 1.3203

Sell: 1.3199 Take profit: 1.3167

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6810, 0.6776, 0.6761, 0.6739, 0.6703, 0.6684 and 0.6660. Here, we are following the development of the ascending structure of February 7. The continuation of the movement to the top is expected after the breakdown of the level of 0.6740. In this case, the target is 0.6761. Short-term upward movement, as well as consolidation is in the range of 0.6761 - 0.6776. For the potential value for the top, we consider the level of 0.6810. Upon reaching which, we expect a pullback to the bottom.

Consolidated movement is possibly in the range of 0.6703 - 0.6684. Hence, the high probability of a reversal to the top. The breakdown of the level of 0.6684 will lead to the formation of a downward structure. Here, the potential target is 0.6660.

The main trend is the upward structure of February 7

Trading recommendations:

Buy: 0.6740 Take profit: 0.6761

Buy: 0.6762 Take profit: 0.6775

Sell : Take profit :

Sell: 0.6682 Take profit: 0.6660

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For the euro / yen pair, the key levels on the H1 scale are: 119.85, 119.51, 119.26, 118.80, 118.36 and 118.13. Here, we are following the descending structure of February 5. The continuation of movement to the bottom is expected after the breakdown of the level of 118.80. In this case, the goal is 118.36. For the potential value for the bottom, we consider the level of 118.13. Upon reaching which, we expect consolidation, as well as a pullback to the top.

Short-term upward movement is possibly in the range of 119.26 - 119.51. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 119.85. This level is a key support for the downward structure.

The main trend is the descending structure of February 5

Trading recommendations:

Buy: 119.26 Take profit: 119.50

Buy: 119.55 Take profit: 119.85

Sell: 118.80 Take profit: 118.38

Sell: 118.34 Take profit: 118.14

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For the pound / yen pair, the key levels on the H1 scale are : 145.19, 144.57, 144.12, 143.50, 142.75, 142.47 and 142.08. Here, we revised the key targets for the upward structure of February 10. The continuation of movement to the top is expected after the breakdown of the level of 143.50. In this case, the target is 144.12. The breakdown of this value will lead to short-term upward movement in the range 144.12 - 144.57. Hence, there is also a high probability of a reversal to correction. For the potential value for the top, we consider the level of 145.19. Upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement, as well as consolidation, are possible in the range of 142.75 - 142.47; hence, the likelihood of a reversal to the top. The breakdown of the level of 142.47 will lead to an in-depth correction. Here, the goal is 142.08. This level is a key support for the top.

The main trend is the rising structure of February 10

Trading recommendations:

Buy: 143.50 Take profit: 144.12

Buy: 144.15 Take profit: 144.50

Sell: 142.75 Take profit: 142.50

Sell: 142.44 Take profit: 142.10

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GBP/USD. Unemployment, inflation, retail: pound awaits key reports

The fundamental background for the British currency remains very controversial: the pound is gradually losing ground today following a surge of optimism last week. Given the rather harsh rhetoric of the representatives of London and Brussels, it can be assumed that the downward trend will continue. In addition, tomorrow's data on the growth of the UK labor market may also put pressure on the GBP/USD pair, especially if the average earnings level disappoints. Key indicators of UK inflation and retail sales data will also be published this week. All these reports will complement the overall fundamental picture for the GBP/USD pair.

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But let's start with politics. As you know, over the past few years (to be more precise, since 2016), the pound has been trading in its "coordinate system", sharply reacting to the news flow regarding Brexit's prospects. Now Brexit is behind us, but the degree of intensity is still high: negotiations during the transition period began with harsh statements, both from the Europeans and the British. Boris Johnson recently threatened to leave the negotiation process, while Brussels promised Spain support in the matter of territorial claims regarding Gibraltar. Today, a kind of "exchange of pleasantries" continued: French Foreign Minister Jean-Yves Le Drian said that both sides are far apart on a number of issues. However, he warned the UK that she should expect a "bloody battle" in the upcoming talks. The Foreign Minister of France also repeated the words of the head of the European Commission that it would be difficult for Britain to achieve the goal of concluding a free trade deal before the end of the year.

It is worth noting that the French have always expressed a tougher stance towards the British compared to other Europeans. For example, at the time, Paris was always hostile to the idea of postponing Brexit and extending the negotiation process. Only at the last moment did the French support the common decision of the leaders of the EU countries. Judging by the first comments by French officials, the upcoming talks will indeed become a real diplomatic test.

Meanwhile, the British retail consortium, in a published statement, warned that consumers could face higher costs and reduced availability of goods if a free trade deal was not reached by the end of the year. Representatives of the consortium recalled that 80% of all food products imported by British retailers came from the EU, and this fact makes these negotiations "especially important for these essential goods". Such a remark against the backdrop of harsh statements by Paris put background pressure on the pound.

In the coming days, the attention of GBP/USD traders will switch to macroeconomic reports - unless, of course, British and European politicians increase the verbal pressure on the currency. If you exclude this scenario, the upcoming releases may have a significant impact on the pair. Let me remind you that the Bank of England unexpectedly maintained an "optimistic and expectant" position at its last meeting, contrary to the pessimistic forecasts of most experts. Nevertheless, the English regulator did not rule out a reduction in the interest rate in the foreseeable future, and two members of the Committee have already voted for this decision for several meetings. And if key indicators this week come out in the red zone, then the likelihood of monetary policy easing this spring will increase again.

Key data on the growth of the labor market in Britain will be released tomorrow, February 18. According to general forecasts, the unemployment rate will remain at a record low of 3.8%. However, the number of applications for unemployment benefits may significantly increase - up to 22 thousand. Salaries can demonstrate a downward movement: the increase in the average earnings should slow down to 3.1% with premiums and up to 3.3% without them. If the inflationary component of tomorrow's release comes out in the red zone, the pound will come under significant pressure, especially in anticipation of the publication of basic inflation data.

We will find out the growth dynamics of the British consumer price index on Wednesday, February 19. Preliminary forecasts are contradictory: the overall index on a monthly basis should slow down to -0.4%, and in annual terms, grow to 1.7% (after a decline to 1.3%). Core inflation can also grow up to 1.5%. For bulls of the pair, it is important that inflation data come out at least at the forecast level, otherwise the bears will get a weighty argument for selling the pair.

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Data on retail sales in the UK will be published on Thursday. This release will be the last puzzle that will form the overall fundamental picture for the pound. According to general forecasts, retail sales will please GBP/USD bulls: on a monthly basis, the indicator will leave the negative area where it has been for the past three months (both taking into account fuel costs and excluding this component). A slight slowdown is expected in annual terms.

Thus, according to preliminary forecasts, key macroeconomic reports will show mixed dynamics. If the releases turn out to be one-way, then the volatility for the GBP/USD pair will be much higher: by the end of the week, the probability of a rate cut at the March meeting will either increase or decrease even more. From a technical point of view, the pair is also at a crossroads - on the daily chart, the price is located on the middle line of the Bollinger Bands indicator, and the trend indicators have not formed any clear and unambiguous signals. From a fundamental point of view, a similar picture has developed: traders are waiting for information drivers that will push the pair either into the region of 28-29 figures, or towards the 31st price level.

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