Fundamental Analysis of EUR/USD for February 26, 2018

EUR/USD is currently struggling at the 1.23 price area ahead of the ECB President Draghi's speech. The price has been quite indecisive at the edge of the 1.23 price area as it is the most important event level from where if broken below the price is expected to be quite impulsive with further bearish pressure. This week USD is expected to be quite strong in nature having Fed Chair Powell to testify the interest rates which is expected to hike in March and also the upcoming monetary policies. Today, USD Home Sales report is going to be published which is expected to show an increase to 655k from the previous figure of 625k. If the economic report comes positive then USD in the coming days is expected to quite impulsive. As of the current scenario, USD is expected to gain momentum further in the coming days of the week whereas EUR may struggle to co-op with the impulsive pressure on the USD side.

Now let us look at the technical view. The price is currently residing below the dynamic level of 20 EMA above the 1.23 price area. Ahead of the upcoming high impact economic reports on the USD side, the price is expected to break below 1.23 this week from where the price is expected to be quite impulsive with the bearish pressure with target towards the 1.2050 support area. As the price remains below 1.2350 with a daily close, the bearish bias is expected to continue further.

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Global macro overview for 26/02/2018

The post of President of the People's Republic of China, Xi, took place at a time that only apparently required a new head of state to carry out far-reaching reforms. Going back in time, you can see that the first months of Xi's power are primarily the presence of relatively strong shocks generated by financial markets. The Chinese economy was surprisingly well prepared for perceptible shocks, which ultimately translated into maintaining high and stable economic growth and lack of deepening the existing imbalances. Currently, the Chinese authorities face problems of a much larger caliber, which can not be solved by one modest package of laws.

The decision of the Chinese Communist Party may lull the Xi cabinet a little, which will be much more gentle in solving structural problems. The delayed decision-making process at the highest levels will only contribute to the deepening of macroeconomic discrepancies and will keep the risk of a sudden deterioration in the condition of local financial institutions. Analyzing only the observed attempt to consolidate power, we note that it may be beneficial in the medium term for the strength of the yuan - despite the increased uncertainties associated with the process of further market opening. The global investors expect, that in the coming months the strength of the Asian currency will depend on the plans related to the minimization of systemic risk, deleveraging or minimizing the percentage of non-performing loans.

Let's now take a look at the Gold technical picture in the H4 time frame. The yellow metal is a very popular asset to invest in China, which is why it is worth to take a closer look at the market behavior. Recently, the price has bounced from the level of $1,322 and currently is testing the black trend line resistance from the bottom. Any breakout through the level of $1,344 would indicate a possible rally towards the last swing high at the level of $1,365. On the other hand, a failure would strengthen the bears and make suggest a push lower, towards the level of $1,322 or even $1,311.

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Global macro overview for 26/02/2018

Calm Monday trading as markets awaits Powell hearing

The rebound on the Asian stock markets following the optimistic end of the last week on Wall Street brings stable trading in currency markets with a mild weakening of the US Dollar and the strengthening of the emerging markets. Gold is trying to rally, Crude Oil remains stable.

The most important event of this week is the hearing of Fed Chairman J. Powell before the Financial Services Committee of the House of Representatives ( scheduled for Tuesday at 03.00 pm GMT) and some important data from the largest economies. This will be Powell second public appearance after taking over the Fed presidency after J. Yellen.

The Fed's rate hike at the March 21 meeting is practically a foregone conclusion, but the market has not yet fully discounted it. Meanwhile, in economist discussions, there are even possible 4 hikes of 25 basis points in the whole of 2018. From the point of view of the US Dollar, higher interest rates have so far no positive impact on its value. The shape of yield curves and differences in interest rates on the long-term US and German government bonds are more important in this respect. In recent days the advantage in this aspect is again getting the American currency. A series of weaker readings from the Eurozone economy indicating some inhibition of the recovery dynamics at the beginning of the year moves the players' attention to profits from simpler, "certain" investments, for which it is certainly the generation of differences in interest rates (carry trades).

Let's now take a look at the EUR/USD technical picture in the H4 time frame. The economists expect that at least until the next Fed meeting the US Dollar will be making up for losses to the EUR (minimum target: 1.21) and other currencies. So far at the H4 time frame, the market has bounced from the golden trend line support and currently is heading towards the nearest technical resistance at the level of 1.2366.The momentum is pointing to the upside but still remains under its fifty level, so the rally might be only a temporary corrective bounce.

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Daily analysis of Gold for February 26, 2018

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Overview

The Gold price opens today's trading with strong rise after leaning well on the bullish channel's support that appears on the chart, to breach 1335.40 level and settles above it now, which hints stopping the recently suggested negative scenario and head to regain the main bullish trend again, supported by moving above the EMA50 besides that positive signal provided by stochastic. Therefore, the bullish trend will be expected for the upcoming period, and the next target is located at 1365.97, taking into consideration that breaking 1335.40 and holding below it will push the price to return to the correctional bearish track that its target located at 1316.48. The expected trading range for today is between 1325.00 support and 1350.00 resistance.The material has been provided by InstaForex Company - www.instaforex.com

Daily analysis of Silver for February 26, 2018

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Overview

Silver price managed to achieve our first target represented by the EMA50, located now at 16.75, noticing that stochastic provides clear positive signals on the daily time frame, which forms positive motive that we are waiting to push the price to continue rising in the upcoming period, waiting to head towards 17.43 that represents our next main station. Therefore, we will continue to suggest the bullish trend on the intraday and short-term basis conditioned by the price stability above 16.25, as breaking this level will push the price to test 15.49 areas before any new attempt to rise. The expected trading range for today is between 16.50 support and 16.90 resistance.

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Analysis of Gold for February 26, 2018

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Recently, the Gold has been trading upwards. The price tested the level of $1,341.06. Anyway, according to the 30M time – frame, I found a rejection of the upper diagonal, which is a sign that buying looks risky. I also found the overbought condition of the stochastic oscillator, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward target is set at the price of $1,332.25.

Resistance levels:

R1: $1,338.40

R2: $1,335.28

R3: $1,332.06

Support levels:

S1: $1,325.70

S2: $1,322.60

S3: $1,319.40

Trading recommendations for today: watch for potential selling opportunities.

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GBP/USD analysis for February 26, 2018

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Recently, the GBP/USD has been trading upwards. The price tested the level of 1.4070. Anyway, according to the 30M time – frame, I found a rejection of pivot resistance 2 at the price of 1.4060, which is a sign that buying looks risky. I also found a hidden bearish divergence on the stochastic oscillator, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the price of 1.4015 and at the price of 1.3960.

Resistance levels:

R1: 1.4015

R2: 1.4060

R3: 1.4117

Support levels:

S1: 1.3915

S2: 1.3860

S3: 1.3815

Trading recommendations for today: watch for potential selling opportunities.

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Technical analysis of GBP/USD for February 26, 2018

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Overview:

  • The GBP/USD pair is still trading below the resistance of 1.4055. It will probably continue to move downwards from the level of 1.4055.
  • Today, the first resistance level is seen at 1.4055 followed by 1.4123, while the daily support 1 is seen at 1.3901.
  • Furthermore, the moving average (100) starts signaling a downward trend; therefore, the market is indicating a bearish opportunity below 1.4055.
  • So it will be good to sell at 1.4055 with the first target of 1.3986. It will also call for a downtrend in order to continue towards 1.3901.
  • The strong daily support is seen at the 1.3901 level. According to the previous events, we expect the GBP/USD pair to trade between 1.4055 and 1.3901 in the coming hours. The price area of 1.4123 remains a significant resistance zone. Thus, the trend is still bearish as long as the level of 1.4123 is not broken.
  • On the other hand, in case a reversal takes place and the GBP/USD pair breaks through the resistance level of 1.4123, then a stop loss should be placed at 1.4221.
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Yen will not be scared of Fed

The Japanese yen confidently leads the race for the title of best performer of the year among the G10 currencies, has strengthened against the US dollar by 5.4% since early 2018. Jerome Powell's speech before the Congress is viewed by investors as a clue about the future dynamics of USD / JPY pair to determine the continuation of the southern campaign of the pair, regardless of what the new chairman of the Fed said.

At first glance, the strengthening of the yen to the highest level since autumn 2016 was facilitated by short-term factors including the repatriation of capital by residents on the eve by the end of the fiscal year (March 31), rumors about the purchase of local bonds by the world's largest pension fund (GPIF), an increase in demand for asylum assets or the correction of world stock indices and talk about the decline in leverage by the regulators of leverage on Forex trading. Indeed, despite the growth of share purchases by Japanese investors for 4 consecutive weeks, non-residents have been net sellers for 1.5 months. At the same time, judging by the conversations in the market, their return is required to restore the uptrend on the Nikkei225 and TOPIX.

However, the double deficit in the U.S. as the end of the era of cheap liquidity. Moreover, the associated ultra-low volatility shows that the USD / JPY pair has outperformed beyond the long-term consolidation range at 108.35-114.45 is just the beginning of the end of the bullish 2012-2015. If the carry trade strategies popular in 2015-2017 have exhausted themselves, a return to the funding currencies will make the Japanese yen a strong asset, regardless of the state of health of the US dollar.

Dynamics of the carry carry index

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Source: Bloomberg.

In this regard, the speech of Jerome Powell before Congress is unlikely to drastically change anything in the dynamics of USD / JPY pair. Indeed, if the head of the Fed will rely on an aggressive tightening of monetary policy, in contrast to his predecessor Janet Yellen, the growth of yield on US Treasury bonds will increase the risk of a correction of the S&P 500. In such conditions that are usually identified with a worsening global appetite for risk, the safe-haven assets are deservedly popular. On the contrary, the "dovish" rhetoric of the chairman of the Fed will return interest of investors to sales of the US dollar.

The main victim in the current situation is the Bank of Japan. Revaluation of the yen slows the growth rates of import prices, PPI and CPI, that prolongs the timing of inflation targeting. At the same time, the companies of the Land of the Rising Sun have a formal excuse to get out of the implemented recommendation of Tokyo's official salary increase. However, when corporate earnings fall due to a strong yen, you need to sit and see how events will develop further. Perhaps, if BoJ does not come up with anything new in terms of monetary expansion, the USD / JPY pair is likely to continue its decline.

Technically, the inability of the bulls to cling to an important level of 107.25 allows us to talk about their weakness. "Bears" are seriously counting on the implementation of the targets at 127.2% and 161.8% on the "Crab" pattern.

USD / JPY pair, daily chart

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Technical analysis of EUR/USD for February 26, 2018

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Overview:

  • The trend of the EUR/USD pair movement was controversial as it took place in a narrow sideways channel, the market showed signs of instability. Amid the previous events, the price is still moving between the levels of 1.2259 and 1.2373. Also, the daily resistance and support are seen at the levels of 1.2408 and 1.2442, respectively. Therefore, it is recommended to be cautious while placing orders in this area. So, we need to wait until the sideways channel has completed. Last week, the market moved from its bottom at 1.2260 and continued to rise towards the top of 1.2352. Today, in the one-hour chart, the current rise will remain within a framework of correction. However, if the pair fails to pass through the level of 1.2404, the market will indicate a bearish opportunity below the strong resistance level of 1.2404. Since there is nothing new in this market, it is not bullish yet. Sell deals are recommended below the level of 1.2404 with the first target at 1.2295. If the trend breaks the support level of 1.2295, the pair is likely to move downwards continuing the development of a bearish trend to the level 1.2260 in order to test the double bottom again.
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Trading plan 02/26/2018

Trading plan 02/26/2018

The overall picture: This is the week of important news.

In the new week, there will be several important news in the US. A package for three days: Tuesday, Wednesday, Thursday.

On Tuesday and Thursday, the US Congress will make a report with the new head of the Federal Reserve Powell at 13:00 London time. The main issue is inflation and rates.

On Tuesday, in addition, at 13:30 London time, the orders for durable goods.

On Wednesday at 13:30 London time, the report on US GDP. And on Thursday, as always, after GDP, the inflation report on the RFE index. That's important.

For the currency pair GBP / USD, the discussion on Brexit in Britain was revived again.

Nevertheless, the pound is expected to raise rates and we look at the pound upward.

We buy both from a strong pullback and after overcoming the high of 1.4150.

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NZD/USD Intraday technical levels and trading recommendations for February 26, 2018

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Daily Outlook

In July 2017, an atypical Head and Shoulders pattern was expressed on the depicted chart which indicated an upcoming bearish reversal.

As expected, the price level of 0.7050 failed to offer enough bullish support for the NZD/USD pair. That's why the further bearish decline was expected towards 0.6800 (Reversal pattern bearish target).

Evident signs of bullish recovery were expressed around the depicted low (0.6780). An inverted Head and Shoulders pattern was expressed around these price levels.

The price zone of 0.7140-0.7250 (prominent Supply-Zone) failed to pause the ongoing bullish momentum. Instead, a bullish breakout above 0.7250 was expressed on January 11.

That's why a quick bullish movement was expected towards the depicted supply zone (0.7320-0.7390) where evident bearish rejection and a valid SELL entry were expected.

On February 2, a bearish engulfing daily candlestick was expressed. This enhances the bearish scenario towards the price levels of 0.7230 - 0.7165 where bullish recovery should be expressed.

Trade Recommendations:

The current price zone (0.7320-0.7390) remains a significant supply zone to offer a valid SELL entry.

Stop Loss should be set as a daily candlestick above 0.7450.

Bearish persistence below 0.7300 should be maintained to allow further bearish decline towards 0.7160 and 0.7090.

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Intraday technical levels and trading recommendations for EUR/USD for February 26, 2018

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Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2050-1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair has been trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450 and recently above 1.2075.

Another bullish breakout above 1.2250 was expressed on the chart. This hinders the bearish momentum allowing bullish advancement to occur towards 1.2750 provided that the price level of 1.2250 remains defended by the bulls.

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Daily Outlook

In September, a bearish target for the depicted Head and Shoulders pattern was projected towards 1.1350. However, the market failed to apply significant bearish pressure against the mentioned zone (1.1415-1.1520).

Instead, In November, evident bullish recovery was manifested around the price zone of 1.1520-1.1415.

This hindered further bearish decline which allowed the current bullish momentum to occur towards the price level of 1.2100 which failed to pause the ongoing bullish momentum as well.

Daily persistence above 1.2470-1.2500 is needed to confirm a recent bullish flag continuation pattern with projected targets around the price level of 1.2750.

On the other hand, a recent bearish pullback is being expressed below the price level of 1.2450 thus expressing a double-top reversal pattern with a projected target around 1.1990.

The current bearish pullback may extend towards 1.2070-1.1990 (reversal pattern projection targets) if a bearish breakdown of the level of 1.2200 (the depicted uptrend line) is achieved on a daily basis.

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Bitcoin analysis for February 26, 2018

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The Bitcoin (BTC) has been trading downwards. As I expected, the price tested the level of $9.324. Czechs are more inclined to store the value in cryptos than in euros, according to a new poll gauging attitudes toward currencies other than the koruna. When asked about their intentions to acquire foreign cash, twice as many respondents said they were interested in buying bitcoin than purchasing US dollars. Technical picture of Bitcoin looks bearish.

Trading recommendations:

According to the 30M time - frame, I found bearish that price is trading in a well defined downward channel, which is a sign that sellers are in control. I also found broken support at the price of $9.551, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the price of $8.972 and at the price of $8.200.

Support/Resistance

$9.551 – Intraday resistance

$9.393 – Intraday support

$8.970 – Objective target 1

$8.200 – Objective target 2

With InstaForex, you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

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Bitcoin analysis for 26/02/2018

Laszlo Hanyecz, the man who made the world's first documented transaction for the purchase of a physical object using Bitcoin in 2010, in which he paid 10,000 BTC for two pizzas, now bought two pizzas using the Bitcoin Lightning Network. On February 25, Hanyecz published on the Lightning-dev mailing list that he had to ask his friend in London to mediate in ordering pizza from a local pizzeria to be able to pay with the Lightning Network because, as stated: "the Pizza Bitcoin replacement software is not yet available". However, according to Hanyecz, the transaction demonstrates the basic assumption of using BTC in everyday transactions. As well, instead of a colleague, the recipient of the payment could be a pizza shop that had its own Lightning node.

The first BTC-pizza transaction took place on May 22, 2010. Since then it has been celebrated as Bitcoin and Pizza Day. Interestingly, there is also a Twitter channel dedicated to the daily publication of what is currently worth 10,000 BTC. Today, the tweeted value is $ 97.560.750. This time, Hanyecz paid for two pizzas, he paid 0.00649 BTC or about 62 dollars. The first documented purchase transaction of a physical object using the Lightning Network protocol is considered to be the next step in the evolution of Bitcoin, which will increase the bandwidth of the network for the global community. Apparently, it took place on January 20 this year. Then the user btc_throwaway1337 announced that he bought a VPN router via the payment channel provided by TorGuard.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. There are still two scenarios possible: main impulsive wave progression to the upside or alternative (W)(X)(Y) correction towards the level of $11,744 as a part of wave B. The golden trend line plays a big role now in the technical picture as the price is clearly reacting to it. As long as the price will trade below the golden trend line the downtrend will continue. The nearest intraday support is seen at the level of $9,170. In a case of a breakthrough, the next important support is seen at the level of $8,806 (50% Fibo) and $8,057 (61% Fibo). On the other hand, the nearest resistance is seen at the level of $10,000 and then $10,507.

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Trading plan for 26/02/2018

The US Dollar at the end of the Asian session is in a fairly strong defensive situation, which is being used effectively by commodity currencies like AUD and NZD (which are additionally supported by reports from the Middle Kingdom). According to the latest reports, the Communist Party of China seeks to preserve the status quo by abolishing the limit of the presidency of Xi Jinping. The spotlight is also the pound sterling (up 0.3%) stabilizing the GBP/USD pair around 1.4020. The market speculates that a part of the observed movement on pairs with the pound is due to the statements of Dave Ramsden, vice-governor of the Bank of England, who in an interview for the Sunday Times decided on more hawkish hints regarding the pace of interest rate hikes.

On Monday 26th of February, the event calendar is light in important news releases, but the market participants should keep an eye on ECB President Maro Draghi speech and New Home Sales data from the US. Late in the night, New Zealand will issue Trade Balance data as well.

USD/JPY analysis for 26/02/2018:

Bank of Japan Governor Haruhiko Kuroda reaffirms his view that the BoJ needs to continue with the current powerful monetary easing program to achieve its 2.0% inflation target. Kuroda said in Japanese parliament that "prices are gradually rising more and more", but "delay in achieving 2.0% inflation target is regrettable". Moreover, he added, that "Japan's economy is expanding very smoothly, needs persistent monetary easing. So far there is no plan for a comprehensive assessment of BoJ policy at this point and continuing powerful easing is essential for reaching 2.0% inflation target". In conclusion, no change in BoJ monetary policy on the horizon.

Let's now take a look at the USD/JPY technical picture in the H4 time frame. The market is falling after Kuroda comments and currently has broken below the support at the level of 106.83 and is testing the support at the level of 106.41. The market conditions are oversold, so there might be a chance for a further bounce towards the level of 106.83 and even 107.15, but as long as the resistance zone between the levels of 108.12 - 108.43 is not clearly broken, the bears should remain in control over this market.

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Ichimoku cloud indicator analysis of USDX for February 26, 2018

The US dollar index is pulling back towards cloud support. The index got rejected at 90 and is now testing the 89.60 level. The inability to break above the 90.60 level was not a good sign for bulls and something that we warned about. For confirmation of a bigger trend reversal and that the entire downward move from 103.60 is over, the index must break above 90.60. It did not happen.

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Red line - resistance (broken)

The US dollar index is trading above the Ichimoku cloud on the 4-hour chart. Support is at 89.45-89.35. The 61.8% Fibonacci retracement of the rise from February lows is at 89. So this is the last line of defense for dollar bulls. On the other hand, the key resistance remains at 90.60.

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Blue rectangle - key resistance

Bears, on the other hand, need to defend the 90.60 level and continue trading below the daily cloud as shown above. The trend remains bearish on the daily chart. Support on the daily chart is at 89.25 so a daily close below it will be a bearish sign. The risk reward of a bearish trade is more favorable now than a long trade.

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Ichimoku cloud indicator analysis of gold for February 26, 2018

The Gold price has broken through the 4-hour cloud resistance and is now trading inside the Kumo (cloud). The trend is now neutral. Bulls need to break above the cloud resistance in order to change trend to bullish again.

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The Gold is trading above both the tenkan- and the kijun-sen in the 4-hour chart. Short-term support is on Friday's low at $1,325. A break below that level will be a bearish sign. A break below $1,325 will most probably push Gold towards $1,300 or lower. Resistance is at $1,345. Break above it and we could see another run towards $1,350 where we find the long-term resistance area. So far bulls have the upper hand if we take under consideration the fact that Gold has made a higher low relative to the early February low at $1,307.

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Magenta line - long-term resistance

On a daily basis, Gold price remains above the daily Kumo and is trying to break above the tenkan-sen. Gold price has important long-term resistance in the $1,350-60 area and if it manages to move towards that level again, it will most probably break above it and move towards $1,400. For now, the trend favors bulls. Only a break below $1,320-$1,300 could change the trend.

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Technical analysis of EUR/USD for Feb 26, 2018

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When the European market opens, there is no Economic Data will be released just ECB President Mario Draghi Speaks. The US will release the New Home Sales, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.2351.

Strong Resistance:1.2344.

Original Resistance: 1.2332.

Inner Sell Area: 1.2320.

Target Inner Area: 1.2291.

Inner Buy Area: 1.2262.

Original Support: 1.2250.

Strong Support: 1.2238.

Breakout SELL Level: 1.2231.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of USD/JPY for Feb 26, 2018

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In Asia, today Japan will not release any Economic Data, but the US will release the New Home Sales data. So there is a probability the USD/JPY will move with a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance. 3: 107.11.

Resistance. 2: 106.90.

Resistance. 1: 106.69.

Support. 1: 106.43.

Support. 2: 106.22.

Support. 3: 106.01.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Daily analysis of EUR/JPY for February 26, 2018

EUR/JPY

This cross has been going strong downwards since February 2, shedding 700 pips in the process. Nonetheless, the southwards journey will soon be over, as a strong rally is expected, which would eventually remove the current Bearish Confirmation Pattern in the market. The outlook on JPY pairs is bullish for this week, and for the month of March. So, short trades are not advisable.

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The price is currently below the supply zone at 121.50, going towards the zone level at 121.00. Another demand zone at 120.50 may also be tested, but the price would not be able to go further than that since a rally is expected.

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Daily analysis of USD/JPY for February 26, 2018

USD/JPY

The market was bearish in the long-term. A rally happened last week from Monday to Wednesday, but it was checked by the bearish correction that took place on Thursday and Friday. There are support levels at 106.50, 106.00 and ultimately at 105.50. Those support levels would impede bearish movements and they would eventually help bring about a bullish reversal, which is expected to take place before the end of this week.

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Should the bullish bias occur, the market would be able to gain at least, 150 pips this week, going towards the supply levels at 107.00, 107.50 and 108.00. These supply levels may even be exceeded, for they are initial targets.

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Daily analysis of USD/CHF for February 26, 2018

USD/CHF

This pair is something that is often affected by whatever happens to the EUR/USD (in a negatively correlated manner). It tested the resistance level at 0.9400 on Thursday and then retraced a bit. The resistance level at 0.9400 could be tested again, and even another resistance level at 0.9450. In case, the EUR/USD rallies, the USD/CHF would be sent plunging back towards the support levels at 0.9350, 0.9300 and 0.9250.

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This bearish plunge would end the bullish bias on the market, which is currently short-term. A movement below the support level at 0.9250 would result in a short-term bearish bias, which would eventually become a Bearish Confirmation Pattern in the 4-hour chart.

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USD/CAD back to support, watch for another bounce

The price has made a nice pullback to our entry and we're looking to buy above 1.2629 support (Fibonacci retracement, horizontal overlap support) for a bounce up to at least 1.2909 resistance (Fibonacci extension, horizontal swing high resistance). We do have to keep an eye out for intermediate resistance at 1.2750 which price has already reacted off nicely once. Only a break of that level would trigger a bigger move up to 1.2909.

RSI (34) sees an intermediate ascending support hold up its bullish momentum really nicely, but we're also seeing major resistance at 62% which needs to be broken to trigger a stronger upside move.

Buy above 1.2629. Stop loss at 1.2561. Take profit at 1.2909.

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USD/JPY bullish for a short term recovery

We are seeing USDJPY for a nice reversal pattern and look to buy above 107.13 support (horizontal overlap support, bullish divergence) for a bounce up to at least 107.95 resistance (Fibonacci extension, Fibonacci retracement, horizontal overlap resistance).

Stochastic (55,5,3) is bouncing up nicely and also sees bullish divergence vs price, signaling that a recovery is impending.

Buy above 107.13. Stop loss at 106.68. Take profit at 107.95.

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Daily analysis of USDX for February 26, 2018

USDX still consolidates the price action well above the 200 SMA at the H1 chart and it seems the 90.63 level is the next target to test. If the index does a break below the 89.36 level, then the doors will open for a testing of the 87.88 level, in a move which should strengthen the bearish bias. MACD indicator remains in the neutral territory, calling for further consolidation.

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H1 chart's resistance levels: 90.63 / 91.75

H1 chart's support levels: 89.36 / 87.88

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 89.36, take profit is at 87.88 and stop loss is at 90.81.

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Daily analysis of GBP/USD for February 26, 2018

The pair still hovers around the 200 SMA, having found support around the 1.3860 level. There is no clear path for the short-term in GBP/USD, as the bulls lost steam in the February 16th highs and bears are no strong enough to push it lower. If the 1.3939 level gives up, the next target would be the 1.3753 level. MACD indicator remains in the negative territory.

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H1 chart's resistance levels: 1.4078 / 1.4209

H1 chart's support levels: 1.3939 / 1.3753

Trading recommendations for today: Based on the H1 chart, sell (short) orders only if the GBP/USD pair breaks a bearish candlestick; the resistance level is at 1.3939, take profit is at 1.3753 and stop loss is at 1.4130.

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The US does not need a strong dollar

In the absence of significant macroeconomic news, the markets have retreated from the February lows and are trying to comprehend what happened - either a technical correction, or a fundamental collapse. Depending on the answer to this question, strategies for further action are developed that look appear in the opposite direction.

If the decline is technical, the fundamentals should show strong and sustained growth, which, among other things, should lead to the rally of risky assets. If the fall is of a deeper nature, then in the near future a new wave of declining markets is imminent, which will lead to an increased demand for defensive assets.

Apparently, investors are still inclined towards the first option - on most indicators there is no reason to fear another serious collapse. In its recent quarterly update, the Philadelphia Fed offers new average benchmarks for a number of key indicators of the US economy, which seem to be openly exaggerated.

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The forecast for GDP growth rates was upgraded for the first quarter, which is traditionally weak due to the influence of seasonal factors. It was revised from 2.4% to 3.0% (a similar forecast from the Atlanta Fed, even higher - 3.2%), an improved performance for the entire 2018. Unemployment rate, which is already extremely low, should, according to the forecast, is seen to be even lower, and in turn correspond to full employment. And, of course, new jobs, the pace of their creation, are revised upwards for the first three quarters at least.

If you recall the Fed's minutes published last week, then it should be noted that hawkish notes prevailed in them. So far, the Fed follows the same strategies and assures the markets that it will adhere to the announced growth rate of the rate, that is, there are three increases in 2018 and two more in the next, which will raise the target range to a long-term level of 2.75%, this level of the Fed considers economically justified. Philadelphia Fed's also sees inflation higher than a quarter ago. At the end of the year, the rate is seen to be at the level of 2.2%, and not 2.1%, as in the previous forecast.

Inflation expectations, according to the dynamics of rates Tips bonds rose on Friday to hit a 4.5-year high.

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Among other things, this means that expectations from the macroeconomic data next week are positive.

And data will be quiet few. On Tuesday, a January update will be published for orders for durable goods, which simultaneously characterizes both industrial production and consumer demand. On Wednesday there will be updated data on GDP in the fourth quarter of 2017 and the index of spending on personal consumption, on Thursday - a report on personal expenses and income in January. Apparently, a good sentiment is created, including, and positive forecasts, which should show a steady growth of the American economy.

Thus, the picture is quite complacent, and opinions are already expressed that the first appearance of the new head of the Federal Reserve Powell in the Congress, scheduled for Tuesday, February 27, may cause strong volatility in the markets. Powell can publicly announce changes in the Fed's policy, making it more aggressive than Janet Yellen's plans.

Thus, the dollar feels quite confident, with no reasons for the macroeconomic nature to reduce it. Trump, like a real businessman, focused all his attention on protectionist policies in an effort to correct the trade balance. After the washing machines came the turn of steel and aluminum. The decision will be taken into consideration until the middle of April. The attempt to correct the trade balance in this manner is unlikely to be successful, since the trade balance deficit first of all indicates the excess of consumption level over the level of production, but nobody expresses plans to limit consumption for some reason. On the contrary, attempts to correct the trade balance are being made simultaneously with supporting consumption growth, this is possible only with simultaneous outpacing growth in production and a decrease in the trade-weighted dollar exchange rate.

The implementation of the planned measures, including the tax reform, will not yield any positive result if the dollar strengthens, so the pressure on the main trading partners, primarily China and Europe, will only increase.

Hence it is clear that the strengthening of the dollar is short-term, the dollar index next week will be traded in the lateral range with a downward trend.

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The ECB (European Central Bank) is disturbed

Eurozone

According to the macroeconomic studies published last week, the expansion period of the eurozone economy that lasted for at least two years is coming to an end.

The evaluation of the ZEW Institute that showed a slowdown in growth rates was confirmed by other studies. All three PMI Markit indices came in worse in January than in December, despite the continuous expansion, the rates are slowing down.

Business climate indices and economic expectations of IFO in February, significantly slowed down, while the expansion phase is completed. Companies are less satisfied with the current business situation, as euphoria is coming to an end, indices are falling across the entire spectrum of the economy specifically in production, wholesale, and construction.

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The minutes of January meeting of the ECB was published on Thursday, which contained a number of disturbing statements. In particular, a number of ECB members expressed displeasure with the intention of the US authorities to help administrative measures to reduce the dollar, which, among other things, will be reflected in damage to the European economy and reduce import prices.

The ECB has no unity on the continuation of soft policy since strong economic performance and the growing euro prevents finding the balance.

On Wednesday, inflation data will be published in the euro area for February. While the outlook is negative which could possibly decline to 1.2%, and will help reduce the euro, update the February lows and attempt to reach the support zone at 1.2105 / 40.

United Kingdom

The British pound reacted by reducing the number of negative macroeconomic data. The GDP growth in 4 square meters is composed of 1.4% only, which is lower than expected. The weak data is because of the decline in the consumer demand amid high inflation, which is the minimum result for 5 years.

The increase of commercial investment in 2017 was 2.1% with a forecast of 2.4%, the growth was unexpected to be completely zero in the fourth quarter.

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According to CBI, the growth of retail sales continues to slow down, the overall balance has decreased to + 8p against + 12p in January, which indicates a decrease in household incomes.

The pound is under pressure despite the favorable external background. Briefly, the dollar looks stronger but the positive expectations from the Brexit talks on March 22-23 will soon start to have a stronger impact. The formed wedge is threatened with a breakthrough, but its horizontal pattern does not provide an opportunity to indicate the direction. The Support can be found at 1.3855, and the resistance is at 1.4008.

Oil

Oil received a number of positive signals last week, which allowed the quotations to come back to the level of $ 70/ barrel. The first factor was the publication of the report from the US Department of Energy, which states that hydrocarbon reserves were reduced by 1.6 million barrels against a backdrop of sustained production growth. While the markets expect an increase in inventories of 1.9 million barrels.

OPEC was inspired by the success of collaboration intended to change the setup of relations into a long-term direction, for which experts from both OPEC and independent producers are working on. The structure of a new partnership will begin to operate after the expiration of the current agreement in late 2018.

Oil has the potential for further growth, which is supported by the sustained recovery of the world economy against the backdrop of controlling production volumes. If Brent quotes will be able to hold above 64.20 until next week, it is likely to establish a next high close to January's 70.82.

* The presented market analysis is informative and does not constitute a guide to the transaction.

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