The yen got wings, next stop $ 108.5

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The fall of the yield curve below zero for the first time since 2007 stirred up the financial markets. The indicator, showing the difference between 10 and 3-year treasuries, is a reliable harbinger of a recession with a time lag of 12-18 months. Its inversion pushed players to active sales of shares. The losses of the S & P 500 amounted to 1.5%, and two new topics appeared on the market, fueling traders' interest in protective assets, such as the yen.

The sharp change in the rate of the Federal Reserve at the beginning of the year contributed to the rapid rally of US stock indices. The stock market prepared to close the quarter with the best result in nearly 30 years. However, it looks unnatural when macroeconomic statistics deteriorate and stocks rise. The growth of the US economy in the first quarter, will slowdown to less than 1% according to estimates of the leading indicator from the Atlanta Fed. hus, Morgan Stanley suspects that October-December GDP may be adjusted from 2.6% to 1.8% in quarterly terms. Divergence between economic reports and stock indicators cannot last forever.

The situation is similar throughout the world. Thus, the index of purchasing managers in the manufacturing sector of China, Japan, and the eurozone is below the critical level - 50, which indicates a slowdown in global GDP growth. Meanwhile, European stocks are ahead of their American counterparts, and the global MSCI is increasing. The naked eye can see that the market is overheated, which means it's time to pay attention to the safe haven assets. A 1.5% increase in the Japanese yen last week is a further evidence of this.

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The national currency of Japan was under the "press" for quite some time. Its growth was hindered by such factors as high risk appetite, low rates of the world debt market and volatility. Inversion of the US yield curve provoked carry-traders to close positions, increased demand for funding currencies, and also caused the USDJPY rate to depreciate.

Among the most obvious fears of the market is the excessively "soft" position of the Fed. There was a too sharp change of tone. In December, the regulator allowed three series of rate increases, and now it does not plan any policy tightening. Perhaps, officials of the regulator do not agree on something, for example, a speedy recession. That is why the yield curve and went into the red zone.

Safe haven assets, as well as the yen, will be supported by the growing risks of the subsequent correction of the S & P 500 and increased volatility. The situation is heightened by rumors about Theresa May's resignation and the possible escalation of trade conflicts. Thus, the USDJPY pair may well move to the level of $ 108.5.

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

Weekly review of the foreign exchange market from 03.25.2019

I don't even know how the speculators will live when this whole saga with Brexit comes to its logical end. It gave them so many unforgettable moments. The past week was no exception, although it is becoming clearer that the denouement is just around the corner. At first, Theresa May said that she would not once again put to the vote her version of the divorce agreement, which had already been rejected twice by the House of Commons. At first, she decided to get a reprieve from Brussels so that Jean-Claude Juncker could fulfill his earlier promise to negotiate trade-related items with all countries of the European Union. After all, earlier the head of the European Commission complained that it was precisely these points that had not yet been approved and would not be in time for Brexit. Here, the British prime minister asks the EU to slightly delay the divorce so that it could finally include unfortunate points in the agreement. But it was not there. Not only did Europe refuse to postpone Brexit until June 30, it reiterated that the version of the agreement proposed to London is not subject to revision. That is, no trade agreements will be made even after Brexit. Moreover, Brussels acted quite unpleasantly, saying that it was ready to postpone the divorce until May 22, but only if the House of Commons adopts the version of the agreement imposed on it, which many MPs rightly consider as bonded. Moreover, a number of politicians from Great Britain argue that the adoption of this agreement threatens the territorial integrity of the United Kingdom. If London refuses to accept the agreement for the third time, then they will be asked to exit the EU no later than April 12. Well, Brussels' statement that that London can still cancel the referendum's results, but this should be done before March 29, that is, they are suggesting that the entire British ruling class commit political suicide. As a result, even Her Majesty's subjects could not stand it and on Sunday a huge rally was held on this matter. Brexit supporters stood side by side, and its opponents. Some demanded a repeated referendum, while others were outraged that there is still no agreement that would suit the UK, and did not pursue the economic interests of some kind of Europe. Well, the pound was thrown from side to side with every breath of political wind.

But the Federal Reserve did not lag behind London in terms of public entertainment. Even before the results of the meeting of the Federal Commission on Open Market Operations were announced, the dollar became cheaper, since many were worried that the US central bank would seriously hint at monetary easing in the near future. These concerns were justified after the European Central Bank actually announced the easing of its own monetary policy. However, the results of the meeting exceeded all expectations and significantly upset investors. First, the Federal Reserve gave a clear explanation that the next refinancing rate hike will happen no earlier than next year. Secondly, since April, the regulator has reduced the amount of monthly repurchase of assets that it has accumulated on its balance sheet since 2008, when it was necessary to urgently save the US banking system. But what is much more important is that as early as September, the Federal Reserve will stop this heinous event and will keep on its balance this magnificent bag without a handle until better times. That is, the Federal Reserve, following the European Central Bank, announced the easing of its monetary policy.

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But it is a worthy bit of distraction from the exciting events and look at the boring statistics, which was not much. Thus, home sales in the secondary market of the United States soared by 11.8%. However, preliminary data on business activity indices somewhat spoiled the mood, as the service sector index fell from 56.0 to 54.8, and production, from 53.0 to 52.5. Well, as a result, the composite index of business activity fell from 55.5 to 54.3. But this is preliminary data. But the data on applications for unemployment benefits obviously pleased, as the number of initial applications decreased by 9 thousand, and repeated ones by 27 thousand. In Europe, data on the construction sector was released, which recently grew by 0.7%, and now it is down by 0.7%, which clearly does not add optimism. Yes, and preliminary data on business indices were not pleasing. The index of business activity in the services sector fell from 52.8 to 52.7, while the manufacturing index fell from 49.3 to 47.6, which makes it all very sad. And, of course, the composite index of business activity fell from 51.9 to 51.3.

Well, in the UK, Brexit was not the only entertaining thing, because the previous week was also the week of macroeconomic data. First, data on the labor market came out, which, although they showed a decrease in the unemployment rate from 4.0% to 3.9%, as well as the stability of the average wage growth rate without taking into account bonuses, still raise a number of concerns. The number of applications for unemployment benefits amounted to 27.0 thousand versus 15.7 thousand in the previous month. But what worries investors the most is the slowdown in the average wage growth rate, excluding bonuses, from 3.5% to 3.4%. And this suggests that employees, whether they are not fine, are not particularly eager to hunch and work overtime. But the sadness about this dispelled data on inflation, which showed its growth from 1.8% to 1.9%. However, this joy was short-lived, since the growth rate of retail sales slowed down from 4.1% to 4.0%, which completely blocked inflation. But the main disappointment was the outcome of the Bank of England meeting. The regulator once again frightened young children with tales of the night about the terrible future of the British economy in the event of a "hard" Brexit, which, as recent events have shown, is becoming more and more real.

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In order to build some plans for a new week, first of all you need to take the US data into account, which has the greatest weight for financial markets. The main news will be the data on GDP for the fourth quarter, and the total, and if the preliminary figures showed a slowdown in economic growth from 3.4% to 2.6%, now everyone is waiting for even more cooling, right up to 2.4%. If these fears are justified, then the next loud statements and steps against Brexit will be the only ones that are able to save the dollar from falling. In addition, the number of applications for unemployment benefits should increase by 4 thousand. Also, the number of building permits issued could decline by 0.6%, but what is much more terrible is the number of construction projects starts, which can fall by as much as 28.3%. This is generally more like a catastrophe. The expected growth in sales of new homes by 1.6% is unlikely to somehow change investor sentiment.

In the EU, there is practically no macroeconomic data. Attention should be paid only to the data on UK GDP, which should confirm the fact of a slowdown in economic growth from 1.6% to 1.3%. So, in consideration of the US data, both the pound and the single European currency should grow. However, there is a Brexit factor, and if the House of Commons again, for the third time, rejects the "divorce" agreement, the United Kingdom will have to leave the European Union on April 12 without a deal. That is, the "hard" option. However, taking into account the content of the text of the agreement, that with a deal, or without it, there is no difference for the UK. So, most likely, the MPs again rejected it. However, we can not exclude another option, because the signing of the agreement gives at least some hope that it will be possible to supplement it through an economic component. Moreover, standing on the edge of the abyss, British politicians can dramatically change their shoes in the air and change their minds. The option of a repeated referendum is not excluded. You should not ignore the possibility of abandoning Brexit. That is, now the games are over. That is until Brexit's months remain, you can grimace and the like. Now everything is either that or that way. There is no time to think. I had to think before. And considering that earlier no one, from those who should, did not think, but pulled the cat by the tail, anything can happen. The acceptance of the divorce agreement is the only thing that can cause an increase in both the pound and the single European currency.

If the House of Commons bends and accepts the agreement, as well as the postponement of the exit date from the European Union, this will be a signal to normalize the situation, and the single European currency will rise to 1.1450. In all other cases, it is worth waiting for its decline to 1,1200.

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The pound has a similar deal, and if the House of Commons accepts the agreement on the third attempt, it will strengthen to 1.3350. Otherwise, we are waiting for a decline to 1.3025.

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

USD investors seem to be waiting for a bumpy road in the next two years -Saxo Bank

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Last week, at some point, it seemed that a widespread strengthening of currencies against the depreciating greenback would be recorded. However, the "greenback" managed to recover most of its losses in several currency pairs.

Meanwhile, according to John Hardy, an analyst from Saxo Bank, it is not necessary to attach great importance to the current reversal, no matter how much one would like to believe in further tactical strengthening of the dollar's position in pairs that unfolded at key levels, for example, the USD/CAD.

"Moreover, we have another example of an unsuccessful USD attempt to take a sustainable direction after the onset of an important event. The first such case this year was the attempt of the EUR/USD pair to rise above the mark of 1.15, when the Fed made the first dovish turn. This was followed by the softening of the ECB's policy, which in turn is unable to induce a sustained break below the level of 1.12," – said the expert.

"However, if we look more broadly (in the medium and long term), why would the dollar strengthen? The Fed has quickly moved to a more "soft" position, and the positive effects of Donald Trump's tax reform for the US economy and the dollar should come to naught this year, " he added.

Last Friday, an alarming signal to the markets was given by the yield curve of US state bonds, which was inverted (turned over) for the first time in 12 years. Recall that the upheaval of the curve occurs when the yield of long-term treasuries is less than short-term. It should be noted that over the past 50 years, this indicator accurately predicted the impending recession in the United States, which occurred on average 311 days after the onset of inversion. At least this was the case in 1990, 2001 and 2008. It is possible that history will repeat itself, especially since the global economy is slowing down, Europe is literally on the verge of recession, and China's GDP is growing at the slowest rate in the past several decades.

Most often, a recession in the United States is followed by a global economic crisis.

On the one hand, in this case the Fed has at least some room to maneuver, unlike the ECB or the Bank of Japan, which still use all possible incentives.

On the other hand, according to J. Hardy, the United States is a country of deficit that requires constant funding, and when the US central bank has more space to lower interest rates and reduce the policy of quantitative tightening, the potential for weakening the dollar increases.

According to the Ministry of Finance, the US state budget deficit increased by 8.7% to $233.977 billion in February 2019. This is a record monthly indicator of a negative balance over the entire period of settlement. The previous high was recorded in February 2012 ($231.7 billion).

"It is assumed that a stable weak dollar will be in demand when we go through a difficult period, which the US as well as the world economies may have to go through. In the next two years, investors in the USD are most likely waiting for a jolly road with many holes, "J. Hardy noted.

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

GBP/USD. March 25. Results of the day. The EU has completed preparations for a "hard" Brexit. April 12 is the new X date

4-hour timeframe

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The amplitude of the last 5 days (high-low): 116p - 70p - 126p - 223p - 143p.

Average amplitude for the last 5 days: 135p (126p).

The British pound sterling continues to waver from side to side. Traders receive a sufficient amount of macroeconomic information. Today, March 25, it became known that Theresa May promised to resign if the British parliament voted for her Brexit agreement. It is unlikely for Parliament to take such a step. Theresa May is offering an unequal exchange, the main purpose of which is to save her current political career, and for this to happen she needs to push her version of the deal through Parliament by any means. What will happen to the country in the future will no longer be decided by it. Parliament cannot fail to understand this. The information that a third vote will be held tomorrow on the same version of the agreement has not been confirmed. In the meantime, the European Union announced that it had completed preparations for an unorganized Brexit, which should take place on April 12, unless the British Parliament finally accepts the proposed "deal" ahead of this deadline. Thus, once again, Brexit's entire process turns into the finish line. This time, it seems, there will not be any postponements for Britain's release date. So, either the UK will leave the EU on April 12 without a "deal", or on May 23 - with a "deal", or will refuse Brexit altogether. In any case, the first important date is April 12. We can only observe what is happening. In the coming weeks, the pound sterling can often and sharply change direction, reacting to any information concerning the most burning issue for the UK in the last three years.

Trading recommendations:

The GBP/USD currency pair is currently in an upward movement in the presence of a newly-formed weak golden cross. However, MACD may already turn down on the current bar. A bad time to open new positions.

It is recommended to return to sell orders with a target of 1.3045 no earlier than when the price consolidates below the Kijun-Sen line. From a fundamental point of view, this option is still preferable.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-sen-red line.

Kijun-sen – blue line.

Senkou span a – light brown dotted line.

Senkou span B – light purple dotted line.

Chikou span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD:

A red line and a histogram with white bars in the indicator window.

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

EUR/USD. March 25. Results of the day. Trade negotiations between China and the United States could stretch out like Brexit

4-hour timeframe

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The amplitude of the last 5 days (high-low): 40p - 28p - 112p - 95p - 118p.

Average amplitude for the last 5 days: 79p (64p).

On the first trading day of the new working week, the EUR/USD currency pair started an upward correction, as we expected in the morning. The correction was suggested after a landslide. The corrective movement's goal is the critical Kijun-sen line. Today's volatility, has certainly decreased, since the macroeconomic event calendar does not contain any important news. Most traders are still closely monitoring the situation around Brexit and the political crisis in the UK, and the EUR/USD pair could start to lose attention. In the meantime, negotiations between the United States and China are continuing on a number of conditions that in the future will merge into a trade agreement that can put an end to all differences between the two countries. However, if a week ago it seemed that the parties would come to an understanding without any problems, and Donald Trump had even managed to shift his attention to the European Union, which, in his opinion, also "unfairly treats the United States", now we can say that the negotiations are progressing slowly. There were new points of misunderstanding between the two parties, in the field of electronic commerce in particular, which is very important for the American side. Washington wants to weaken the legislation of China, which involves the storage of information only in China, thus, "discriminating" American cloud companies that are seeking the Chinese market.

Trading recommendations:

The EUR/USD pair has started to adjust against the "dead cross". Thus, it is now recommended to wait for the completion of the correction, and then resume trading for a fall with the first target level of 1,1239.

Buy positions are recommended to be considered if the pair manages to consolidate above the critical line, with a target at the level of 1.1398.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-sen-red line.

Kijun-sen – blue line.

Senkou span a – light brown dotted line.

Senkou span B – light purple dotted line.

Chikou span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD:

A red line and a histogram with white bars in the indicator window.

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

Teresa May's proposal will eventually be adopted by Parliament

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Traders are overly optimistic about the prospects for a positive resolution of the current chaos - Brexit, which causes concern among experts. Apparently, the market is waiting for Prime Minister Theresa May and the British lawmakers to accept the draft deal or look for ways to postpone Brexit for a longer period.

Based on the EU ultimatum, the postponement of Brexit for a period later than May 22 will entail London's participation in the European Parliament elections, which will start on May 23. Such a scenario can be devastating for Brexit. It is possible that the market is expecting this result, keeping the pound stable. Meanwhile, a further delay in the deadline will likely be the cause of the sterling's strongest rally.

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The new week is more than ever full of uncertainty and is close to clarifying the situation on Brexit. What would Theresa May do? There are two ways: if the speaker allows, she will again offer an unpopular proposal to the Parliament or abandon her idea. The second option is possible if the prime minister suspects that she is doomed to a third defeat.

Of course, May could just resign, but in the current circumstances it is difficult to imagine how her Conservative party will choose a new leader. At the moment, the main issues for coordination are the Irish "backstop" and the European elections. Voting in the European Parliament can be avoided which is subject to a "hard" Brexit on April 12 or a May 22 exit in accordance with the terms of the transaction. In this situation, relations between Britain and the EU will remain almost the same as it is now.

In addition, this means taking for granted the assurances of European officials that the Irish backstop would not bind Britain to the customs union forever. Although it is quite difficult to understand what the final compromise will be. However, despite all the flaws, the deal should be attractive to Brexit supporters in the Conservative Party and their allies from the Democratic Unionist Party of Northern Ireland. A messy Brexit does not support the Irish "backstop".

London Protests

Last weekend, a rally of supporters of the referendum was held in London. The number of demonstrators reached a million. However, in 2016, almost 1.3 million people voted for Brexit. In addition, the votes were divided 60/40 in the British capital, so it is not clear as to what extent a mass protest reflects the will of the people.

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It is possible that the truth is on the side of currency traders, and, despite the storm, the UK will agree to a deal or get an extension, which will lead to a softening of the conditions or even towards rejecting Brexit.

Observers, by the way, reduced the chances of a "hard" scenario to 25%. But in 2016 there was a misfire, and the version regarding the referendum's outcome was not justified.

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

EUR/USD: dollar flat, euro follows Brexit

The euro-dollar pair is showing corrective growth today. Today, although the macroeconomic calendar is nearly empty, the day is filled with events – primarily related to the prospects of Brexit. The single currency follows the pound, which in turn has hopes for a third vote on the draft deal.

In addition, the only more or less important economic release for today was in favor of the euro. For the first time in the last six months, the IFO business optimism index showed positive dynamics. And although the growth was minimal, traders were still impressed: after the devastating figures from ZEW last week, today's publication has become a kind of "spoonful of honey in a barrel of tar."

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However, this fundamental factor did not become a catalyst for the EUR/USD's steady growth. First of all, this index is of secondary importance (and key indicators continue to decline), and secondly, its slight increase is unable to change the overall situation. After a surge in shoppers' activity, the pair froze in anticipation of the news drivers. One such driver could be Theresa May's speech, which is expected tonight. In the course of her speech, she can report her actions and intentions, since the market is currently disoriented by conflicting rumors.

Just a few hours ago, according to the press, the third vote for the deal would take place tomorrow, and allegedly, there is an agreement between the Conservatives and the Unionists. Against this background, the pound rose in price across the entire market, pulling the euro-dollar pair with it. But an hour later, on other sources, a refutation of this information appeared: moreover, the DPA representatives allegedly refused to support the deal, destroying the entire negotiating structure. After that, expectations began to grow that Theresa May would announce that she would resign - but only in exchange for approval of an agreement.

This scenario has been mentioned for a long time, but now is the moment when May can play her final (but the strongest) trump card. In this case, she can attract some Laborites to her side, although it is impossible to talk about this with any certainty. In any case, today's events in London can be the driving force not only for currency pairs involving the pound, but also for the euro-dollar pair. Against the background of a flat greenback, which is under the weight of its own problems, today's dynamics of the pair will depend on the single currency's behavior, which, in turn, focuses on Brexit due to the nearly empty economic calendar.

But the dollar bulls could not maintain last week's pace. The growth of anti-risk sentiment made it possible for the US currency to catch up on lost positions, but the momentum started to fade on Friday, and today it has completely disappeared. The dollar index is near the boundary of 96-96 figures, flat and showing detachment. The fact that major Wall Street indices opened in the red today amid continued flight from risk did not help the dollar.

Negotiations between the US and China are going on quite hard - this, in particular, is evidenced by the information vacuum around this issue. Traders are forced to "be content" only with rumors, which, however, also do not make investors happy. So, according to the American press, Beijing did not make concessions to Washington in the field of e-commerce, whereas this topic is among the top priorities for the White House. Another deadlock in the negotiation process worries traders, but the dollar ignores the growth of anti-risk sentiment. Apparently, the greenback is impressed by the strengthening of the "dovish wing" of the Federal Reserve. The news that Trump nominated his longtime associate and the famous "dove" Stephen Moore to the Board of Governors has unpleasantly surprised dollar bulls, who had just moved away from an extremely soft meeting of the regulator in March.

Today, it became known that a record monthly budget deficit was recorded in February: expenses went up, while revenues from the collection of corporate income taxes fell by 20%. As a result, the US budget deficit amounted to $234 billion last month, compared with $215 billion a year earlier. This is an absolute record (to be more precise - an anti-record).

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Another factor that also complements the grim fundamental picture for the dollar is the decline in the Dallas Fed Manufacturing Index. The indicator fell to 8.3 points, contrary to forecasts of growth to 9 points. The index has been falling for the second month in a row. Despite the secondary importance of this indicator, the dollar still reacted to its decline.

Thus, the US currency currently has no power and arguments to dominate in dollar pairs. The single currency, in turn, focuses on the Brexit theme. That is why the upward dynamics of EUR/USD is largely dependent on political events in London. If the British are one step closer to the deal's approval, the pair will grow at least to the Tenkan-sen line on the daily chart (1.1360 mark) and further towards 1.1400 (the upper limit of the Kumo cloud on the same timeframe). Otherwise, the price will return to the area of the middle of the 12th figure.

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

March 25, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

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On January 10th, the market initiated the depicted bearish channel around 1.1570.

The bearish channel's upper limit managed to push price towards 1.1290 then 1.1235 before the EUR/USD pair could come again to meet the channel's upper limit around 1.1420.

Shortly after, the recent bearish movement was demonstrated towards 1.1175 (channel's lower limit) where significant bullish recovery was demonstrated on March 7th.

Bullish persistence above 1.1270 enhanced further bullish advancement towards 1.1290-1.1315 (the Highlighted-Zone) which failed to provide adequate bearish pressure.

Last week, a bullish breakout attempt was executed above 1.1327 (the upper limit of the current demand zone). This enhanced further bullish movement towards 1.1450 demonstrating a false bullish breakout above the upper limit of the depicted movement channel.

On the other hand, On Thursday, significant bearish pressure was demonstrated around 1.1380 leading to the current bearish decline towards 1.1290.

The short term outlook for EURUSD pair remains bearish.

Quick bearish breakout below 1.1280 is mandatory to pursue towards the next bearish target around 1.1235 and 1.1180.

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

Bitcoin analysis for March 25, 2019

BTC has been trading downwards. The price tested the level of $3.935. More downside is expected.

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According to the H4 time – frame, there is the bearish divergence in the progress, which is sign that buying looks risky. Support levels are seen at the price of $3.882 and at the price of $3.861. Key resistance is set at the price of $4.048. The BTC is still in the long -term downward trend.

Trading recommendation: We are bearish on the BTC from $3.944 and targets are set at the price of $3.882 and at the price of $3.861. Protective stop is placed at $4.049.

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

Analysis of Gold for March 25, 2019

Gold has been trading upwards. The price tested the level of $1.322.36. We found strong bullish momentum.

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According to the H4 time – frame, there is the completed downward correction (expanded flat) in the background and the key support remains at the price of $1.280.00. Price is respecting the upward trendline and the Gold is heading towards the resistance at $1.345.75.

Trading recommendation: We are long on Gold from $1.320.00 and with target at $1.345.75. Protective stop is placed at $1.290.00.

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

March 25, 2019 : GBP/USD demonstrating a Bullish Flag Pattern for Intraday traders.

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On January 2nd, the market initiated the depicted uptrend line around 1.2380.

This uptrend line managed to push price towards 1.3200 before the GBP/USD pair came to meet the uptrend again around 1.2775 on February 14.

Another bullish wave was demonstrated towards 1.3350 before the bearish pullback brought the pair towards the uptrend again on March 11.

A weekly bearish gap pushed the pair slightly below the trend line (almost reaching 1.2960) before the bullish breakout above short-term bearish channel was achieved on March 11.

Bullish persistence above 1.3060 allowed the GBPUSD pair to pursue the bullish momentum towards 1.3130, 1.3200 then 1.3360 where the recent bearish pullback was initiated.

Bullish persistence above 1.3250 ( 50% Fibonacci expansion level ) was needed for confirmation of a bullish Flag pattern. However, significant bearish pressure was demonstrated below 1.3250.

Hence, the short term outlook turned to become bearish towards 1.3120 - 1.3100 where the depicted uptrend line failed to provide any immediate bullish support.

Bearish breakout below 1.3100 (23.6% Fibonacci level) allowed quick bearish decline towards 1.3000 where the current bullish momentum that brought the pair back above 1.3200 was initiated (False bearish breakout).

Today, The price level around 1.3250 ( 50% Fibonacci expansion level) stands as an Intraday resistance/supply level that needs to be broken to the upside for confirmation of the depicted flag pattern.

On the other hand, bearish rejection around 1.3250 may initiate bearish decline towards 1.3180 then 1.3100 thus remainin within the current consoliation range.

Trade Recommendations:

Intraday traders should wait for a bullish breakout above (1.3250) on H1 chart. Bullish projection target levels to be located around 1.3320 then 1.3420.

SL to be placed above 1.3180.

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

Citigroup: What are the prospects for oil in 2019?

Today, Citigroup investment bank analysts have released updated forecasts regarding the prospects for oil prices in the current year.

From the updated material, it follows that on average this year the barrel of oil of the Brent reference grade will be valued at $70. According to the results of the second quarter, Brent is expected to cost $69 per barrel, which is $9 more than the previous assumption.

Based on the forecast, the barrel will cost $74 in the third quarter and above the previous expectation by 11 dollars.

In Q4, the price is expected to decline to $72 and the forecast is $5 above the previous estimate.

According to the results of Q1 2020, Brent will be valued at $ 65 per barrel.

Explaining the upward revision of the forecast, the experts identified among the reasons for the further decline in oil supply from Iran, Nigeria, Algeria, and Venezuela, as well as the continuing reduction in stocks of raw materials in consuming countries. In Venezuela, where recently a large-scale blackout paralyzed the country's economy, the risks of a repeated power outage remain. In addition, the United States can tighten sanctions on oil exports from Iran.

As a result, the cost of futures for May on Brent crude oil sank by 0.18%, amounting to 68.92 dollars per barrel at around 10:25 London time.

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EUR: Reports on German business community improved sentiment

The euro managed to strengthen its position in tandem with the US dollar after positive data on business sentiment in Germany, which began to gradually improve in March of this year after more than six months of deterioration.

According to the Ifo research institute, the German business sentiment index in March 2019 was 99.6 points against the February figure of 98.7 points. The data significantly exceeded the forecast of economists, who expected the index to be 98.3 points.

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The index was well supported by investors' expectations, while the business climate index for the manufacturing sector continued to decline. Ifo noted that the prospects for the production sphere in March were estimated to be more pessimistic.

Considering that the release of more important fundamental statistics is no longer provided today, traders are closely watching the speeches of representatives of the Federal Reserve System.

Charles Evans said that the Fed's interest rates may rise, fall or remain unchanged today. Hence, caution on the part of the Fed seems justified and the policy now comes down to risk management.

The head of the Federal Reserve Bank of Chicago also noted that the Fed's policy will depend on the data, as downside risks are now felt more than positive. Evans predicts GDP growth of 1.75% -2% in 2019 due to the fact that fundamental US macroeconomic indicators remain good.

An interview with Federal Reserve Bank of Philadelphia Patrick Harker also took place today, who said that the outlook for the US economy is still quite good, but the balance of risks is a bit biased in a negative way.

Harker predicts one rate hike in 2019 and another one in 2020. Let me remind you that in the last meeting of the committee, they said that they did not plan to raise interest rates this year. The representative of the Fed predicts that US GDP growth will slightly exceed 2% in 2019 and slow down in 2020.

As for the technical picture of the EUR/USD pair, it remained unchanged. The trading instrument keeps the intermediate level of 1.1295 from further falling, a breakthrough of which will increase the pressure on risky assets. At the same time, it will lead to the updating of last week's lows in the areas of 1.1270 and 1.1225. With an upward correction, the growth of the euro was already limited by the level of 1.1330. However, a repeated test may lead to a larger upward movement in the area of resistance 1.1355.

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Yen returns to the game

In the background of trade wars and the slowdown of the global economy, there is an increased risk of the American recession in the market. It concerns the development of a correction in global stock indices and rumors about the resignation of Theresa May from the post of British Prime Minister, which heightened the demand for safe-haven assets. Currencies such as the Japanese yen, gold, and the Swiss franc feel like a fish in the water amid a sharp rise in volatility and a deterioration in the global risk appetite. But just a week ago, the positions of these assets seemed very fragile.

Dynamics of volatility

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In 2019, the currency of the Land of the Rising Sun has already managed both to amuse and upset its fans. The flash accident allowed her to execute annual targets within a few minutes, but the following implementation of the bearish forecasts for the USD/JPY pair had to be postponed. The de-escalation of the US-Chinese trade conflict, as well as the change in the Fed's worldview, allowed the "bulls" on the analyzed pair to return its quotes to maximum levels from December 20. Meanwhile, stock indices were rapidly recovering, the cost of borrowing was falling, and interest in developing countries' monetary units and carry trade operations grew by leaps and bounds. Under such conditions, funding currencies fall into disgrace and the yen is no exception.

By the end of March, investors began to suspect that both the Fed and Donald Trump are going too far. The US president claims that the duties on $250 billion Chinese imports will remain in force after the conclusion of an agreement with China but Beijing is making concessions in order to cancel them. The inconsistency of interests can be a serious obstacle to the contract signing. At the same time, the yen is likely to benefit more from the escalation of the conflict than in 2018. Last year, all the cream went to the US dollar as the strength of the US economy allowed investors to direct capital to the New World. In 2019, the US is slowing down and the inversion of the yield curve signals growing recession risks. As a result, just as the dollar took the status of a safe-haven from the yen and gold last year, they can return it in the present.

The rhetoric of the Fed is becoming more and more "dovish". If the Central Bank is confident of a further slowdown in GDP and is doing everything possible to avoid a recession then the option of lowering the federal funds rate should not be off the table. The derivatives market estimates the chances of such an outcome in 2019 to be more than 50%, which is a strong argument in favor of completing the cycle of normalizing monetary policy and sales of the US dollar.

Considering the next stage of trade negotiations between Washington and Beijing, the economic calendar saturated for the United States (including the release of fourth-quarter GDP data and the exacerbation of the political crisis in Britain), these allow the yen to claim the title as the most interesting currency in the last week of March.

Technically, the transformation of the Shark pattern is continuing at 5-0 on the daily chart of the USD/JPY pair. A break of support at 109.65 (50% of the CD wave) will increase the risks of continuing the pair's downward rally.

USD / JPY daily graph

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GBP / USD plan for the American session on March 25. Pound remains in the side channel before an important vote in the British

To open long positions on the GBP / USD pair, you need:

As long as there are no specifics from Theresa May on the voting, the pound remains in a narrow side channel. You can return to purchases only after fixing above the resistance of 1.3222, which will lead to an upward correction in the area of 1.3266 and 1.3316, where I recommend taking profits. In the case of a re-decline on the news on Brexit, long positions are best to consider on the rebound from the lows of 1.3136 and 1.3083.

To open short positions on the GBP / USD pair, you need:

Bears coped with the task in the first half of the day and did not let the pair to reach above the resistance of 1.3222. As long as trading is conducted below this range, the pressure on the pound will remain, which may lead to a decrease in the support area of 1.3136 and 1.3083, where I recommend taking profits. In the event of a breakthrough of resistance 1.3222 on the positive news on Brexit, short positions in the pound are best to consider at the resistance levels of 1.3266 and 1.3316.

More in the video forecast for March 25

Indicator signals:

Moving averages

Trade is conducted in the area of 30- and 50-medium moving, which indicates the lateral nature of the market.

Bollinger bands

The upward correction for the pound is limited by the upper limit of the Bollinger Bands indicator in the 1.3222 area.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

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EUR / USD plan for the US session on March 25. Data from the IFO supported the euro

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

The euro has slightly strengthened its position against the US dollar in the morning after a good report from the IFO Institute, which published data on the German economy. At the moment, buyers need to break through the resistance level of 1.1324, where a test was observed during the first half of the day, which will lead to a further upward correction to the area of 1.1358 maximum, where I recommend taking profits. In the scenario of a return to the low of the day to support 1.1294, it is best to consider long positions in the EUR/USD pair on the area of 1.1269 or on the rebound from the support of 1.1247.

To open short positions on EURUSD you need:

Sellers coped with the task in the morning and did not allow the pair to rise above the resistance of 1.1324. While the trade is conducted below this range, the pressure on the euro will remain. However, the main goal will be to break through and consolidate below support 1.1294, which will lead to the formation of a new downward wave and update weekly lows in areas 1.1269 and 1.1247, where I recommend taking profits. If the growth scenario is higher than 1.1324 in the second half of the day, short positions in EUR / USD pair can only be considered on a rebound from the resistance of 1.1358 and 1.1388.

More in the video forecast for March 25

Indicator signals:

Moving averages

Trade is conducted in the area of 30- and 50-medium moving, which indicates the lateral nature of the market with the advantage of sellers.

Bollinger bands

In the event of a further decline in the euro, support will be provided by the lower limit of the Bollinger Bands indicator in the 1.1290 area. A breakthrough on the upper boundary of the indicator in the area of 1.1320 will lead to a new wave of growth of the euro.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

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GBP/USD analysis for March 25, 2019

GBP/USD has been trading upwards. The price tested the level of 1.3244. We found strong bullish momentum.

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According to the H1 time – frame, we found confirmed breakout of the inverted head and shoulders pattern, which is sign that GBP/USD may continue with the upward movement. Most recently, there is also breakout of the bullish flag pattern, which is another sign of the strength. Key resistance at the price of 1.3227 is broken so GBP may test the strong resistance at 1.3377. Support levels are seen at the price of 1.3160, 1.3080 and 1.3009.

Trading recommendation: We are long on GBP from 1.3230 and with target at 1.3377. Protective stop is placed at 1.3150.

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Trading recommendations for the GBP / USD pair - placement of trading orders (March 25)

By the end of the last trading week, the GBP/USD currency pair showed high volatility of 140 points, which resulted to a rollback to the previously passed cluster. From the technical analysis point of view, we see a rollback correction in the direction of the accumulation zone at 1.3220, where the quote slowed down the movement and tried to work out this level in the background of continuous rage on Brexit's controversy. This time we have a large-scale demonstration in London itself, where an estimated 1 million people on streets demanding for a second referendum. What we have are options that the Parliament of Great Britain must make a decision until March 29: agree on an agreement, exit without a deal, cancel the Brexit or hold a new referendum. Any option gives speculators the opportunity to see the races on the market, where you can ride.

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Today, there is silence on the economic calendar but the information on the background will continue to hold the interest of speculators.

Further development:

In analyzing the current trading chart, we see an attempt to work out the accumulation of 1.3220 giving out short positions. It is likely to assume that the pound may be under pressure, continuing to decline in the medium term against the background of thickening clouds due to Brexit. The pound may be under pressure and continue its decline in the medium-term. Considering the current oscillation, I do not exclude a temporary bump in the range of 1.3170 / 1.3220 and we can consider a decline to 1.3313-1.30.30 in the case of a clear price fixation below 1.3170.

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Based on the available data, it is possible to deduce a number of variations, let's consider them:

- Positions for the purchase of traders consider above fixing the price of 1.3220, with the target of 1.3300.

- Positions for sale traders consider after fixing the price lower than 1.3170.

Indicator Analysis

Analyzing a different timeframe (TF) sector, we can see that there is a downward interest in the short and intraday perspective. Due to uncertainty, the medium-term outlook has changed interest to neutral.

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Weekly volatility / Measurement of volatility: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation with the calculation for the Month / Quarter / Year.

(March 25 report was based on the time of publication of the article)

At the current time, the volatility is 59 points. It is likely that the volatility may remain at a high level in the event that an ambiguous information background is preserved.

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Key levels

Zones of resistance: 1.3220 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700

Support areas: 1.3000 ** (1.3000 / 1.3050); 1.2920 *; 1.2770 (1.2720 / 1.2770) **; 1.2620; 1.2500 *; 1.2350 **.

* Periodic level

** Range Level

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GBP / USD: Theresa May's resignation talks are getting louder but doesn't clarify Brexit

Last week, the European Union gave Britain a couple more weeks so that the country could avoid withdrawing from the alliance without entering into any agreement.

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But will London have enough time to break the deadlock and provide a "soft" Brexit?

Today, the GBP/USD pair is trading near the 1.32 mark in anticipation of the next Brexit vote to be held in the British Parliament in the coming days.

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Recall that the EU leaders rejected London's request to postpone the United Kingdom's withdrawal from the bloc to June 30, declaring its readiness to provide a reprieve until May 22 but in a condition that the divorce agreement will be approved by deputies of the House of Commons this week. However, if the deal fails, an emergency EU summit will be convened, where Britain will have to state their further actions, which means that the country will either leave the EU without a deal or a longer Brexit delay will be required.

In turn, Theresa May noted that she would not become the prime minister in which the UK's withdrawal from the EU would be postponed for a long time, which suggests the possible resignation of the head of the cabinet in the absence of ratification of the deal until April 12.

According to British media, May's resignation is only a matter of time and the options now range from immediately replacing her with some of the ministers to leaving her post after a couple of months.

Of course, the United Kingdom may still withdraw its application for withdrawal from the alliance. Thus, the online petition to cancel Brexit has already gained more than 5 million signatures but it still has a much smaller weight than the 18 million votes cast three years ago for the country to leave the EU.

Thus, the upcoming week promises to be tense for the British currency.

The downside risks for the pound are the implementation of the "hard" scenario and the holding of early parliamentary elections.

However, if parliament takes control of Brexit from the government and the majority of the House of Commons deputies advocate for a repeat referendum, this will lead to an increase in the pound.

According to analysts, one of the original decisions is for the legislators to adopt the draft divorce agreement, provided that it is approved by the citizens of the country in a new referendum and three questions are to be raised concerning the vote, either to accept the deal, remain in the EU or leave without deal.

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When supply balances between OPEC production cuts and growth in the United States, oil prices are determined by the dynamics of global demand. In this regard, the fall of Brent and WTI quotes against the background of the collapse of European business activity in the manufacturing sector to the lowest marks in the last 6 years and its American counterpart to the very bottom for 21 months looks logical. Purchasing managers' indices are leading indicators for GDP and its slowdown indicates a further slowdown in the global economy and global demand for black gold.

One of the main drivers of almost 30% of the Brent and WTI rally from the December lows was the de-escalation of the US-Chinese trade conflict. Trade negotiations evolved quite successfully. Donald Trump occasionally talked about progress but as they approached the finish line, investors began to doubt the end of the trade war. First, Beijing is unhappy with the preservation of $250 billion in tariffs on its exports to the States and the US president is not going to cancel them. Secondly, the arena of hostilities may shift from Asia to Europe. Both OPEC (the International Energy Agency) and the United States Energy Information Administration take these risks into account and lower oil demand forecasts.

Dynamics of oil demand forecasts

Adds a negative with the first 2007 drop in the yield curve in the red zone. The differential rates on the 10 and 3-year US Treasury bonds quite clearly predicted recessions in the past. With a time lag of 12-18 months, the American economy may face a recession, which negatively affects domestic demand for black gold and contributes to lower prices. Moreover, interest in safe-haven assets, including the US dollar, has returned in such conditions. Since oil is quoted in this currency, the growth of the USD index contributes to the fall of Brent and WTI quotes.

As for the proposal, the market continues to pull the rope between US companies and OPEC. The growth of oil production to 12 million b/s in the US leads to an increase in reserves and exports. On the other hand, the fall of rigs from Baker Hughes to minimum levels over the past 11 months indicates that another round of shale boom is coming to an end. On the opposite side of the rope is the cartel and other producing countries, including Russia. Saudi Arabia's activity is a serious bullish trump for Brent and WTI as it regularly exceeds production cutbacks. Nevertheless, the fact that Russia is satisfied with the current price level and does not want to roll over the contract creates a certain ceiling for black gold. When there is no agreement in the partners, buyers begin to record profits.

Technically, the rebound from the level of 50% of the CD wave pattern "Shark" was predicted for a long time. It occurred within the framework of the transformation of the model in 5-0. If the bears manage to lower the Brent quotes below the supports by $ 64.1 and $ 58.7 per barrel, the risks of the downtrend recovery will increase.

Brent daily chart

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Technical analysis of AUD/USD for March 25, 2019

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Overview: The AUD/USD pair is set above strong support at the level of 0.7046 which coincides with the 23.6% Fibonacci retracement level and 0.7168. This support has been rejected four times confirming the uptrend. Hence, the major support is seen at the level of 0.7046, because the trend is still showing strength above it. Accordingly, the pair is still in the uptrend in the area of 0.7046 and 0.7168. The AUD/USD pair is trading in the bullish trend from the last support line of 0.7112 towards the first resistance level of 0.7168 in order to test it. This is confirmed by the RSI indicator signaling that we are still in the bullish trending market. Now, the pair is likely to begin an ascending movement to the point of 0.7168 and further to the level of 0.7290. The level of 0.7389 will act as the major resistance and the double top is already set at the point of 0.7389. At the same time, if there is a breakout at the support levels of 0.7112 and 0.7046, this scenario may be invalidated. Overall, however, we still prefer the bullish scenario.The material has been provided by InstaForex Company - www.instaforex.com

Analysis of EUR / USD Divergence on March 25. Euro ceded leadership to US dollar

4h

On the 4-hour chart, the EUR / USD pair declined to23.6% correctional level of 1.1269. Releasing the pair's rate on March 25 from this Fibo level will allow traders to expect a reversal in favor of the EU currency and some growth in the direction of the 38.2% correction level at 1.1328. There is no maturing divergence in any indicator. Closing the pair below the Fibo level of 23.6% will increase the chances of a further fall in the direction of the next 0.0% correction level of 1.1177.

The Fib net was formed on boundaries from January 10, 2019 and March 7, 2019.

Daily

On the 24-hour chart, the pair quotes returned to the correction level of 127.2% - 1.1285. The price quotation from the Fibo level of 127.2% will allow traders to expect a reversal in favor of the European currency and the resumption of growth in the direction of the 100.0% correctional level at 1.1553. Closing the pair below the Fibo level of 127.2% will again work in favor of the US currency and some fall in the direction of the 61.8% correction level at 1.0941. In the last 5 months, the pair is trading between the levels of 100.0% and 127.2%.

The Fib net was formed on boundaries from November 7, 2017 and February 16, 2018.

Recommendations to traders:

Purchases of the EUR/USD pair can be made with the goal of 1.1328 and a Stop Loss order under the correction level of 23.6% if the pair rebounds from the level of 1.1269.

Sales of the EUR/USD pair can be carried out with the target of 1.1177 and a Stop Loss order above the Fibo level of 23.6% if the pair closes below the level of 1.1269.

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Technical analysis of GBP/USD for March 25, 2019

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Overview: The GBP/USD has broken resistance at 1.3221 which acts as support this morning. The pair is moving between the levels of 1.3221 and 1.3382. As the trend is still above the 100 EMA, a bullish outlook remains the same as long as the 100 EMA is headed to the upside. Consequently, the level of 1.3221 remains a key resistance zone. Therefore, there is a possibility that the GBP/USD pair will move upwards above 1.3221, which coincides with a ratio 61.8% of Fibonacci retracement. The falling structure does not look corrective. In order to indicate a bearish opportunity above 1.3221, buy above this level with the first target at 1.3382. Moreover, if the pair succeeds to pass through 1.3382, it will move upwards continuing the bullish trend development to 1.3487 in order to test the daily resistance 2. However, if a breakout happens at 1.3123, this scenario may be invalidated.The material has been provided by InstaForex Company - www.instaforex.com

Wave analysis of GBP / USD for March 25. The pound remains in instability due to the lack of specifics on Brexit

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Wave counting analysis:

On March 22, the GBP / USD pair rose by 90 bps. Thus, if the upward trend is completed near the 100.0% Fibonacci level, then the pair has started to build a downward section and has already completed the construction of internal waves 1 and 2. If this is true, then the tool will continue to decline as part of wave 3 with targets located under the 29th figure. Unfortunately, the news background remains unstable. There is still no final decision on Brexit. What awaits the country is a clear indication on whether or not the government will change in the near future. It is still unknown. Whether there will be new negotiations with the European Union is doubtful. Therefore, the pound will remain in the potential "zone of turbulence" until the end of this process.

Purchase goals:

1.3350 - 100.0% Fibonacci

1.3454 - 127.2% Fibonacci

Sales targets:

1.2961 - 0.0% Fibonacci

General conclusions and trading recommendations:

The wave pattern allows for the construction of an upward wave with targets located near the estimated level of 1.3454; however, I recommend returning to this option only in case of a successful attempt to break through the level of 100.0%. A more likely development of events is now the construction of a downward wave with targets below 29 figures, thus, I recommend sales in small volumes.

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Wave analysis of EUR / USD for March 25. Euro is ready to build a new rising wave

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Wave counting analysis:

On Friday, March 22, bidding ended for the pair EUR / USD by 70 bp decrease. Thus, the estimated wave b in the composition of the new upward trend can already be completed. The tool made an unsuccessful attempt to break through the 61.8% Fibonacci level, which indirectly indicates the pair's readiness to build a new upward wave. The news background for the pair is now with a slight margin in favor of the euro. Still, the Fed last week announced that it was not going to raise the key rate in 2019. And this indirectly indicates a decline in economic growth and the threat of recession.

Sales targets:

1.1280 - 61.8% Fibonacci (small grid)

1.1240 - 76.4% Fibonacci (small grid)

Purchase goals:

1.1448 - 0.0% Fibonacci

General conclusions and trading recommendations:

The pair supposedly completed the construction of wave b. Now, I recommend re-buying the pair, initially in small volumes, and as the instrument's transition to the building of the rising wave is confirmed, increase the volumes with targets located near the estimated 1.1448 mark, which equals to 0.0% Fibonacci.

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EUR: Weak eurozone data indicates recession is likely

Rather weak data on activity in the manufacturing and service sectors in Germany, as well as in the eurozone, led to a sharp fall in the euro last Friday. All this once again confirms the fact that the eurozone economy is in a rather weak state, balancing on the verge of recession.

According to the report of IHS Markit, activity in the manufacturing sector in Germany continued to decline in March of this year. Despite preliminary data, traders reacted very quickly. Thus, the PMI for purchasing managers in Germany in March fell to 44.7 points from 47.6 points in February. Germany's composite PMI remained above 50, at the level of 51.5 points. An index value below 50 points indicates a reduction in activity. In IHS Markit noted that the decline in the manufacturing sector in Germany is associated with a decrease in new orders and problems with exports.

France's preliminary composite PMI returned below 50 points and dropped to 48.7 points in March from 50.4 points in February. This happened for the same reason as in Germany, due to the reduction of new orders due to falling external demand.

All of this has affected the weakness of the eurozone economy and the general indicator for the eurozone, where the decline in the purchasing managers index indicates a further slowdown in activity.

According to IHS Markit, the composite PMI PMI for the eurozone in March 2019 dropped to 51.3 points from 51.9 points in February. Economists had expected a decline to 51.8 points.

Data was released in the second half of the day on the American economy. In general, it did not affect the situation in the market.

According to a report by the US Department of Commerce, inventories in the wholesale trade in January 2019 increased by 1.2% to $ 669.87 billion. Economists had expected stocks to fall by 0.2% in January. The ratio stocks / sales in January was 1.34.

Indicators of activity in the manufacturing sector and the US service sector declined in March. The decrease in the overall figure occurred against the background of a slowdown in production growth. According to IHS Markit, the preliminary PMI Purchasing Managers Index for the US manufacturing sector in March 2019 dropped to 52.5 points from 53 points in February. The PMI for the service sector fell to 54.8 points against the February value of 56 points. Index values above 50 indicate an increase in activity.

Housing sales on the secondary market in the US rose in February. According to the National Association of Realtors, sales increased by 11.1% due to lower interest rates, accelerated earnings growth.

As for the technical picture of the EURUSD pair, the trading tool keeps the intermediate level of 1.1295 from further falling. A breakthrough of which will increase the pressure on risky assets and lead to the updating of last week's lows in the 1.1270 and 1.1225 areas. With an upward correction in the first half of the day, the euro may be limited to the level of 1.1330, however, larger resistance is seen in the area of 1.1355.

The Canadian dollar fell against the US dollar on Friday after a weak report, which indicated that retail sales in Canada declined in January 2109.

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According to the data, retail sales fell by 0.3% compared with the previous month and amounted to 50.09 billion Canadian dollars. Economists had expected sales to rise by 0.4%. Compared with the same period of the previous year, sales in January increased by 1.1%.

Inflation in Canada rose in February due to food prices. As indicated in the report of the National Bureau of Statistics of Canada, Canada's CPI in February showed an annual growth of 1.5%, with a target level of about 2.0%.

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Analysis of GBP / USD Divergences on March 25. Sterling pound is preparing to return to 1.3100

4h

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On the 4-hour chart, the GBP/USD pair had a reversal in favor of the British pound and began the process of growth in the direction of the 100.0% correction level at 1.3300. However, the bearish divergence at the CCI indicator allows traders to expect a reversal in favor of the American currency and a return to the Fibo level of 76.4% at 1.3094. Passing the last divergence peak by the pair will work in favor of continuing growth in the direction of the correctional level of 100.0%.

The Fib net was formed on boundaries from September 20, 2018 and January 3, 2019.

1h

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On the hourly chart, the pair made an increase to the correctional level of 38.2% at 1.3220, which rebounded from it and turn in favor of the US currency. As a result, the process of declining quotations can be continued in the direction of 50.0% correction levels of 1.3171 and 61.8% at 1.3121. Quoting quotes from one of the target Fibo levels will allow traders to count on a reversal in favor of the sterling pound and the resumption of growth in the direction of 38.2% and 23.6% at 1.3228. The emerging divergences today are not observed in any indicator.

The Fib net was formed on boundaries from March 11, 2019 and March 13, 2019.

Recommendations to traders:

Purchases of the GBP / USD pair can be carried out with targets at 1.3220 and 1.3281 and a Stop Loss order under the level of 50.0% if the pair bounces off the level of 1.3171 on the hourly chart.

Sales of the GBP/USD pair can be made with the target at 1.3121 and a Stop Loss order above the 50.0% level if the pair closes below the correction level of 1.3171 on the hourly chart.

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The threat of recession provokes panic in the financial markets

The Asian session at the auction on Monday did not bring any surprises, supporting massive sales in stock markets, which began on Friday. Nikkei 225 is losing more than 3%, demand for government bonds is noted, June gold futures are trading above 1320, and demand for yen is at a 1.5-month high.

Panic moods reflect the growing understanding of the promise made by the Fed at its meeting on March 21. The US economy began to move towards recession, which means that the world as a whole is beginning to move towards recession. One of the most informative indicators of the economic downturn is the spread on rates between 10-year treasures and short-term 3-month bonds reached zero, 2-year securities are in the half-step, and, as historical experience shows, the inversion of the yield curve always precedes a recession with a temporary lag from 8 to 16 months.

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This conclusion means that the US economy is losing its ability to be a driver of world economic growth, which means it's time to revise long-term strategies. In connection to this, the current trade negotiations between the US and China unexpectedly acquired new meaning. Until recently, it seemed that China was in unfavorable conditions, since the complication of access to the American market would coincide with a slowdown in China's growth, but now the situation looks exactly the opposite.

China sees the weakness of the American position, and therefore, it is not interested in the conclusion of negotiations,, but in maximum tightening them. For the US, on the contrary, it is important to reach an agreement as soon as possible, since every day the Republican position will deteriorate before the next presidential company approaches.

In conditions of growing panic, the demand for defensive assets, including the dollar, will increase. Meanwhile, commodity currencies are subject to a decline, and oil prices may also decline.

EURUSD

The markets barely breathed a sigh of relief when they saw the first signs of a recovery in the eurozone economy after a protracted fall in 2018, and even predicted that the euro would not pay particular attention to the ECB's intention to launch a new wave of TLTRO as a new blow followed.

Friday's preliminary PMI indexes in March showed a noticeable decline relative to February. The German manufacturing PMI collapsed from 47.6p to 44.6p, which was the absolute minimum for 79 months, and even growth in the services sector cannot compensate for the overall slowdown.

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France's second eurozone economy slowed down both in the manufacturing sector and in the services sector, while in the eurozone, manufacturing PMI showed 47.6p against 49.3p. In February, the composite index decline to 51.9p to 51.3p.

The decline in production is pushing the eurozone into recession, as it will lead to an increase in unemployment, a decline in real incomes, and in the future - a slowdown in inflation. The euro suddenly developed a bullish momentum in the evolving conditions, and now even the threat of a recession in the United States is unlikely to help it, because in the United States this threat is still a matter of the future, even if not very distant, and in Europe it is already knocking on the front door.

EURUSD returned to the downward channel forming from January. The resistance zone moved to 1.1330 / 40, and thus, there is a high probability of a decline on Monday to support 1.1230 / 40.

GBPUSD

On Friday, the European Council approved a new timeline for the UK leaving the EU. The decision provides for two options - if the UK Parliament approves the withdrawal agreement, the Brexit process is extended until March 22, but if the Parliament rejects it, then the UK will need to notify the EU of its further actions by April 12.

In any case, the EU intends to resolve the issue of withdrawal before the elections to the European Parliament, which will be held in May 23-26. The EU's rather tough decision was the cause of a riot in the British Cabinet, which, according to unconfirmed data, is preparing Theresa May to be dismissed from her post as a prime minister.

GBPUSD will decline. The pound has high chances to go below 1.3090 and leave the ascending channel.

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Trading Plan 03/25/2019

The Fed's decision to halt the rate hike gave a clear boost to the market against the dollar.

However, unexpectedly, the Brexit theme returned to the market - and everything is confusing again.

Prime Minister Theresa May received a delay until April for new attempts to hold an agreement with the EU through Parliament - and now the release date for Britain is May 25.

On Monday, the Parliament will once again hold another vote on May's plan. Most likely, May will see a new failure - and on Wednesday, the Parliament will vote for all possible options: including a new referendum and version of an agreement with the EU.

Thus, the Brexit theme will be in a fever in the market until Thursday for sure.

We are ready to join the euro's trend if it starts

We buy the euro from 1.1450

Sell the euro from 1.1175

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Fundamental Analysis of GBPUSD for March 25, 2019

BREXIT uncertainty is likely to end up with a no-deal option. However, it might be extended further than June of 2019 as well. Though, there is no final decision yet. GBP has gained momentum over USD recently amid negative economic reports and the Fed's unchanged interest rate.

After three years of debates, the BREXIT issue is still uncertain. Recently, UK Prime Minister Theresa May hinted that she might not bring her twice-defeated BREXIT deal back to the parliament this week. These rumors may cause some political unrest in Britain as well. The UK Average Earning Index report reflected decrease to 3.4% from the previous value of 3.5%, while experts anticipated to see 3.2%. The Unemployment Rate also dropped to 3.9%, even though it was expected to be unchanged at 4.0%. The CPI rose to 1.9% exceeding the expectations of 1.8%.

There are no other important publications anticipated from the UK ahead of the Parliament BREXIT Vote this week.

On the USD side, the economic challenges along with the FED deciding to keep the interest rate unchanged lead to significant weakness of the US currency against GBP. USD is trying to gain momentum in spite of low expectations regarding the final GDP data that is due this week. The index is forecast to slide to 2.4% from the previous value of 2.6%. Additionally, tomorrow's Consumer Confidence report is expected to indicate an increase to 132.1 from the previous figure of 131.4. The US economy is slowing down as the $1.5 trillion tax cuts arose along with reduction in government spending. Moreover, the trade war between the US and China together with a slowdown in the global economic growth and uncertainty ahead of BREXIT also add tension to the situation. Meanwhile, according to Fed's member Bostic, the interest rate may change despite the regulator's decision amid a need for economical stability.

Currently, the pair is expected to be extremely volatile this week as there is a plenty of important economic reports from the UK and the US anticipated to be published. As GBP is gaining momentum over the USD weakness, some short-term gains might be recordered ahead of BREXIT vote this week.

Now, let us look at the technical view. The price rebounced from the 1.31 support area, I expect the further bullish movement towards 1.3400. The bearish sentiment is still quite strong in the market amid of the BREXIT issue. Therefore, the trendline is anticipated to continue its bearish movement to 1.30 support area after retreating from 1.3400-1.3500 resistance area. The trend can be considered bearish, while the price remains below 1.3500.

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Brexit: "conspiracy" against May and options for the development of events

Over the weekend, the news flow regarding the possible prospects of Brexit went off-scale. The media was full of loud headlines that surprised by its diversity. There is a "conspiracy" of ministers against May and the scandal with a 5 million petition against the country's withdrawal from the EU and the accusations of the French president and so on and so forth. The Saturday march against Brexit came about a million Britons according to various estimates, which only added to the overall picture of events.

Despite such a tumultuous weekend, the pound opened the trading week very restrained without a gap. Firstly, the market is no longer responding keenly to the rapidly changing flow of information. Since December, the news background is too saturated and quite contradictory. Secondly, many rumors circulated were almost immediately refuted by official statements and although, as a rule, in such cases, "there is no smoke without fire," official refutations level the initial effect.

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For example, the British influential newspaper it was reported on Saturday that 11 ministers would ask Teresa May to resign on Monday. Otherwise, they will resign. The publication even voiced the names of possible successors to the current prime minister, namely the British Foreign Minister Jeremy Hunt, Environment Minister Michael Gove and Chancellor of one of the duchies David Lidington. However, British Finance Minister Philip Hammond denied the information that appeared by Sunday evening, adding that the change of prime minister would not help the situation.

By and large, the position of the Minister of Finance is difficult to refute. Brussels will not resume negotiations with London just because the country will change the head of government. In Europe, they have repeatedly stated this and recent events have only confirmed the firmness of their position. Therefore, the fate of Brexit is now exclusively in the hands of the British Parliament. Theresa May can really resign if at this price she will ensure that the deputies approve the deal. According to another British publication, the prime minister will soon announce his decision to resign immediately after the approval of the deal with the EU.

Deputies also need to take into account the growing discontent among the British. More than 5 million citizens of this country have signed an electronic petition for the preservation of Britain within the EU. This is a record value as the last time such a stir was in 2016, when the British, demanded a referendum on the contrary. Now the situation has turned 180 degrees where hundreds of thousands of people took to the streets of London with the only slogan: "We changed our mind." In other words, the British deputies will not be able to simply "brush off" the problem by showing passivity. In turn, this means that Britain is on the threshold of important and unconventional political decisions that are not amenable to any intelligible forecast. These are the only probable scenarios that can be realized in one form or another.

First option: Theresa May really resigns in exchange for an approved deal. In this case, not only all conservatives need agreement (75 of which did not support the agreement on March 12) but also representatives of the DUP, who are allies of the Tories in parliament. In turn, they are categorically opposed to the conditions proposed by Brussels, regarding the question of backstop above all. In addition, deputies need to vote for the amendment, which allows submitting the draft transaction to a vote. As is known, the Speaker of the House of Commons blocked the third consideration, referring to the convention 400 years ago where according to which, the deputies cannot re-examine the same issue without making any changes. Of course, if May agrees with the Parliament, these questions will be voted as a "package".

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Second option: London asks Brussels for a longer-term delay, thereby agreeing to participate in the elections to the European Parliament. This option is opposed by the French, whose opinions have to be considered by the other members of the Alliance. Macron can change his opinion, but today such a variant of the development of an event looks unlikely.

It is also unlikely that the deputies will agree to withdraw from the EU without a deal on April 12. Let me remind you that the House of Commons voted against leaving the country without an agreement on March 29, nor ever at all. On the other hand, parliamentarians may re-vote this issue "derailing the country" but this option looks too incredible, given the previous rhetoric of the majority of deputies.

Thus, there are several options for the development of events and all of them are associated with certain difficulties that can be hypothetically overcome. The pound will react depending on which scenario ultimately comes to life. The delay in any form and the more so the approval of the agreement will have a positive effect on the currency. But if the situation finally reaches a dead end, the GBP/USD pair will at least return to the first support level of 1.2930 (the upper limit of the Kumo cloud on the daily chart) and further to the area of 27-28 figures.

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Burning Forecast 03/25/2019

Last week the EURUSD made an attempt to start a trend against the dollar, but failed once again.

The reason is the unexpected return of the Brexit theme to the agenda.

There will be a new vote in the British Parliament in agreement with the EU on Monday - in case May's plan fails once again - a new principled vote will be held on Wednesday. May has been given a deadline of April 12 in order to acquire support in Parliament (the EU provided a delay).

We are waiting for the beginning of the trend for the euro.

We are ready to buy the euro from 1.1450

We are ready to sell the euro from 1.1175

For more aggressive traders, selling from 1.1270 is possible.

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GBP/USD: plan for the European session on March 25. Great Britain has two terms, April 12 or May 22

To open long positions on GBP/USD you need:

Theresa May will hold another vote on the ratification of the Brexit agreement this week in Parliament, and if it is adopted, the UK will leave the EU on May 22. If not, the deadline is April 12th. Volatility provided. Buyers need to stay above 1.3178, and the formation of a false breakdown there will be a signal to buy. If the pound's downward movement resumes, it is best to return to long positions after updating the low around 1.3136 or to rebound from the support of 1.3083. A breakthrough and consolidation above 1.3222 will be another signal to increase in long positions based on the test highs of 1.3266 and 1.3316, where I recommend taking profits.

To open short positions on GBP/USD you need:

Sellers of the pound will try to form a false breakdown in the area of a resistance of 1.3222, but the main goal will be a breakout and consolidation below the support of 1.3178, which will lead to selling GBP/USD to the area of lows of 1.3136 and 1.3083, where I recommend to lock in profits. When the growth scenario is above 1.3222 in the first half of the day, good resistance levels will be seen in the area of 1.3266 and 1.3316, from where you can open short positions immediately to rebound.

Indicator signals:

Moving averages

Trade is conducted above the 30-day and 50-day moving averages, which indicates the formation of a bullish scenario.

Bollinger bands

In case of an attempt to raise the pound's rate, the upward potential of the Bollinger Bands indicator will be limited to around 1.3222. In case the pound falls, support will be provided by the lower limit in the area of 1.3150.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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Forecast for USD / JPY pair on March 25, 2019

USD / JPY pair

On Friday, the USD/JPY quote fell by 93 points, stopping on the accumulation of graphic lines on the daily chart. Despite the fact that the price is now below the MACD line of daily scale, the current supports are strong enough, which can push the price back over this line. Then, a technically false price output breakthrough at the support will be formed under the MACD line. Day fixation of prices under it has not yet happened but formally, the price is in the zone of uncertainty at 109.70-110.30. If we expect the price to exit above the upper limit of this range and considered as the main scenario with further growth to the price channel line of 110.90. Fixing below the lower limit may cause the price to fall to the downward support for the price channel of 107.77.

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EUR/USD: plan for the European session on March 25. Weak data on the eurozone put pressure on the euro

To open long positions on EURUSD you need:

On Friday, a series of weak reports on the eurozone economy led to the euro's decline. At the moment, buyers need to stay above support at 1.1294, and the formation of a false breakdown there will be a signal to open long positions in order to increase towards the area of 1.1324 and 1.1358, where I recommend taking profits. In case the EUR/USD declines due to reports from IFO for Germany, it is best to return to long positions after updating the previous week's low to the area of 1.1269 or to rebound from the support of 11247.

To open short positions on EURUSD you need:

Sellers will try to prevent the pair from rising above the resistance of 1.1324, and the formation of a false breakout there will be a signal to sell the euro with a trend to break through and consolidate below the support of 1.1294, which will lead to forming a new downward wave and an update of the week lows in the area of 1.1269 and 1.1247, where I recommend taking profits. If the IFO reports are better than expected, short positions in EUR/USD can only be considered for a rebound from resistances of 1.1258 and 1.1388.

Indicator signals:

Moving averages

Trade is conducted below the 30-day and 50-day moving average, which indicates the formation of a bearish trend in the market, and failure to consolidate above the moving average in the first half of the day will be a signal to sell the euro.

Bollinger bands

The euro's growth is limited by the upper limit of the Bollinger Bands indicator in the area of 1.1315, while the lower limit of the indicator in the area of 1.1280 may limit the downward correction.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
The material has been provided by InstaForex Company - www.instaforex.com

Indicator analysis. Daily review for March 25, 2019 for the pair GBP / USD

Trend analysis (Fig. 1).

On Monday, there is a high probability of continuing the upward movement. The first upper target 1.3031 is the pullback level of 76.4% - 1.3292 (yellow thin line).

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Fig. 1 (daily schedule).

Comprehensive analysis:

- indicator analysis - up;

- Fibonacci levels - up;

- volumes - up;

- candlestick analysis - up;

- trend analysis - up;

- Bollinger lines - up;

- weekly schedule - up.

General conclusion:

On Monday, there is a high probability of continuing the upward movement. The first upper target 1.3031 is the pullback level of 76.4% - 1.3292 (yellow thin line).

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Fundamental Analysis of EUR/USD for March 25, 2019

EUR lost significant momentum recently after the price rejected off the 1.1450 area with a daily close. Despite downbeat economic reports, such gains on the USD side signal severe EUR weakness.

According to Finnish Central Bank chief Olli Rehn, the risk of Britain leaving the EU without a deal is the biggest risk which could aggravate the eurozone's economic slowdown in the short term. BREXIT is a biggest threat to both economies. Ahead of the BREXIT vote on March 29th, EUR is expected to lose further momentum against USD. Today, German Ifo Business Climate report is going to be published with the appropriate index to edge up to 98.7 from the previous figure of 98.5. The survey will hardly make a serious impact on EUR.

On the other hand, USD was hurt by recent economic events and reports. USD lost shine as the Federal Reserve states its intention to refrain from raising interest rates throughout this year. As a result, USD is losing favor with investors. This week, the US is due to release revised GDP data which is expected to decrease to 2.4% from the previous value of 2.6%. Nevertheless, USD is still gaining momentum. The US economy is losing steam as the $1.5 trillion tax cuts arise along with cuts in government spending. Moreover, there are other global factors which dent investor confidence: the trade war between the US and China, softening global growth, and uncertainty ahead of BREXIT.

This week is going to be very volatile for both EUR and USD as the economic calendar contains high impact economic reports and events. Though USD gained momentum amid EUR weakness, any negative reading in the US macroeconomic reports like GDP will affect USD momentum. Under the current economic conditions, USD has the upper hand over EUR to gain significant momentum ahead of possible BREXIT this week.

Now let us look at the technical view. The pair is currently trading at bear the psychological level of 1.1300 with higher volatility. The price is making corrections along the way. After the impulsive bearish pressure off the 1.1450 area, further bearish momentum is expected as per the preceding trend. The price is expected to move lower towards 1.1200 support area in the coming days. As the price remains below 1.1500 with a daily close, the bearish bias is expected to continue further.

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