The flames of the trade war may spread to the currency market

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Against the background of increasing tension in trade relations between Beijing and Washington, the opinion is growing that "military actions" can spread to the foreign exchange market.

It is assumed that as compensation for US tariffs, China will begin to devalue the yuan and fold its portfolio of US government bonds.

Markets are now considering the mark of 7.0 for the pair USD/CNY as the extreme limit, which the Celestial Empire should not cross to avoid retaliation from the United States both in the foreign exchange market and in the trade sphere.

The Chinese national currency is moving in this direction since the beginning of this month, the head of the White House, Donald Trump, announced an increase in duties on imported goods to America from China.

In recent months, the currency pair USD/CNY was in the range of 6.7-6.75. It is currently trading near the mark of 6.9. According to some estimates, to compensate for the new tariffs, the yuan should fall to $7.10.

Most analysts doubt that China will devalue the national currency in response to the new US tariffs, as this will not only cause a negative reaction from Washington but also accelerate the outflow of capital from China, as well as cause a serious blow to the efforts within the framework of the internationalization of the yuan.

Experts also reject the idea that Beijing will start selling US Treasury securities.

They proceed from the fact that any sale that affects the value of the US government debt will cause damage to China itself, since the remaining share of treasury bonds at its disposal will be cheaper.

In addition, even if the Celestial Empire begins to fold bonds, there will be no shortage of buyers, as the yield of 10-year treasuries over the past few months has decreased from 3 to 2.2%.

D. trump took the fall of the yuan as a manipulation of the exchange rate and as a sign that Beijing wants to conclude a trade deal with Washington.

"China will pump money into its economy and probably lower interest rates in order to compensate for the loss of its business. If the Federal Reserve retaliates, the game will be over, we will win!"- said the American President.

D. Trump would be happy if the Fed gave in to his pressure, lowered interest rates, resumed the program of asset repurchase, thereby reducing the value of the dollar.

Some analysts are now wondering whether Washington will raise and expand tariffs on Chinese imports if the USD/CNY pair crosses the mark of 7.0. In this scenario, the yuan could drop to $7.40, as the currency war should intensify as the trade conflict escalates.

At the end of last week, the US administration proposed a rule allowing the United States to automatically set tariffs for States suspected of manipulating exchange rates in order to obtain trade advantages.

The irony is that if the Fed does not go about D. Trump and will not adjust its policy, the dollar will come out of this conflict as a winner because it is being strengthened as an asset of a "safe haven". At the same time, currencies of emerging markets in a tandem with the yuan will fall in price.

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EUR and GBP: the euro is falling under the pressure of weak data on Germany, and the pound is waiting for clarity with the

The European currency ignored the data on the French economy, where GDP coincided with the forecasts of economists, but closer to the middle of the European session, the pressure on EURUSD returned after the release of a weak report on the German labor market.

Quite a lot has already been said that the prospects for the German economy are gradually deteriorating, and this was confirmed by a sharp increase in the number of applications for unemployment benefits in May this year, which analysts did not expect.

According to the report of the Federal Employment Agency of Germany, in May of this year, the number of unemployed in Germany increased by 60,000 compared with April. Economists, on the contrary, predicted a decline of 8,000.

Such a sharp increase in new applications occurred after an inspection was conducted of the employment status of people eligible for unemployment benefits. Another 10,000 new applications came from people who recently lost their jobs due to the economic situation in the country.

It did not pass without a trace for the unemployment rate in Germany, which rose to 5.0% in May, after a test of a record high of 4.9% in April of this year. The number of registered vacancies in Germany in May was 792,000.

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As noted above, the French GDP data was ignored by the market, since all reports almost coincided with economists' forecasts. According to the data, the French economy in the 1st quarter of this year grew by 0.3% compared to the 4th quarter of 2018. In annual terms, growth was 1.2%.

Consumer spending in France in April showed growth again and turned out to be better than economists' forecasts, which allows concluding that economic growth continued in the 2nd quarter. According to the statistics agency, spending rose by 0.8% in April, while economists had expected a growth of only 0.3% compared with March. As for the same period in 2018, consumer spending increased by 1.2% with a growth forecast of 0.9%.

As for inflation, preliminary data on consumer price growth in France are far from the objectives of the European Central Bank. According to the report, the preliminary CPI in France in May 2019 rose by 0.2% and 1.0% per annum, while the consumer price index was expected to rise in May at the level of 0.2% and 1.1%, respectively. As for the consumer price index harmonized by EU standards, it rose by 1.1% per annum in May compared to 1.5% in April of this year.

Maintaining the growth of inflation in the eurozone is one of the main tasks of the European Central Bank because without reaching the target level in the region of 2.0%, there will be no talk about raising interest rates.

As for the technical picture of the EURUSD pair, the bears continue to push risky assets down to the support area of 1.1140, the breakthrough of which will easily return the trading instrument to the minimum of this month in the area of 1.1110.

As for the British pound, the breakthrough of support 1.2640 did not lead to its big sale. This once again confirms the fact that the major players prefer to stand aside until clarity with the election for the post of British Prime Minister. If the Conservative Party of Great Britain elects its leader as a supporter of hard Brexit, the pound will resume its major downward trend and return to the December minimum around 1.2480. However, the further medium-term downward movement will depend on a parliamentary vote on the subject of Brexit already under the new Prime Minister.

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How to make money on the imminent fall of AUD/USD?

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The focus of traders' attention is still the tension in the US-China relationship. Any threats from Donald Trump against Beijing have a strong influence on the market. China is ready to use rare earth elements as weapons in the trade war with America. Metals are used in many industries, including the production of high-tech consumer electronics and military equipment.

A week earlier, market participants took Xi Jinping's visit to the JL MAG Rare-Earth Company plant as a hint at how Beijing's response to Washington's new duties could be. The aggravation of rhetoric is a kind of reaction to the harsh statements of Donald Trump, who during his visit to Tokyo made it clear that the Chinese had to grasp the proposed deal with their hands and feet. It's too late now because the US has changed its mind.

The long-running trade conflict, whose degree is constantly increasing, aggravates not only the position of the euro but also the Australian dollar.

Due to the tight trade relations with China, the "Australian" risks to be one of the main currency assets – the beneficiaries of the economic difficulties of China. As you know, the Chinese financial system is bursting at the seams. The chain of corporate defaults, which hit the Chinese market in January-April, reached the banking sector. A bank collapsed in the country, and it happened for the first time in two decades. Recently, the Central Bank of China announced the beginning of the rehabilitation of Baoshang Bank, whose total assets amount to $83 billion.

The Reserve Bank of Australia has taken a policy of easing monetary policy, as it foresees a significant slowdown in the Chinese economy. JP Morgan expects the Central Bank to reduce the rate by 100 basis points by the middle of next year, to 0.50% from the current level of 1.50% by the middle of next year. It should be noted that the first decline will occur at the meeting of the regulator next Tuesday, June 4.

According to the markets, only soft monetary policy can be an assistant to the RBA in achieving macroeconomic goals. Otherwise, inflation and GDP growth rates will continue to lag behind the targets.

Thus, a promising idea for the next two weeks may well be the sale of the AUD/USD pair. On Wednesday, "Aussie" in conjunction with the US competitor is trading just above the mark of 0.69.

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As for the euro, it remains under pressure and continues the negative movement taken at the beginning of the week. In addition to concerns about the escalation of the conflict, the situation of the euro is aggravated by Italian problems with public debt. At the end of the year, the indicator may reach 3.4%, while the ceiling for all regions is set at 3% of GDP. Members of the EC consider the issue of penalties. Rome has already been warned, but political leaders seem to want to run into a conflict with Brussels. The yield spread of 10-year state bonds of Germany and Italy reached its highest level in 3 months, which is a negative factor for the euro.

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The dollar should fall, instead of increasing

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Yields on 10-year US Treasury bonds fall to 2-year lows, there is a signal of an imminent recession. In the first quarter, the US economy did not grow as fast as we would like (3% against 3.2% in the first reading), the risks of a single rate cut this year increased. It would seem that all this is not favorable to the dollar, and it is simply obliged to fall, but greenback feels quite confident.

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So what is its strength? Maybe the weakness of other major currencies, for example, the euro.

There are rumors in the market that in the near future, the EU may bring Italy to administrative responsibility for violation of the limits of public debt and budget deficit. The amount of the fine is likely to be 3 billion euros. The ECB representative and Governor of the Bank of Spain Pablo Hernandez de Cos warned of the risks of a slowdown in the European economy. He also questioned the forecast for accelerating inflation in the region due to wage growth. The European currency declined, while the "American" strengthened due to its weakness. Another return of quotes under the level of $1.1180 indicates a weakness of buyers, and the risk of resuming the downward movement is also growing.

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The trade conflict between the US and China not only continues but also intensifies. From this, the eurozone only gets worse as exports suffer. On the eve, the Chinese press hinted at a secret weapon. We are talking about rare earth metals, which are used in many industries, including the release of high-tech consumer electronics and military equipment. China is known to be one of the main suppliers of rare earth elements to the United States, and rising prices for them can cause serious pain to US consumers.

It is worth noting that Washington this time did not declare China a currency manipulator, so as not to aggravate relations. However, the Ministry of Finance has changed the criteria, and the list of suspects now is not 12 countries, but 21. The States intend to monitor regions with foreign trade from $40 billion or more. A currency manipulator can be called one who often intervenes in the financial market, and also has a trade surplus with the United States of $20 billion. Those who have a surplus above 2% of GDP fall out of favor, earlier it was about 3%. Now, on the blacklist along with China, Japan, Germany, and South Korea are such countries as Italy, Ireland, Malaysia, Singapore, and Vietnam.

The support of "euromedical" on the eve was provided by the growth of the US consumer confidence index. The value of the indicator approached 18-year highs. This makes you think that in the second quarter, the situation will not be as bad as predicted in Macroeconomic advisors, expecting a rise of 1.7%. The leading indicator from the Atlanta Federal Reserve Bank indicates a 1.3% signal, J.P. Morgan insists on 1%.

Now, the EUR/USD pair is trading in a narrow range and is unlikely to go far from the 1.12 mark. The fact is that traders are waiting for the publication of the second estimate of US GDP growth in the first quarter. Market participants are also not in a hurry to force things, because they want to see a report on business activity in China.

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GBP/USD: plan for the US session on May 29. The lull before the election of the Prime Minister of Great Britain can harm

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

Buyers missed the support level of 1.2648, but a major sell-off has not yet occurred, which leaves a chance for an upward correction. However, this requires a return to 1.2648, which will return the demand for GBP/USD and lead to an update of the resistance of 1.2969. This will allow us to count on the rapid growth of the pair to the highs of 1.2744 and 1.2800, where I recommend fixing the profits. With a further decrease in the pound, it is possible to open long positions on a false breakdown from a minimum of 1.2607 or on a rebound from larger monthly support of 1.2564.

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

The bears achieved their goal and broke below the support of 1.2648. As long as the trade is conducted below this level, the pressure on the pound will continue. However, the main task of the bears is the support of 1.2607, a breakthrough of which will plunge the pair into a new downward peak with the building of a trend and updating of the lows around 1.2564 and 1.2500, where I recommend fixing the profit. With the growth scenario above 1.2648 in the second half of the day, you can return to sales of the pound immediately to rebound from the maximum of 1.2696.

Indicator signals:

Moving Averages

Trading is below 30 and 50 moving averages, indicating a return to the market of the sellers of the pound.

Bollinger Bands

However, the main problem of a downward trend is low volatility, which does not give signals to enter the market.

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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 May 29. The rise in unemployment in Germany has affected the euro

To open long positions on EURUSD, you need:

The euro continued its downward momentum, formed earlier this week after the data on the growth of unemployment in Germany to 5.0%. To return the upward impulse, buyers need to get above the resistance of 1.1170, where the demand for the euro will increase, which will lead to an update of the highs of 1.1196 and 1.1218, where I recommend fixing the profit. In the event of a decline in the euro further along with the trend, support will be provided by the area of 1.1143, however, to open long positions from it is best provided that a false breakdown is formed. I recommend buying EUR/USD on the rebound only after the test of the minimum of 1.1112.

To open short positions on EURUSD, you need:

While the trade is below the resistance of 1.1170, the pressure on the euro will remain, but the main task of the bears will be to test a large support level of 1.1143, which will increase the pressure on the pair and lead to an update of the minimum of the month in the area of 1.112, where I recommend fixing the profit. The release of important fundamental data for the US is not planned for the second half of the day, therefore, in case of EUR/USD growth above the resistance of 1.1170, it is best to consider short positions after updating the maximum of 1.1196 or to rebound from the larger level of 1.1218.

Indicator signals:

Moving Averages

Trading is below 30 and 50 moving averages, which indicates the bearish nature of the market.

Bollinger Bands

In the case of the growth of the euro in the second half of the day, an upward correction will be limited to the upper border of the indicator in the area of 1.1175.

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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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Gold scares dollar recession

Gold continues to trade in the range of $1270-1310 per ounce, sensitively reacting to the behavior of the dollar, US Treasury bonds, and US stock indices. Despite the fall in rates on 10-year bonds to its lowest level since September 2017, the US currency shows signs of strengthening. It is again perceived by investors as a safe-haven asset, which in the conditions of maintaining trade tensions between Washington and Beijing, deprives the precious metal of an important trump card.

During his visit to Japan, Donald Trump said that the States are not ready to deal with China, Beijing is attacking the WTO, arguing that the US is manipulating its national security in order to introduce illegal tariffs, and the Chinese press talks about weapons of retaliation. They can be 17 rare earth metals, which are used in the production of a wide range of goods, including military equipment. Their main supplier to the American market is China, and the rise in prices will hit the consumer's pocket. Obviously, a trade war is a serious and lasting one. The question is who will take better advantage of it: gold, which traditionally grows during the escalation of various conflicts, or the US dollar, which in 2018 intercepted the status of the main asset-shelter not only from the precious metal but also from the yen and the franc.

American macroeconomic indicators can give a hint. If last year the economy expanded under the influence of a large-scale fiscal stimulus, this year may be deflated due to weak external demand. The fall in the yield curve of the US in the red zone is increasing the risks of a recession. And this is not the only negative signal. The differential price of gold and silver reached its highest level since 1991 when the States were in a recession. In contrast to XAU/USD, the XAG/USD bulls are experiencing problems due to the slowdown in the global industry under the influence of trade wars.

Dynamics of gold and silver

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Investors will closely monitor the statistics on US GDP and Chinese business activity. According to Bloomberg experts, the US economy expanded not by 3.2%, but by 3%. In April-June, it may be even worse: the leading indicator from the Atlanta Federal Reserve Bank signals a modest growth in the gross domestic product by 1.3%. The peak of purchasing managers' indices in China may strengthen anti-risk sentiment and contribute to the correction of the S&P 500, which should be considered as a "bullish" factor for XAU/USD.

Unlike the futures market for gold, the physical asset indicates the untapped potential of falling prices. Swiss net exports in April rose to 142 tons, 80% of the total supply went to Asia. India imported 58.6 tons from this European country, which is the highest figure in two years. As a rule, when gold flows from West to East, the market is dominated by "bears".

Technically, consolidation in the range of $1270-1310 per ounce becomes more pronounced. The breakthrough of the lower limit activates the pattern AB=CD with a target of 161.8%. On the contrary, a successful assault on the resistance at $1288 and $1304 will return the bulls hope for the implementation of the "Wolfe Wave" model.

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EURUSD: The pressure on the euro increased after the Italian authorities began to talk about increased costs again. Consumer

A good report on the US economy and the growing tensions associated with the future fiscal policy of Italy, deters investors who put on further growth of risky assets. In confirmation of this is the sharp increase in the yield of Italian government bonds, indicating the resumption of the conflict between the government and Brussels.

Concern emerged immediately after the results of the European elections, in which Italian Deputy Prime Minister Matteo Salvini strengthened his position. Let me remind you that he is a supporter of higher spending and has a negative attitude to the austerity that Brussels so demands. Yesterday, Salvini has already announced its intention to challenge the EU rules setting limits on public debt and spending.

Last year, Italy has already tried to expand and go beyond the established budget deficit but met with very strong resistance from the EU.

As noted above, a good report on American optimism, which continues to grow in relation to the economy, was supported by the US dollar yesterday afternoon.

According to the report of the Conference Board, the consumer confidence index in May 2019 rose to 134.1 points against 129.2 points in April. Economists had expected the index to be 129.5 in May. A good rise in the index is directly related to the good state of the labor market, as well as the growing economy.

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Data on manufacturing activity in Texas was ignored by the markets, despite the fact that it grew at a slower pace in May.

According to the Fed-Dallas report, the production index in May of this year was 6.3 points against 12.4 points in April. The general index of business activity in May fell to -5.3 points.

The data from S&P/CoreLogic/Case-Shiller also did not please traders, but the decline in house prices is directly related to falling demand and high interest rates, which was not unexpected for investors. According to the report, the national index of housing prices in March increased by only 3.7% compared with the same period of the previous year, after rising by 3.9% in February. Meanwhile, Case-Shiller noted that, given the overall picture of the economy, the situation in the housing market could be better.

As for the technical picture of the EURUSD pair, it is quite likely that the pressure on risky assets will continue. An unsuccessful return to the resistance level of 1.1170 will lead to another wave of short positions in the trading instrument, which will allow the bears to reach a minimum of 1.1140. However, the main goal is larger support in the area of the minimum of the month – 1.1110. The upward trend will be limited to yesterday's resistance level at 1.1200.

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Technical analysis of USD/CHF for May 29, 2019

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Overview:

The USD/CHF pair continues moving in a bullish trend from the support levels of 1.0123 and 1.0177. Currently, the price is in an upward channel. This is confirmed by the RSI indicator signaling that the pair is still in a bullish trend. As the price is still above the moving average (100), immediate support is seen at 1.0177. Consequently, the first support is set at the level of 1.0177. So, the market is likely to show signs of a bullish trend around 1.0177. In other words, buy orders are recommended above the level of 1.0177 with the first target at the level of 1.0265. Furthermore, if the trend is able to breakout through the first resistance level of 1.0265, we should see the pair climbing towards the point of 1.0314. On the other hand, it would also be wise to consider where to place a stop loss; this should be set below the second support of 1.0126.

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Technical analysis of AUD/USD for May 29, 2019

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Overview:

The AUD/USD pair is set above strong support at the levels of 0.7046 and 0.7168. This support has been rejected four times confirming the uptrend. 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 thae 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

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Overview of GBP/USD on May 29. The forecast for the "Regression Channels". Theresa May still considers her deal as the best

4-hour timeframe

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Technical data:

The upper linear regression channel: direction – down.

The lower linear regression channel: direction – down.

The moving average (20; smoothed) – down.

CCI: -48.7856

The pound worked perfectly on the moving average line, bounced off it and resumed the downward movement. In the first two trading days of the week, no important news from the UK and the States was received. Only last night, Theresa May give an interview in Brussels before the EU summit, in which she said that both sides of the agreement should make concessions to bring Brexit to the finish line. According to Theresa May, who will resign on June 7, the best option is to leave the European Union on the terms described in her "deal". May also said that the "divorce" with the European Union is now the problem of the new Prime Minister. Also, many British tabloids are now discussing the question of what to expect from the new Prime Minister? According to many, it will be Boris Johnson, who is not against leaving the EU without a "deal". However, the Parliament can block this option, in this case, as in the case if the EU rejects the new negotiations on Brexit, the country is waiting for either a second referendum or Parliamentary elections. These options are basic, according to British experts. As you can see, among these options, there is simply no "deal" of Theresa May, which was rejected by Parliament three times. What about the pound? The pound maintains a bearish trend, there are almost no bulls on the market, as well as the prospects for the British currency to strengthen. Thus, we expect the pound to continue falling.

Nearest support levels:

S1 – 1.2634

S2 – 1.2573

Nearest resistance levels:

R1 – 1.2695

R2 – 1.2756

R3 – 1.2817

Trading recommendations:

The GBP/USD pair has completed an upward correction. Thus, it is now recommended to sell the pound with targets at 1.2634 and 1.2573, before the Heiken Ashi indicator turns up, which will indicate a turn of correction.

Long positions are recommended to be considered only after the pair has been fixed above the moving with targets at 1.2756 and 1.2817. However, at the moment, the bulls remain fairly weak.

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

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line of the unidirectional movement.

CCI – the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels – multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

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Overview of EUR/USD on May 29. The forecast for the "Regression Channels". The weakness of the euro is visible to the naked

4-hour timeframe

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Technical data:

The upper linear regression channel: direction – down.

The lower linear regression channel: direction – down.

The moving average (20; smoothed) – down.

CCI: -46.7675

The third trading day of the week promises to be as boring in terms of macroeconomic events and reports as the first two. On Wednesday, May 29, neither in the States nor in Europe is planned any important publication. Meanwhile, the euro currency is on the sly, but fixed back below the moving average line. Thus, the trend for the euro/dollar pair has changed to a downward one against the background of the complete absence of any fundamental information. This speaks, first of all, about the mood of traders. If even without disappointing European statistics or, on the contrary, positive from the US, the euro has been falling for three days in a row, then the mood among traders is definitely bearish. What can we expect from the pair in the future? If there is no loud and strong news that will support the European currency, the EUR/USD will slowly but surely continue to slide to annual lows. Despite the fact that the technical picture between April 26 and May 23 fits perfectly into the "double bottom" pattern, we believe that the chances of overcoming the lows from these dates are much greater than the formation of an uptrend. The EU, by the way, has a new problem, this time with Italy. Rome stubbornly refuses to reduce the size of its own national debt, which is 132% of GDP, which can force Brussels to impose a fine of 3.5 billion euros, as, according to EU rules, the amount of debt cannot exceed 60% of GDP. Such conflicts, which are clearly not out of the blue, may in the future lead to new Exits.

Nearest support levels:

S1 – 1.1139

S2 – 1.1108

S3 – 1.1078

Nearest resistance levels:

R1 – 1.1169

R2 – 1.1200

R3 – 1.1230

Trading recommendations:

The EUR/USD currency pair is fixed below the moving average, which indicates the return of traders to the bearish trend. Thus, sales of the euro with targets at 1.1139 and 1.1108 have now become relevant again.

It is recommended to consider buy orders for the euro/dollar pair only after fixing the price above the moving average with targets at 1.1200 and 1.1230 small lots.

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

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line of the unidirectional movement.

CCI – the blue line in the indicator window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels – multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

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

Forecast for EUR/USD and GBP/USD on May 29. Two divergences can cause pairs to have opposite effects

EUR/USD – 4H.

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As seen on the 4-hour chart, the EUR/USD pair continues the process of falling, after closing below the Fibo level of 100.0% (1.1177). However, on May 29, a bullish divergence was formed in the CCI indicator, which allows traders to count on a reversal in favor of the European currency and some growth in the direction of the correction level of 76.4% (1.1241). There was nothing interesting in terms of news over the past day. Only the level of consumer confidence in the European Union has shown that trust is at an extremely low value. Now the pair is at an important point for itself, when, on the one hand, there is a bullish divergence, which is a very strong signal. On the other hand, there is no news, there is no support for the euro, traders are still looking with great caution in the direction of buying the euro. Wednesday will be the third day in a row when no information is expected from the two countries interested in the euro/dollar pair. Thus, the market will not force events today. Calm trades are expected. The closing of the euro quotes under the latest low divergence will work in favor of continuing to fall in the direction of the next correction level of 127.2% (1.1102)0.

The Fibo grid built on the extremums from March 7, 2019, March 20, 2019.

Forecast for EUR/USD and trading recommendations:

The pair EUR/USD closed below the Fibo level of 100.0%. Thus, I recommend buying the euro with the target at 1.1241, with a protective order under the correction level of 100.0%, if the quotes perform a close above the level of 1.1177. I recommend selling the pair after closing the pair under the low bullish divergence with the aim of a correction level of 1.1102 and stop loss order above 1.1177.

GBP/USD – 4H.

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As seen on the 4-hour chart, the pound resumed the process of falling after the formation of bearish divergence in the CCI indicator. The GBP/USD pair performed a return to the correction level of 76.4% (1.2661). The rebound of quotes from this Fibo level will allow expecting a reversal in favor of the pound and some growth in the direction of the correction level of 61.8% (1.2796). The consolidation of quotations below the level of 76.4% will increase the probability of a further fall in the direction of the correction level of 100.0% (1.2437). Theresa May give an interview in Brussels at the same time. She told reporters that the issue of Brexit is now the problem of the next Prime Minister. However, she still believes that the earlier agreement with the European Union is the best solution for the UK. Theresa May also says that in any case, the Parliament will need a compromise to make any decision on Brexit.

The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.

GBP/USD – 1H.

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As seen on the hourly chart, the GBP/USD pair performed an uncertain consolidation under the correction level of 161.8% (1.2673), which allows traders to expect a further fall of the pound in the direction of the correction level of 200.0% (1.2554). There are no emerging divergences on the current chart. Thus, the barrier to falling is the level of 76.4% on the 4-hour chart. In the UK, there is no news that would be able to inspire optimism in the market. Theresa May is preparing to resign and reports that she is sorry that she could not bring Brexit to the end. Traders are unlikely to like this information. This makes us believe that the pound still has little chance of growth. From America, there is also no news. At the same time, the demand for the US dollar still remains.

The Fibo grid is built on the extremes of April 25, 2019, and May 3, 2019.

Forecast for GBP/USD and trading recommendations:

The pair GBP/USD completed the close below the level of 1.2673. I recommend selling the pair with a target of 1.2554 with a stop loss order above the level of 161.8%, if the closure is performed below the level of 1.2661 (4-hour chart). I recommend buying a pair when closing above the Fibo level of 161.8% (hourly chart) with a target of 1.2782 and a protective order below the level of 1.2673.

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Bitcoin. Correction before a new movement upwards?

The Bitcoin exchange rate has returned to the first important support level, which can hit stop orders slightly lower and force speculators to take profits.

Vitas Vasiliauskas, a member of the board of the European Central Bank, said that states should consider the option of introducing and using national cryptocurrencies in the wholesale and retail trade. In his opinion, such a move will improve monetary policy and modernize its processes.

Signal to buy Bitcoin (BTC):

Despite the slight decline in Bitcoin, from a technical point of view, nothing has changed. The task of buyers is to hold the support level of 8480, as well as the breakthrough of the range of 8900, which will lead to the area of new highs of 9100 and 9300, where I recommend fixing the profit. Those who still believe in the correction and reduction of Bitcoin, you can wait for the update of the 8120 lows and open long positions from there.

Signal to sell Bitcoin (BTC):

The bears still managed to put pressure on Bitcoin and gradually returned it to the support area of 8480. Fixing below this level will lead to the demolition of a number of stop orders and reduce the cryptocurrency in the support area of 8120 and 7646, where I recommend fixing the profit. In the scenario of the next growth, it is best to return to short positions in Bitcoin with an unsuccessful breakout of the level of 8900 or a rebound from the highs of 9100 and 9300.

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Bitcoin dips towards $8,500 area; bullish trend may continue: May 29, 2019

Bitcoin has been bearish with the recent rejection off the $9,000 area which lead the price to reside at the edge of $8,500. However, the bullish bias is still quite strong and expected to continue pushing the price higher with target towards $10,000 in the coming days.

As per candlestick arrangements, Bitcoin is within a bullish breakout pattern, thanks to May 26th price spike that temporarily placed BTC at $9,000. Since yesterday's bar closure above $8,500 was confirmed, there is an opportunity to buy at spot rates with the target as aforementioned.

It's now abundantly clear that bitcoin and other cryptocurrencies are in a firm uptrend, posting consistent gains on a weekly basis. Every minor pullback acts as fuel for further gains. It now appears that BTC doesn't have any significant resistance until the coveted $10,000 region, which may signal that further gains are imminent. It is important to note that although Bitcoin is currently showing a significant amount of strength at its current price levels, it has not been able to break into the $9,000 region yet. It may signal that the cryptocurrency is going to require a significant influx of buying pressure for it to extend its upwards momentum.

As of the current scenario, bitcoin is expected to move higher quite impulsively, and it seems that the upward movement has started and the preceding bullish trend is in place. The price has recently formed the Bullish Divergence as well while it was forming a throwback towards $8,500. As per current price formation and bullish momentum building up, the price is expected to push higher towards $9,000 and later towards $10,000 area in the coming days.

SUPPORT: 8,000, 8,400, 8,500

RESISTANCE: 9,000, 9,300, 9,500, 10,000

BIAS: BULLISH

MOMENTUM: VOLATILE

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"Loonie" is waiting for the decision of the Bank of Canada and the euro looks forward to the final alignment of the new political

In this month, the USD/CAD pair has repeatedly tried to subdue the 1.35 mark, but so far, it has not managed to consolidate above this level.

Despite a rather positive statistical data from Canada, the USD / CAD pair has been trading upward over the past six weeks.

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Today, the results of the next meeting of the Bank of Canada (BoC) on monetary policy will be announced.

Investors tend to expect cautious rhetoric from the regulator. If they turn out to be right and the Central Bank ignores both of the strengthening of the labor market and the growth of retail sales in the country, then another attempt to storm the 1.35 bulls could be crowned with success.

According to the latest data, the Canadian economy is in good shape. In April, the number of jobs in the country increased by a record of 106.5 thousand, reaching the highest level since 1976. The situation also improved in the housing market and growth in manufacturing activity has accelerated. Inflation declined on a monthly basis but returned to the 2% mark in annual terms.

At the time of the April BoC meeting, the Canadian economy also showed significant improvement. However, the regulator completely ignored the strong data and lowered its economic forecasts. In addition, the Central Bank expressed concern about the growth prospects of the global economy and the trade war between the United States and China.

Since then, the economy of the Maple Leaf has continued to strengthen but trade relations between Washington and Beijing have deteriorated significantly. Oil quotes have declined by more than 10% and stock markets have passed local highs. The Middle Kingdom is the second most important trading partner of Canada after the United States and the prospect of slowing economic growth in both countries poses a greater threat to the six-month BoC forecast. If the regulator goes too far with concern, it may be enough for the USD / CAD pair to close above 1.35 for the first time since the beginning of the year.

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Meanwhile, the EUR/USD pair continues to decline in anticipation of the final placement of the new political forces in the EU after the recent elections to the European Parliament.

"Although the absence of a more dramatic shift to the right is in itself positive for the euro, the growing political division of the Old World could be a burden for the single European currency," said Stefan Bielmeier, chief economist at DZ Bank.

According to him, the greatest risks for the euro are the new political crisis in Italy and the collapse of the ruling coalition in Germany.

"The initial relief from the fact that populists did not receive a tangible advantage in the elections to the European Parliament was replaced by fears about the lack of a clear majority among the centrists that could lead to political paralysis," said John Hardy, currency strategist at Saxo Bank.

"The elections to the European Parliament have ended relatively successfully for the single European currency. However, it remains vulnerable amid sluggish economic growth in the EU and concerns about a possible deterioration in the trade relations between Washington and Brussels," said Jane Foley from Rabobank.

"Another risk factor for the euro is to strengthen the position of the Italian eurosceptics, encouraged by the success in the past elections," she added.

According to Rabobank's forecast, the EUR / USD pair can sink to the level of 1.10 in the next three months.

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Trading Plan for EUR / USD pair on 05/29/2019

The euro is under pressure and the US market is rather looking down. Yet, the economy remains strong. There is no reason for a crisis right now.

On the market is a stop period. All major topics are deadlocked. The resignation of Prime Minister May in Britain has stopped the situation on Brexit for at least a month. The US-China trade negotiations also halted.

The euro is under pressure and the US market is rather looking down. Yet, the economy remains strong. There is no reason for a crisis right now.

EUR/USD: Returns to range

Moving up and down is equally is expected.

We are ready to buy euros from 1.1220.

We are ready to sell the euro from 1.1105.

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Trading concerns and falling yields are pushing the yen upwards

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The Japanese yen has every chance to continue climbing. The currency strengthened to a two-week high against the dollar amid fears of a further escalation of the trade conflict between the United States and China. Another "surge" sent investors to a safe haven. The reason for this was unexpectedly aggressive rhetoric in the pages of the People's Daily newspaper, which is the official mouthpiece of the ruling Communist Party of China. As a result, the yen rose to 109.15 yen against the dollar, which is the highest level since May 15 this year. However, this is the only sparring where the dollar loses, as it steadily grows against other currencies.

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Now, investors are considering the dollar as an ideal instrument in the transition period, when global growth is weakening amid trade disputes and political uncertainty. The American currency received an additional impetus after the publication of a report by the US Treasury Department, which states that the agency considered the monetary policy of more than 21 major US trading partners and found that nine of them require close attention due to currency fraud, namely China, Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore and Vietnam. According to the United States, these countries deliberately holding back the growth of the value of national currencies.

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Burning forecast EURUSD 05/29/2019

There is no important news on the market today.

EURUSD: Growth has stopped.

The euro fell again under the inexorable pressure of sellers and retreated to 1.1150.

The growth has stopped, and we return to the range.

However, the exit from the long range and the trend is inevitable.

We are ready to buy the euro from 1.1220.

We are ready to sell the euro from 1.1105.

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Trading recommendations for the GBPUSD currency pair - placing trading orders (May 29)

For the last trading day, the currency pair pound / dollar showed a low volatility of 53 points, but this amplitude was strong enough to keep the recovery phase on the market. From the point of view of technical analysis, we see that the quotation is gradual, but restores short positions after the recent corrective move, having a current recovery of more than 70% relative to the correction. Considering the graph in general terms, we see that the tact in the global calculus is correct: impulse - correction - impulse, where in case of breakdown of the local minimum 1.2604 (May 23), the main downward trend will continue its march.

On the other hand, the information and news background, in principle, did not have any strong statistics. The only thing that was highlighted was the S & P / Case-Shiller house price index in the United States, where they waited for the decline, and received it from 3.0% to 2.7%. Returning to the information background, which precisely holds the interest of speculators, we have a statement by the head of the European Commission, Jean-Claude Juncker, who said he would transfer the meeting with the outgoing British Prime Minister Theresa May on the sidelines of the EU summit in Brussels. However, revising the agreement on exit conditions kingdom from the community is excluded.

"I will have a short meeting with Theresa May, but I was crystal clear - there will be no revision of the agreement," Juncker said.

From all the above, we understand that the Brexit theme remains with all the negative background that exists, and with the new Prime Minister, nothing will change and perhaps, the situation will only get worse.

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Today, we do not have an empty economic calendar. Thus, we should all hope for a spontaneous information background.

Further development

Analyzing the current trading chart, we see that the quotation, after all, is moving towards the previously set forecast, and is a prerequisite for speedy convergence with the point of support in the form of the level of 1.2620. It is likely to assume the preservation of the current mood while waiting for a descent to the area of 1.2600 / 1.2620. Furthermore, it is necessary to track the behavior of quotes for fixation points within this range of 1.2600 / 1.2620. Thus, work will be conducted according to the method of breakdown / rebound.

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Based on the available data, it is possible to decompose a number of variations. Let's consider them:

- Buy positions will be considered, in the case of a slowdown in the range of 1.2600 / 1.2620, followed by refinement.

- We already have positions for sale. The deal goes towards 1.2600 / 1.2620. Further refilling is made in case of a clear price fixing lower than 1.2600, not a puncture.

Indicator Analysis

Analyzing the different sectors of timeframes (TF), we see that the indicators in the short, intraday and medium term, are configured in a downward plan due to the general market background.

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

Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.

(May 29 was based on the time of publication of the article)

The current time volatility is 23 points. In case of preservation of the inertial course and breakdown of the local minimum of 1.2604 (May 23), we can expect an increase in volatility. Otherwise, we will again see the flaccid amplitude of oscillation.

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Key levels

Zones of resistance: 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700

Support areas: 1.2620; 1,2500 *; 1.2350 **.

* Periodic level

** Range Level

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Wave analysis of EUR / USD and GBP / USD for May 29. The results of the elections to the European Parliament are positive

EUR / USD

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On Tuesday, May 28, the EUR / USD pair trading ended in a further 30 basis points. It would seem that the American statistics summed up the dollar at the end of last week. On the other hand, the euro received good chances for building an ascending wave, even though it does not fit into the current wave counting, and on Monday, the results of the elections to the European Parliament became known. According to which, party members who won are supporters of the EU. However, all this does not help the euro in the fight against the US dollar. On the current wave picture - everything is logical. The trend section, which takes its beginning on March 20, takes on a very long look. The unsuccessful attempt to break through the low of April 26 made doubts at first about the willingness of traders to sell the euro. But now, it is clear that the EUR / USD instrument is still inclined to decline.

Sales targets:

1.1097 - 161.8% Fibonacci

1.1045 - 200.0% Fibonacci

Purchase goals:

1.1324 - 0.0% Fibonacci

General conclusions and trading recommendations:

The euro / dollar pair remains at the stage of building a downward trend. The signal from the MACD was formed down, so I recommend selling the euro with the targets of 1.1097 and 1.1045, which corresponds to 161.8% and 200.0% in Fibonacci. A restrictive order is recommended to be placed above the level of 76.4% Fibonacci. Thus, an unsuccessful attempt to break through will lead to a new decrease in the instrument.

GBP / USD

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On May 28, the GBP / USD pair lost another 25 basis points. The estimated wave from the downward trend, taking its beginning on March 13, is ready to take a more complex and extended look. In addition, the longer the uncertainty persists with Brexit and the future prime minister of the country and, accordingly, with the future of the country itself, the longer the pound will remain an object for sales among small and large traders. Now, I see a very likely completion of the construction of the expected wave 2, c, which in size was not more than 23.6% of wave 1. Thus, the pound / dollar pair showed readiness to build a downward wave 3, c, with the prospect of falling towards 23 and 22 figures.

Sales targets:

1.2554 - 200.0% Fibonacci

1.2360 - 261.8% Fibonacci

Shopping goals:

1.3175 - 0.0% Fibonacci

General conclusions and trading recommendations:

The wave pattern of the pound / dollar instrument suggests a resumption of the instrument decline within the estimated wave c. Thus, now, I still recommend selling the pound with targets located near the calculated levels of 1.2554 and 1.2360, which corresponds to 200.0% and 261.8% Fibonacci.

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Control zones for GBP/USD pair on 05/29/19

Working outside the monthly CZ of May provides an opportunity to search for favorable prices for the purchase. The "false breakdown" should become the main pattern since it will allow entering the zone of large limit purchase orders. Any sales from the current marks will be unprofitable at a distance since the probability of closing the auction for this month below the level of 1.2689 is 30%.

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Purchases are also possible from the current levels if a pattern of a false breakdown of the Friday minimum is formed. This will give the opportunity to work on the market maker level. The first goal will be the maximum of last week.

An alternative model of falling has a probability of 30%, therefore, it should be used only to search for favorable prices for the purchase. Sales of the instrument beyond the average monthly rate at a distance will cause losses even if it is possible to earn small profits in similar situations. The most favorable prices for searching for the pattern of "false breakdown" in opening a long position are at the low of last week.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The area formed by marks from the important futures market, which changes several times a year.

Monthly CZ - monthly control zone. The area is a reflection of the average volatility over the past year.

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Review of EUR / USD and GBP / USD pairs on 05/29/2019: Do not disturb until Monday

The intermission of Brexit's theatrical production continues and the macroeconomic calendar is full of all sorts of things that are of little interest to anyone. Thus, investors simply do not have any ideas. Indeed, consumer lending in Europe accelerated from 3.2% to 3.4% and according to BBA, the number of approved mortgage loans in the UK increased from 40,564 to 42,989. In turn, the housing price growth in the United States slowed from 3.0% to 2.7% based on the report from S&P Case-Shiller. However, all these data are not so important for the market and have not had any impact. Thus, the dollar could symbolically strengthen the number and this is more likely due to inertia since the situation remained unchanged. Moreover, an unregulated Brexit with an unpredictable outcome is on the agenda.

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Today is a pre-holiday day in Europe, as tomorrow will be the Day of Ascension. Given that they will rest on Thursday, it is likely that no one will work especially on Friday. After all, what's the point of working just one day? Hence, European traders will already be preparing to take care of a long weekend and in a completely empty macroeconomic calendar, they can try to close the week so as to eliminate at least a little the imbalances that have taken the form of dollar overbought. Although the size of this overbought is so small that it does not affect the quotes as much. However, one should not forget that investors will keep tomorrow's data on US GDP in mind, especially since the second estimate of economic growth rates may turn out to be somewhat worse than the first.

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Thus, the single European currency will remain close to the achieved levels, periodically demonstrating attempts to rise to 1.1200.

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The situation with the pound is similar, although, it is unlikely that he will be able to reach the level of 1.2700.

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Fight over pound: 10 candidates for the premiership and one Brexit

The British currency is still under pressure from political uncertainty. Slowing down its fall, the pound paired with the dollar froze in anticipation of news impulses that will be associated primarily with personnel policies in Downing Street and the prospects for the June vote for the draft of Brexit deal.

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After the resonant (but expected) statement of Theresa May about the imminent resignation, the situation did not stabilize. Moreover, the tangle of contradictions was even more confused, taking into account the political struggle for the premiership. Already 10 conservatives have declared their desire to sit in the chair of the British government and many of them are political heavyweights. Thus, some intrigue remains despite Johnson's leading position. Each of the applicants has his own vision of future relations with Brussels, but all of them are united by one thought: Brexit must take place at all costs. The categorical rhetoric of some candidates (including Johnson) scares traders, which is why the pound is not in demand. Not only when paired with the dollar but throughout the market (for example, in May, the British lost more than 300 dollars) points).

As I have already said above, the post of Prime Minister is claimed by 10 politicians, who all (without exception) held or occupy public positions. Just yesterday, the head of the British Home Office, Sajid Javid, and the Minister of Regional Affairs and Local Government Kit Malthouse, entered the election race. Before them, some expressed their desire to become the successor to May including the Environment Minister Michael Gove, Minister of Health Matt Hancock, Foreign Minister Jeremy Hunt, ex-Foreign Minister Boris Johnson, Ex-leader of the House of Commons Andrea Leedsom, Ex-Minister of Labor and Pensions Security Esther McVey, former Brexit Minister Dominic Raab and lastly, Secretary of International Development Rory Stewart.

Boris Johnson is considered a favorite in the inner-party political race. Its position relative to Brexit is distinguished by a known toughness. Last week, he stated that he did not support the idea of a repeated referendum and would not ask Brussels for another postponement, citing political changes in the country. Johnson stressed that the epic "divorce process" should end on October 31 - in one form or another. Although, he personally prefers to make a deal with Brussels. Despite such "peace-loving" intentions, the former foreign minister is unlikely to make any concessions to Europe, while the Europeans have already stated beforehand their categorical refusal to revise the terms of the agreement. Therefore, the appointment of Johnson will increase the likelihood of "hard" Brexit and this scenario does not exclude Boris himself.

Environment Minister Michael Gove, one of the contenders for the premiership, is a collaborator of Johnson and largely (almost all) shares his position, including on the prospects for Brexit. Another candidate is the former Minister of Labor and Pensions Esther McVey - takes a tough position regarding Brussels. It admits the option of withdrawing from the EU without an agreement, "unless Europe makes serious concessions" (which naturally not). By the way, she left Theresa May's government last year after a disagreement with the Prime Minister about the negotiation process with the European Union. Brexit ex-minister Dominic Raab is ready to withdraw from the EU without an agreement. He also left Theresa May's Cabinet due to disagreements with her over the Irish border regime (backstop).

The remaining candidates for the prime minister's position are more liberal regarding Brexit's prospects. For example, Interior Minister Sajid Javid stated the need to conclude a deal with Brussels, and Foreign Minister Jeremy Hunt even considers the hard Brexit to be "political suicide." The Minister for International Development, Rory Stewart, promised to reach a compromise agreement with Brussels, stating that he would leave his post if Boris Johnson was elected, as he categorically disagreed with his position. Health Minister Matt Hancock also agrees to make certain concessions to Brussels, advocating a "moderate exit scenario from the EU." According to him, a compromise is needed to carry out the project through parliament.

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Former leader of the House of Commons Andrea Leeds left her post in protest against the idea of May to hold a second referendum (or rather, to give deputies the opportunity to vote for this idea). At the same time, she is a supporter of further negotiations, primarily within the parliament, distancing as far as possible from the scenario of the tough Brexit. The Minister for Regional Affairs and Local Government, Keith Malthouse, is in favor of extending the transition period to negotiate "alternative agreements" with Northern Ireland.

Thus, all contenders for the premiership post are conditionally divided into two camps. Some are in favor of a "tough" Brexit (or rather, they allow this option), while others take a softer (liberal) position. In general, such a division reflects the existing split within the Conservative Party, since there is also no consensus among its members regarding a way out of the current impasse. Despite the clear leadership of Boris Johnson, it is still early to speak about his unconditional victory. British policy sometimes brings surprising surprises.

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GBP/USD: plan for the European session on May 29. Wanting to buy a pound less and less

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

After the recent growth of the pound against the background of Theresa May's statement about her resignation, to date, the British pound has lost all its positions and is on the verge of another major fall. Yesterday, buyers failed to break through the level of 1.2696, which will maintain a downward impulse. Today, in the first half of the day, a return and consolidation above the resistance of 1.2969 are required, which will allow us to expect a quick return to the maximum of 1.2744 and an update of the resistance of 1.2800, where I recommend fixing the profits. With a further decrease in the pound, you can open long positions on a false breakdown from the low of 1.2648 or on the rebound from the support of 1.2607.

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

As long as trading will be below the resistance of 1.2696, the pressure on the pound will remain, and the formation of a false breakdown there in the first half of the day will be a signal to sell the pound. The main task of the bears will be the support test of 1.2648, which may lead to an update of the minimum of 1.2607, where I recommend fixing the profits. If the growth scenario is above 1.2696 in the morning, you can return to the sales of the pound immediately on the rebound from the maximum of 1.2744.

Indicator signals:

Moving Averages

Trading is below 30 and 50 moving averages, which indicates a possible return to the market of large sellers.

Bollinger Bands

Volatility is very low, which does not give signals to enter the market.

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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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USDCAD: CAD to lose further momentum ahead of BOC Overnight Rate? May 29, 2019

The USD/CAD pair has been corrective and volatile at the edge of the 1.3500 area for a few days. Now, it is likely to move higher with a break above the important psychological level with a daily close.

The US Consumer Confidence positive report supported the US currency. Consumer confidence report showed an increase in May as households grew more optimistic about the labor market, suggesting the economy remained on solid ground despite signs that activity was slowing after being temporarily boosted by exports and a build-up of inventories.

The trade war between US-China has worsened the economic development. Chinese Mobile Giant Huawei is currently facing US sanctions. The cut-off date for the Conference Board survey was on May 16. The U.S. raised existing tariffs on $200 billion in Chinese goods to 25% from 10% on May 10, prompting Beijing to retaliate with its own levies on American imports. Moreover, all 12 of the U.S. Federal Reserve's regional banks supported keeping steady the interest rate commercial banks are charged for emergency loans before the central bank's last policy meeting.

The figure of the Prelim GDP report is expected to drop to 3.1% from 3.2%. US Richmond Manufacturing Index report is going to be published today. The reading is expected to boost to 6 from 3.

Bank of Canada Governor Stephen Poloz pointed out that the interest rates remained unchanged on Wednesday. Today, the CAD Overnight Rate report is going to be released. The reading is expected to be unchanged at 1.75%. It's a reflection of an economy, only just emerging from a serious slowdown, that's still too fragile to cope with higher rates. Businesses are spooked by global trade uncertainty. Low oil prices and transportation constraints have hobbled the crucial energy sector. Though certain rumors are being heard about the rate cut by Bank of Canada but till now Bank of Canada has not shown any evidence to believe it yet.

Today, Canadian Government will formally present draft legislation to parliament to ratify a new North American trade pact. it is expected to press ahead with moves to ratify the United States-Mexico-Canada Agreement after the U.S. administration lifted tariffs on Canadian steel and aluminum exports. Additionally, the Bank of Canada's Rate Statement is expected to lead to further volatility in the currency pair today.

The Canadian dollar is likely to lose momentum against the US dollar.

Now let us look at the technical view. The price is currently residing at the edge of the 1.3500 area after a strong bullish pressure observed recently. Having resided inside the corrective range for a few days, the price has found strong support at the preceding upward trend line which is expected to carry the price further upward with a target towards 1.3600 area in the coming days. As the price remains above 1.3350 area with a daily close, the bullish bias is expected to continue.

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Indicator analysis. Daily review on May 29, 2019 for the currency pairs EUR/USD and GBP/USD

On Tuesday, the market in both currencies moved down.

The GBP / USD pair could not reach the lower fractal of 1.2605 while moving down.

The EUR / USD pair, when moving down, tested the pullback level of 50.0% - 1.1162 (yellow dotted line), but did not go below.

On Wednesday, strong calendar news come out at 7.55 (euro) Universal time.

Trend analysis (Fig. 1).

Today, the price will make an upward pullback movement (before lunch - this is for sure) with the first target of 1.1182 - a pullback level of 38.2% (blue dashed line). However, a possible downhill may occur after lunch.

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Fig. 2 (daily schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - up;

- volumes - down;

- candlestick analysis - up;

- trend analysis - down;

- Bollinger lines - up;

- weekly schedule - up.

General conclusion:

On Wednesday, we are waiting for the continuation of the downward movement, but this is most likely to be after lunch, and before that - the upper pullback movement. The first upper target of 1.2688 is the pullback level of 14.6% (yellow dotted line). On the other hand, the overall lower target remains to be 1.2605 - the lower fractal.

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EUR/USD: plan for the European session on May 29. Good data on the US return buyers of the US dollar to the market

To open long positions on EURUSD, you need:

Yesterday's report on consumer confidence in the US led to a new wave of EUR/USD decline. At the moment, the upward momentum will depend on the level of 1.1170, the return on which will increase the demand for the euro, which will lead to an update of the maximum of 1.1196 and 1.1218, where I recommend fixing the profits. In case of further decline of the euro against the background of weak data on the economy of France and Germany, namely, they will focus on the first half of the day, support will be provided by the area of 1.1143, where you can open long positions immediately on the rebound.

To open short positions on EURUSD, you need:

A false breakdown and a return below the resistance level of 1.1170 will be a signal to open short positions in the euro, and the main task for the first half of the day will be a test of a large support level of 1.1143, which will increase the pressure on the pair and will lead to an update of the minimum of the month in the area of 1.1112, where I recommend fixing the profits. In the scenario of good fundamental data, it is best to return to short positions in EUR/USD after updating the maximum of 1.1196 or to rebound from a larger level of 1.1218.

Indicator signals:

Moving Averages

Trading is below 30 and 50 moving averages, which indicates a further decline in EUR/USD in the short term.

Bollinger Bands

In the case of euro growth in the first half of the day, the upward trend may be limited by the upper limit of the indicator around 1.1190. in the area of 1.1190.

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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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Control zones for AUD / USD pair on 05/29/19

Today's trading plan should take into account the multiple tests of 1/2 WCZ at 0.6940-0.6933. As long as the pair is trading below the specified zone, the probability of the resumption of the downward movement is high. The pattern for sale will be a false breakdown of Monday's high. If this happens, then the goal of the fall will be at least last week.

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It is important to understand that it's better to refrain from selling a large offer from sales since the closure of today's American session will indicate a trend change.

An alternative model will be developed if today's trading closes above 0.6940. In this case, the purchases will come to the fore already at tomorrow's Asian session. The growth potential will be 74 points, which will give an opportunity to enter purchases with a stop not exceeding 20 points. Working in the upstream direction can become the basis in the second half of the week.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The area formed by marks from the important futures market, which changes several times a year.

Monthly CZ - monthly control zone. The area is a reflection of the average volatility over the past year.

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AUDUSD: Australian Dollar to regain momentum over USD? May 29, 2019

Australian Dollar managed to sustain the bullish momentum against the US dollar despite the positive economic reports which were supposed to support the US dollar gains.

The Australian economy is hugely affected the US political events such as the US-China trade tension. Australian Building Approval report is going to be published soon. The reading is expected to increase to 0.1% from -15.5%. Private Capital Expenditure might drop to 0.5% from 2.0%. Due to this report, certain indecision and higher volatility are likely to impact the Australian dollar gains. In case, if the upcoming economic data turns out to be weak, the greenback might assert strength and gain ground/ The greenback has been already supported by the positive Consumer Confidence report.

US Consumer Confidence report also supported the US currency. Consumer confidence report showed an increase in May as households grew more optimistic about the labor market, suggesting the economy remained on solid ground despite the signs that market activity was slowing after being temporarily boosted by exports and a build-up of inventories. The trade war between US-China resulted to worsen the situation. Chinese Mobile Giant Huawei is currently facing US sanctions. The cut-off date for the Conference Board survey was on May 16. The US raised existing tariffs on $200 billion in Chinese goods to 25% from 10% on May 10, prompting Beijing to retaliate with its own levies on American imports. Moreover, all 12 of the U.S. Federal Reserve's regional banks supported keeping steady the interest rate commercial banks are charged for emergency loans before the central bank's last policy meeting.

The figure of the Prelim GDP report is expected to sink to 3.1% from 3.2%. Today, the US Richmond Manufacturing Index report is going to be released. The reading might rise to 6 from 3.

Hence, the greenback has got better economic reports in comparison with the Aussie. However, the Australian dollar is likely to regain momentum, but the US dollar has a greater probability to continue the bearish pressure.

Now let us look at the technical view. The price has been struggling at the edge of 0.6930 area carried by the dynamic level of 20 EMA as support indicates further upward momentum. The price without Bearish Divergence in the build may lead to an upward break. The daily close remaining below 0.70 is an indication of the continuation of Bearish bias in the market. It may lead the price towards 0.6500 support area in the coming days.

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Technical analysis: Important intraday Level For EUR/USD, May 29,2019

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When the European market opens, some economic data such as German Unemployment Change, French Prelim GDP q/q, FrenchPrelim CPI m/m, French Consumer Spending m/m will be published. The US will release Richmond Manufacturing Index. Amid reports, the EUR/USD pair will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL: Breakout BUY Level: 1.1221.Strong Resistance:1.1215.Original Resistance: 1.1204.Inner Sell Area: 1.1193.Target Inner Area: 1.1167.Inner Buy Area: 1.1141.Original Support: 1.1130.Strong Support: 1.1119.Breakout SELL Level: 1.1113.(Disclaimer)

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