Overview of the EUR/USD pair on December 5. The document with the charges in the case of impeachment of Trump has been transferred

4-hour timeframe

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Technical data:

The upper channel of linear regression: direction - up.

The lower channel of linear regression: direction - up.

The moving average (20; smoothed) - up.

CCI: 64.8784

The EUR/USD currency pair made another upward leap yesterday and perfectly worked out the Murray level of "4/8" - 1.1108, from which a rebound and an equally strong drop in the pair's quotes immediately followed. Thus, yesterday ended without strengthening the European currency. We can once again conclude that even despite the weak macroeconomic statistics from overseas and seemingly good from the European Union, traders are still very reluctant to buy the euro. Yesterday, the indices of business activity in the services sectors of Germany and the European Union showed a positive trend. There were no major changes in these indices, so we can assume that there was no reaction to them and should not have been, but then the report on the change in the number of employees in the US private sector from ADP completely failed. A little later, the US ISM index of business activity in the services sector failed, amounting to only 53.9 in November, with a forecast of 54.5 and the previous value of 54.7. However, the euro currency did not continue to grow, as could be expected, it began to decline, that is, the US dollar began to grow again.

Thus, it follows from all the above that the bulls remain extremely weak, despite any fundamental factors. Quite a strong imbalance between the monetary policy of the Fed and the ECB continues to play a key role in the exchange rate of the euro/dollar. The threat that Donald Trump will impose new duties on Chinese goods on December 15 applies to the European Union too, and also, Trump may begin to impose duties and apply sanctions against EU member states. Yesterday, we already found out that soon, France may fall under 2.4 billion sanctions because of its tax for IT companies with a high level of turnover, under which American companies also fall. Also, the automotive sector of the European Union may fall under sanctions. Thus, although the trade wars fueled by Trump relate primarily to America itself and the American currency, the euro is experiencing a greater burden on the foreign exchange market.

Today, the European Union will publish quite important statistics on GDP for the third quarter and retail sales for October. According to experts, retail sales will show an increase of no more than 2.2% y/y, and GDP will be +1.2% in annual terms. We believe that both of these forecast values are quite low, so if the real values are even lower, then traders can gladly rush to sell the euro currency. In the United States today, there will be no important macroeconomic publications, but Donald Trump is again on the front pages of newspapers and periodicals.

The story of the impeachment of the incumbent US president is extremely controversial. Firstly, because in the entire history of America, as a result of impeachment, the president left his office only 1 time, and another 1 time - the president voluntarily resigned. Thus, the probability that impeachment will take place in the case of Trump is extremely low. Secondly, the US Senate, which will have to approve the decision of Congress on impeachment, in its composition has more Republicans than Democrats, respectively, it is unlikely that the Senate will approve the initiative to remove Trump from his post. Third, the presidential election is less than one year away. Does it make sense to remove Trump in less than a year before the moment when he leaves? Yes, the American president is trying his best to be re-elected for a second term, but the probability of this, from our point of view, is extremely small. Trump will be remembered as the president who ignited trade wars around the world and fell out with everyone he could. It doesn't matter whether it is good for the States or not, but no one will deny the fact that Trump is a very "complex person".

Last night, the Congressional Intelligence Committee approved the text of the impeachment investigation. Now, this document is transferred to the Legal Committee of the House of Representatives, which will determine whether Donald Trump is guilty. The Democrats' accusations are the same: Donald Trump tried to put pressure on Ukrainian President Vladimir Zelensky to initiate an investigation into his main rival Joe Biden. "The president put his personal and political interests ahead of America's national interests, took actions aimed at undermining the US presidential election process and jeopardized US national security," the document said. Trump himself immediately called the document and the accusations in it "a laughing stock", but history, as we see, takes a new turn.

The technical picture of the currency pair is now again reduced to a weak movement without a clear direction. We still believe that the prospects for the euro currency are very vague, so we expect a new decline in the European currency. However, there is still an upward trend above the moving average line and it is not recommended to sell the pair in this area.

As for the average volatility of the euro/dollar pair, it is now 53 points. Thus, in the maximum case, we can expect today to move between the levels of 1.1024 and 1.1130. However, this is the maximum case, in practice, the range of movement of the euro/dollar on Tuesday may be much narrower unless GDP in the eurozone fails and does not cause a massive sell-off of the euro.

Nearest support levels:

S1 - 1.1078

S2 - 1.1047

S3 - 1.1017

Nearest resistance levels:

R1 - 1.1108

R2 - 1.1139

R3 - 1.1169

Trading recommendations:

The euro/dollar pair is again correcting against the continuing upward trend. Thus, now purchases of the euro currency formally remain relevant, however, it is recommended to open them no earlier than turning the Heiken Ashi indicator back up with targets between 1.1108 and 1.1130. It is recommended to return to the pair's sales not earlier than the back fixing of the bears below the moving average line.

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

Explanation of the illustrations:

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

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

CCI - the blue line in the indicator window.

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

Support and resistance - the red horizontal lines.

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

Possible variants of the price movement:

Red and green arrows.

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

Trading plan for EURUSD on 12/05/2019. Weak data on the US and the euro.

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On Wednesday, important US data were released.

The employment report from ADP showed fewer jobs in November than forecast - 67k-100K less than forecast. This creates a real chance that nonfarm will come out very weak tomorrow, December 5th.

Further, the ISM services sector index came out noticeably worse than forecast and the previous value at 53 - with a forecast of 56 - this is still growth - but with a clear slowdown in growth.

Thus, there are more signs of a slowdown in the US economy - this creates the possibility of a Fed rate cut as early as December 11.

EURUSD: The attempt to break through the sellers' defense at 1.1100 failed.

On weak US data, the euro buyers attacked the sellers at the level of 1.1100.

Briefly reached the level of 1.1115 - but the sellers were stronger.

We are in the purchase from 1.1035 and waiting for a new hike up.

Stop at 1.0990.

Entry down from 1.0980.

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

USD/CAD. Bank of Canada inspired the loonie, but don't rush into short positions

The Bank of Canada surprised the market with its hawkish attitude yesterday: contrary to the expectations of most analysts, not only did the regulator not soften the tone of its rhetoric, but also showed optimism regarding the growth prospects of key macro-indicators of the country. Such a scenario came as a surprise to the market, so the loonie instantly collapsed by a hundred points and is currently heading towards the main support level of 1.3150. If the bears overcome it, they will be able to return to the region of the 30th figure, where the pair was for the last time at the end of October.

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On the eve of the December meeting, the market was 100% certain that the regulator would leave all the parameters of monetary policy unchanged. At the same time, according to general expectations, the central bank should have taken a dovish position regarding the assessment of its further actions. Some experts argued that the central bank will announce a rate cut in January, while others suggested that the regulator hinted at easing monetary policy in the first half of next year. In other words, almost everyone was convinced that against the backdrop of uncertain prospects for US-Chinese trade negotiations, the Bank of Canada would take at least a defensive position - especially since key economic indicators have recently shown conflicting dynamics.

In particular, the latest labor market data unexpectedly disappointed: for the first time since July, the employment growth rate was in the negative area - the number of jobs decreased by almost two thousand. And this is despite the fact that for two months, experts marked record growth in the indicator (in August it grew by 80 thousand, and in September - almost 54 thousand). Despite the October forecast for growth of 14 thousand jobs, the indicator showed a negative trend. The external fundamental background was also in favor of the dovish scenario. Let me remind you that representatives of the Bank of Canada have repeatedly warned that they may resort to preventive measures if trade uncertainty increases. Therefore, after the latest events, when negotiations between the US and China once again stalled, the Canadian dollar lost its foothold - the USD/CAD pair jumped to 1.3320 last month.

But contrary to negative expectations, the Canadian regulator focused on the positive aspects of the fundamental picture. According to members of the Bank of Canada, the global economy is showing "signs of stabilization," although global trade conflicts remain the main risk factor for forecasts, they said. The central bank also indicated a decrease in recession risks and a significant increase in investment spending in the third quarter. In addition, the regulator positively commented on the price dynamics of the commodity market (including the oil market), noting that the Canadian dollar rate maintains "relative stability".

In a separate line, the Bank of Canada noted the growth of inflation indicators in the country. According to members of the central bank, inflation will remain near the target two percent mark in the next two years, while the latest releases inspire some optimism. It is worth noting that recently published data on inflation growth really came out at the forecast level, showing a good result. Thus, the consumer price index in October rose to 1.9% in annual terms. A similar result was recorded in previous months - in September and August. If we talk about monthly calculation, then the index rose by 0.4%, this result also coincided with the forecasts of most experts. Excluding gasoline, price increases were 2.3% after rising 2.4% for 3 consecutive months.

The structure of the indicator suggests that housing prices (0.6% MOM and 2.6% YOY), foodstuffs, and clothes grew the most. Transportation costs also increased (by 0.7% on a monthly basis and by 1.4% on an annualized basis).

Summing up the last meeting this year, members of the Canadian regulator said that the current level of interest rate is "optimal". As for future prospects, the Bank of Canada will proceed from an assessment of the current situation at the time of the decision. First of all, the central bank will analyze the balance of such factors as foreign trade and a stable domestic economy.

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All this suggests that in the near future (at least until February) the Bank of Canada will maintain a wait-and-see attitude, despite the uncertainty regarding the prospects for a global trade war. This fact has provided significant support to the loonie. At the same time, it is already risky to open short positions today, given the damping of the downward impulse and the proximity of tomorrow's Nonfarm. The pair retains the potential to decline to 1.3150 and 1.3080 (the lower line of the Bollinger Bands indicator on the weekly chart), however tomorrow's data on the labor market could trigger an upward pullback. The US currency will receive strong support if the Nonfarms data turns out positive, especially amid the disappointing ADP report. Otherwise, the downward dynamics of USD/CAD will continue - to the levels indicated above.

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

Threat of weak nonfarm has become clear, EUR remains in the range, while GBP has chance to continue the rally

The report on private sector employment from ADP was disappointing, contrary to the forecast of 140 thousand, jobs only increased by 67 thousand, which casts doubt on the attainability of the result of 180 thousand for non-farms, which will be published on Friday. There was only one case when non-farms exceeded the result of ADP by 100 or more thousand Since 2012. Therefore, a high result from non-farms should not be expected.

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Moreover there is negativity on the weaker report of ADP which came from a weaker than forecast ISM report on the service sector. In November, 53.9p is higher than the boundary of the expansion zone, but it should be bear in mind that ISM has been slowing for 13 months after the peak reached in October 2018, which, combined with a slowdown in the manufacturing sector, casts doubt on the ability of the US economy to overcome crisis trends without additional incentives.

Stock indices, in turn, closed in positive territory. However, it was quite a technical pullback after a strong decline at the beginning of the week, and the chances of a resumption of the decline look high. Donald Trump also added a little positivity, who announced that negotiations with China are going very well during the NATO summit in London, which he actually canceled his statement last Tuesday regarding the possibility of continuing trade tensions until the next presidential election.

On the other hand, more expensive oil and the decision of the Bank of Canada to leave the rate at the current level also contributed to the increased demand for risk, but there is quite a high probability that the market will forget positive signals quite soon, as problems in the US economy are growing. Nonetheless, an employment report will already confirm this conclusion the next Friday.

EUR/USD

The eurozone economy is attempting to push itself from the bottom, although frankly, it is still far away to the bottom. The Markit index of business activity in the service sector increased in November from 51.5p to 51.9p and composite index from 50.3p to 50.6p. Both indicators were ultimately higher than forecasts and were confirmed by previously published studies from ZEW and Ifo.

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At the same time, country data came out mixed and do not give a clear picture of the reversal - if Spain and Germany are making attempts to continue growth, then Italy and France are still slowing down. So far, the euro is trading in the range, and even a weak ISM did not help.

Today, Eurostat will publish the updated data on GDP and employment in the 3rd quarter. In addition, retail sales for October will also be released. Thus, the chances of leaving the range before the publication of the US employment report on Friday are low.

EUR/USD is trading near the level of 1.1100. Breaking above will indicate the next target of 1.1180, although the long-term trend is still negative, and for the forecasts of most banks to confirm the growth of the euro in 2020, it is necessary to exit above 1.12.

GBP/USD

The pound continues to climb and reached a seven-month high, as the markets have firmly established confidence that the conservatives will win a full victory in the December 12 elections.

However, data on business activity in November did not have a noticeable effect on the pound, despite the fact that there was a slight increase in all sectors, including the construction sector, which is in stagnation near 10-year lows.

The pound will also be mainly controlled by surveys in the coming days, since the nearest significant macroeconomic data will be published on December 10 only.

Technically, the pound remains in the upward channel and the forecast is bullish. Closing above 1.30 led to a breakthrough of the "bull flag" pattern. Meanwhile, the closest resistance level is in the zone of 1.3170 / 90, and the target is an annual maximum of 1.3380. Corrective pullback is possible to 1.3050, and thus, attempts to reduce will be used by the market for new aggressive purchases.

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Control zones for AUD/USD on 12/05/19

On the third day, the pair tests the zone of the average weekly move, which leads to a halt in growth and the formation of a local accumulation zone. The probability of consolidation above the average move by the end of this week is 30%, which makes purchases from current marks not profitable. In order to enter a long position, it will be necessary to lower the pair to yesterday's low or to Weekly Control Zone 1/2 0.6804-0.6798.

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Working in the flat implies the search for entry points at the boundaries of the range. The lower boundary is at a minimum of the last two days.

The upward movement remains a medium-term impulse, and thus, sales from the upper boundary of the accumulation zone should be focused on short profits. On the contrary, purchases from the lower boundary have an excellent perspective, since the main goal of growth is the weekly control zone 0.6875-0.6887.

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

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

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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Control zones of USDJPY 12/05/19

Today's move will depend on whether the pair can gain a foothold above the WCZ 1/4 109.00-108.95. If consolidation occurs, then yesterday's purchases can be moved to breakeven and left for the medium term. The first goal of growth will be the upper middle course zone, which coincides with the November extremum. Work in the upward direction may become the main for the remaining days of this week.

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Work in the upward direction remains a priority, as there was no consolidation below the WCZ 1/2 108.71-108.62.

An alternative model will be developed if the closure of today's US session occurs below the level of 108.62. This will entail the formation of a reversal pattern and the fall will become a major one in the medium term. It is important to understand that the probability of closing trades below the zone of the average weekly move is 30%, so you should not count on sales until the beginning of next week.

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

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

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

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GBP/USD: plan for the European session on December 5. Regular polls and another pound growth

To open long positions on GBP/USD you need:

The bulls formed another leap of the British pound after the breakthrough of a large resistance of 1.3009. Today, all attention will be paid to the level of 1.3125, at which divergence can be formed on the MACD indicator, which is limited by the upward potential. Therefore, you need to carefully buy 1.3125 for a breakout. In the absence of active growth of GBP/USD after updating yesterday's high, it is best to abandon long positions in the pair and wait for a downward correction to the support area of 1.3085. However, I recommend buying from this level only on a false breakout. Larger players will enter the market only after updating lows of 1.3048 and 1.3009.

To open short positions on GBP/USD you need:

Sellers are clearly not in a hurry to return to the market, and only the formation of a false breakout in the resistance area of 1.3125, with confirmation of divergence on the MACD indicator, will be the first signal to adjust the pound in the support area of 1.3085, where I recommend profit taking, A more important task for the bears will be to consolidate below this range, which will lead to a downward impulse to the area of a low of 1.3048. If the bulls cope with the level of 1.3125 in the morning, and the growth of GBP/USD continues along the trend, it is best to postpone sales until the highs are updated in the areas of 1.3167 and 1.3227.

Signals of indicators:

Moving averages

Trade is conducted above 30 and 50 moving averages, which saves the probability of a pound growth in the short term.

Bollinger bands

Growth may be limited by the upper level of the indicator at 1.3135. In case the pair falls, support will be provided by the lower boundary at 1.3048.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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Technical analysis: Important Intraday Levels For EUR/USD, December 05, 2019

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When the European market opens, some economic data will be released such as French 10-y Bond Auction, Spanish 10-y Bond Auction, Revised GDP q/q, Retail Sales m/m, Final Employment Change q/q, and German Factory Orders m/m. The US will also publish the economic reports such as Natural Gas Storage, Factory Orders m/m, Unemployment Claims, Trade Balance, and Challenger Job Cuts y/y, so amid the reports, the EUR/USD pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Breakout BUY Level: 1.1136. Strong Resistance: 1.1130. Original Resistance: 1.1119. Inner Sell Area: 1.1108. Target Inner Area: 1.1082. Inner Buy Area: 1.1056. Original Support: 1.1045. Strong Support: 1.1034. Breakout SELL Level: 1.1028. (Disclaimer)

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

EUR/USD: plan for the European session on December 5. Important eurozone GDP and retail data could raise pressure on euro

To open long positions on EURUSD you need:

Yesterday, we watched how the unsuccessful breakout of resistance at 1.1092, which occurred along with the release of reports on the state of the US economy, led to the return of the EUR/USD pair to the narrow side channel in which it continues to be located now. Data on the growth in the number of new jobs in the US turned out to be worse than economists' forecasts, and activity in the non-manufacturing sector slowed down altogether. The entire focus of traders in the first half of the day will be shifted to today's report on eurozone GDP growth and retail sales. Only in case of good indicators, which you should not count on much, will the bulls break above the resistance of 1.1092, which will lead to the renewal of highs in the areas of 1.1109 and 1.1131, where I recommend profit taking. In the scenario of EUR/USD decline in the morning, it is best to open long positions after the formation of a false breakout in the support area of 1.1067, or to buy immediately for a rebound from a low of 1.1035.

To open short positions on EURUSD you need:

As yesterday, the bears will count on unsuccessful consolidation above the resistance level of 1.1092, which will be another signal to open short positions in the euro, the purpose of which will be the support of 1.1061, however, returning to the support level of 1.1034, where I recommend profit taking, will be more important. In the meantime, trade is conducted below the range of 1.1092, pressure on the euro will continue, and the market will remain on the side of sellers. With a EUR/USD growth scenario above the resistance of 1.1091 in the morning after good data on eurozone GDP, it is best to consider short positions after updating the high of 1.1109, or sell immediately for a rebound from the resistance of 1.1131.

Signals of indicators:

Moving averages

Trade is carried out in the region of 30 and 50 moving average, which indicates the lateral nature of the market in the face of important data.

Bollinger bands

The upper boundary of the indicator passes slightly above the resistance of 1.1092, in the region of 1.1100, while the breakout of the lower boundary of the indicator in the region of 1.1060 can increase the pressure on the euro.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Important Intraday Levels for USD/JPY, December 05, 2019

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In Asia, Japan will release the 30-y Bond Auction and the US will also publish some economic data such as Natural Gas Storage, Factory Orders m/m, Unemployment Claims, Trade Balance, and Challenger Job Cuts y/y. So there is a probability the USD/JPY pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Resistance. 3: 109.46. Resistance. 2: 109.24. Resistance. 1: 109.03. Support. 1: 108.77. Support. 2: 108.56. Support. 3: 108.34. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Important Intraday Levels for USD/JPY, December 05, 2019

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In Asia, Japan will release the 30-y Bond Auction and the US will also publish some economic data such as Natural Gas Storage, Factory Orders m/m, Unemployment Claims, Trade Balance, and Challenger Job Cuts y/y. So there is a probability the USD/JPY pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Resistance. 3: 109.46. Resistance. 2: 109.24. Resistance. 1: 109.03. Support. 1: 108.77. Support. 2: 108.56. Support. 3: 108.34. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD testing resistance, potential drop!

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Trading Recommendation

Entry: 1.10944

Reason for Entry: 100% Fibonacci extension, 61.8% Fibonacci retracement, horizontal swing high resistance

Take Profit : 1.09994

Reason for Take Profit: Horizontal overlap support, 61.8% Fibonacci retracement, 78.6% Fibonacci extension

Stop Loss: 1.11419

Reason for Stop loss:

horizontal swing high resistance, 78.6% Fibonacci retracement

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

NZD/USD further rise in progress!

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Trading Recommendation

Entry: 0.65400

Reason for Entry: 23.6% Fibonacci retracement, horizontal overlap support

Take Profit : 0.65800

Reason for Take Profit:

61.8% Fibonacci extension

Stop Loss: 0.65040

Reason for Stop loss:

Graphical Swing Low

38.2% Fibonacci retracement

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

USD/JPY approaching support, potential bounce!

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Trading Recommendation

Entry: 107.898

Reason for Entry: 127% Fibonacci extension, 50% Fibonacci retracement, horizontal swing low support

Take Profit : 109.852

Reason for Take Profit: horizontal swing high resistance

100% Fibonacci extension

Stop Loss: 106.62

Reason for Stop loss:

horizontal swing low support

61.8% Fibonacci retracement

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

Forecast for GBP/USD on December 5, 2019

GBP/USD

Yesterday, the British pound overcame the October 21 high and as a result accelerated growth, almost reaching the upper limit of the price channel (1.3147). If the channel wall is overcome, the next pound target will be the Fibonacci reaction level of 200.0% at the price of 1.3206 (near the January high), then growth may follow to the level of 223.6% at the price of 1.3352 (February high). A price reversal downward from the nearest target of 1.3147 is possible according to the peculiarity of the boundary of the price channel that has been going on since July 2014 - the channel is quite long and stable.

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A price breakthrough, if it does, is most likely not going to happen on the first try. Therefore, the situation will remain difficult for several more days. When the price falls below the MACD line (below 1.2825) it will be possible for us to confidently believe that attacks on the boundary of the price channel have been stopped.

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A strong upward trend is observed on the four-hour chart, but there are already early signs that it's fading, this is the intention of the Marlin oscillator signal line to go down from its own channel. With the departure of the signal line to the zero line, the growing potential will significantly weaken.

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

Forecast for USD/JPY on December 5, 2019

USD/JPY

The information received yesterday from the headquarters of the US and Chinese negotiators on trade encouraged the markets - representatives of the parties allowed the conclusion of the first phase of the deal until December 15, before the date of the introduction of tariffs on Chinese goods. The US S&P 500 index gained 0.63%, Nikkei 225 is currently up 0.70% and China A50 grew 0.36%. The price turned from the achieved first bearish goal - from the enclosed line of the price channel, a little short of the MACD line. The signal line of the Marlin oscillator is still in the negative trend zone, growth could continue, but still within the correction.

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The correction can continue to the range of 109.30/50 (highs of October 30 and November 7), going over the range will mean the correction will go into a trend growth, the target will be the line of the green price channel in the region of 109.95. Leaving prices at yesterday's low opens the next bearish target at 107.57 - the intersection of the lines of the red and green price channels.

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Prospects for the euro - EURUSD in the context of the end of 2019

There is the concept of seasonality in any market, including foreign exchange. Some markets, such as the energy market, are more prone to this, while other markets, such as the currency market, are less susceptible, but absolutely all financial markets are subject to seasonal changes. Many of you have heard of the pre-Christmas stock market rally, usually taking place on New Year's Eve, but few have wondered how the end of the year affects exchange rates. Let's try to figure this out.

First of all, we must understand that financial markets are connected with economic cycles and time periods, just as the quotes in our InstaForex terminals are subject to session changes. If you did not know this, then I inform you that the worst time to open positions is the period one and a half hours before the opening of the US session and half an hour after the opening. At the current moment, this corresponds to the period from 12 to 14 London time. It was at this time, before and immediately after the beginning of the US trading session, that the market generated a lot of false signals that mislead traders, but let's return to seasonality.

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The generally accepted economic periods are the quarter, the end of the half year and the end of the year. Moreover, the end of the year, coinciding with the end of the fourth quarter, is the most important period that coincides with the Christmas holidays, which are widely celebrated in the US and Western Europe. As you close the year, you get such a bonus. Close the year with a loss, you will declare a loss in the statements, close the year with a profit - you will receive a premium.

That is why the closure of numerous financial contracts in December is of such great importance. In addition, the Christmas holidays do not allow traders and investors to quickly respond to possible threats, and in this regard, part of the open position is reduced. In other words, liquidity is leaving the market, and the market is becoming thin. This is fraught with significant price spikes and increased volatility, which occurs in the absence of a counterparty to transactions. This is especially dangerous in low liquid currency pairs and cross rates, as well as other assets that are not very popular, but liquid assets, such as EURUSD, are also subject to stress at this time.

Significant increases in swaps and spreads are also possible during this period, which is fraught with unplanned losses for traders. In turn, the increase in liquidity begins immediately after the New Year and by the second half of January, liquidity in the markets is usually restored.

This Friday, December 6, the last option contract of the current year will be closed in the futures currency markets, and, as you understood from the narration above, how it is closed will largely determine whether option sellers will profit in the current quarter. They no longer have time to correct a mistake and withdraw positions from losses.

Let me remind the reader of the mathematically proven truth: 75% of options burn out without money, and rare exceptions only confirm this rule. However, we have the opportunity, falling out only once a year, to test this theory in practice. Let's see how the optional barriers were located in the course of the European currency a week ago, November 26 (Fig. 1).

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Fig. 1: Optional barriers (strikes) as of November 26

As you can see from the diagram below, the largest barrier of Put options was located at 1.10. At the same time, the largest option barrier of Call options was located at around 1.12. The point of maximum pain for option buyers - Max Pain was located at 1.1150. The number of Call options in the money was 5.6%. The number of Put options in the money was 37.1%. The EURUSD rate closed at 1.1020 on November 26.

On Friday, November 29, using the thin market triggered by Thanksgiving in the USA, EURUSD updated its low, took off stops below 1.0985, after which on Monday, November 30, it sharply grew and ended the session at 1.1080, i.e. actually achieved goals at the end of this week. Let's see how the optional barriers have changed since November 26? (fig. 2)

First of all, it should be noted that by December 3, the MP point has shifted from the level of 1.1150, to the value of 1.11. At the same time, the number of Call options in money increased to 13.5%, and the number of Put options in money decreased to 26.9%. The price of the EURUSD cash rate has almost matched the futures contract and is now actually at the point of Max Pain for option buyers, which was to be proved. An accident? I don't think so.

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Fig. 2: Optional barriers (strikes) as of December 3

What conclusion can we draw from these facts? First of all, it can be assumed that, with a high degree of probability, before the closing of the option contract EUUZ9, the EURUSD rate will be in the zone of 1.11. Then a period of low liquidity will come, which will intensify even more after December 16, when the December futures contract for the ECZ19 euro will be closed.

It will not be superfluous to note that the European Central Bank meeting will be held on December 12, and a decision by the US Federal Reserve will be announced on December 18. These meetings will serve as additional uncertainties for the entire foreign exchange market and, in particular, for the euro. Considering the fact that unemployment data in the US will be published this Friday, December 6, the picture of the forthcoming movement of the euro exchange rate by the end of December becomes completely uncertain. However, let's see how option barriers are located in the next January option contract. Perhaps there, we will receive answers to our questions.

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Fig. 3: Optional barriers (strikes), January EUUFO option contract

The January option contract, with the closure on January 3, 2020, although it has good liquidity, still does not have such key significance as the December contract. However, if you look at the current status of this EUUFO contract, you can see that the maximum open interest of Put options is on strike 1.1050, and the maximum open interest of Call options is on strike 1.12. In turn, the MP point of the January contract coincides with the MP point of the December contract and is at a value of 1.11. This is a very narrow range, so during December it is impossible to exclude a change in the parameters of open interest at the optional levels in this contract, and therefore the shift of the MP point.

Traders, when opening positions for buying, should be guided by the level of 1.12, and when opening positions for sale as a price reference, by the end of the current year, the level of 1.1050 should be considered, at least until new data allow another informed decision . In conclusion, I would especially like to note that the main thing in trading financial instruments is not determining the direction, but following the rules of money management.

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

Growth to $1.39 or a crash to $1.15 - what to expect from the pound after the December 12 election?

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The GBP/USD pair updated its seven-month highs amid reports that the Conservative Party continues to hold leading positions in the election race.

Apparently, investors consider the Conservative majority following the December 12 election as the most positive result for the market.

In an effort to find a way out of the impasse around Brexit, the head of the British Cabinet of Ministers, Boris Johnson, supported his proposal in the national Parliament to hold early elections in the country before Christmas.

It is noteworthy that opponents of Johnson hope that these elections will put an end to his prime minister's career. Labour leader Jeremy Corbyn promises to hold a referendum on a new deal to leave the UK from the EU, and the Liberal Democrats, led by Joe Swinson, calls for the abolition of Brexit altogether.

The results of the pre-election polls cause the British currency to fluctuate continuously. Market participants are sensitive to them, because they are afraid of two events: Brexit without a deal and the formation of a Labour government led by Corbyn, who promised to nationalize the main industries and raise taxes for high-income citizens.

The British currency strengthens when opinion polls indicate the likelihood of a Conservative victory with a significant advantage. When they allude to the possibility of resistance from the Labour Party, the pound is reduced.

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According to some experts, the British currency is underestimated, and everything indicates the possibility of its rally after early elections.

"Now all polls promise the Conservatives victory. But even if they are mistaken, as was the case in 2016, the outcome of the election may not be so bad. Even if the Conservatives win with a slight advantage and none of the parties gets the 326 seats needed to get a parliamentary majority, and Labour unexpectedly won the election, the pound still has a good chance of growth. Corbyn will have to form a government with the support of other parties, which will make the implementation of his policy impossible," said Anatole Kalecki, chief economist at Gavekal Research.

"Of course, the prospects for the pound will be better in the event of a clear victory for the Tories. The Conservatives gaining a confident majority corresponding to the latest polls will allow the GBP/USD pair to rise to 1.33 in a couple of months," said Petr Krpata, currency strategist at ING.

UBS Global Wealth Management experts continue to evaluate the pound's prospects as positive and believe that the pound could go up to $1.35 in case the Tories receive the majority.

Bank of America analysts believe that the British currency should benefit from resolving the situation with Brexit and expect GBP/USD to rise to 1.39.

Meanwhile, Rabobank experts warn that the pound could fall to $1.15 if Great Britain could not agree with the EU to conclude a free trade agreement after Brexit.

The UK will leave the EU on January 31, 2020 if the Tories get a majority in the December 12 elections, and the country's Parliament approves a "divorce" agreement promoted by Prime Minister Boris Johnson and allowing negotiations to begin on trade deals.

"In the election, it is likely that many moderate Conservative MPs will be replaced by Brexiters, which will increase the risk of inaction after the Brexit transition. This could lead speculators to hastily increase their net short positions in the pound early next year," said Jane Foley, strategist at Rabobank.

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

EUR/USD. December 4. Results of the day. New US laws puts pressure on Beijing

4-hour timeframe

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Amplitude of the last 5 days (high-low): 33p - 20p - 47p - 87p - 27p.

Average volatility over the past 5 days: 43p (low).

On December 4, the EUR/USD currency pair made another jump, however, if we look more closely at the European currency's growth on Wednesday, it becomes clear that the entire leap is 30 points, and the volatility of the entire trading day is currently at 49 pips. Thus, from our point of view, nothing extraordinary happened except that the pair nevertheless updated the previous local high and, thus, showed its intention to form a more or less tangible upward trend. However, at the same time, we still believe that there are no good reasons for strengthening the European currency. Macroeconomic reports provide local support for the euro, but this joyful period for the EU currency can end very quickly, since in general the state of the EU economy remains much weaker than in the United States. Yes, inflation in the EU has shown positive dynamics in recent weeks, business activity indices in the services sector, but US data cannot be called a failure. Thus, the euro can still resume falling at any time.

Data was published during the European trading session today, it includes indices of business activity in the services sector of Germany and the European Union. Both exceeded their values and reached 51.7 and 51.9, respectively. However, the previous values and forecasts did not differ much from the total values for November. The situation is similar with the composite business activity indexes in Germany and the EU, both showed a slight improvement. But in France and Italy, business activity in the service sector decreased. Thus, it can hardly be stated that the euro showed growth today due to these reports. It would be more correct to say that the euro was strengthening due to the failed US ADP report reflecting the change in the number of workers in the private sector. Traders saw only 67,000 jobs instead of the expected 140,000. Thus, one of the relatively important macroeconomic reports of the United States completely failed, which triggered a sell-off of the US currency in the afternoon. But even with such a weakness in the US labor market report, the US dollar lost a few positions against the euro, which once again convinces us that bulls are very cautious about buying the euro. The Markit US business activity index in November was 51.6, which is fully consistent with experts' forecasts, and the composite index is 52.0, which is 0.1 points higher than forecasts.

Meanwhile, the United States clearly lacked one "Hong Kong Law" and was followed by another Law on Human Rights and Democracy, this time a bill that condemns the treatment of Muslims and ethnic minorities in China, in Xinjiang . The bill has already been passed by Congress and must now go through the Senate and the US President. It is anticipated that sanctions will be imposed against China, as well as against the country's first officials. According to correspondent John Sudworth, if the bill is approved, it will be the most significant attempt to force Beijing to stop the camp system in Xinjiang. The Chinese Foreign Ministry has already issued a statement, stressing in it that the bill intentionally distorted the goals of the Chinese authorities in Xinjiang County. In fact, the province is fighting against radical elements, terrorists and separatists. The Chinese Foreign Ministry also once again warns the US government that they will grossly intervene in the internal affairs of China and that retaliatory measures will immediately follow again if this law is signed by the president.

Despite the fact that there are all visible reasons for another escalation of the trade conflict between the United States and China, some sources close to the negotiation process argue that the parties are approaching consensus on the issue of canceling tariffs, which will be canceled as part of the first phase of the agreement. Even despite the situation around Hong Kong and Xinjiang, experts believe that they will not affect trade negotiations. Moreover, experts and political scientists believe that the deal will nevertheless be concluded before December 15, although we personally do not see any reasons or grounds for this. It is much more likely that on December 15, Trump will introduce new duties on Chinese imports for another 160 billion dollars. However, the wait was short.

From a technical point of view, the currency pair made a new attempt today to resume the upward trend, but after half an hour, it could be said that it failed, like the report from ADP. The euro grew by 30 points and could not hold on to new positions for itself and immediately began to fall, which again could be the beginning of a downward correction, which will eventually turn into a downward trend.

Trading recommendations:

The EUR/USD pair retains the prospects for an upward movement, and the volatility at today's trading is again low. Thus, it is still recommended to buy the euro very carefully, since it is growing very reluctantly and only thanks to weak macroeconomic statistics from across the ocean. Tomorrow, for example, there will definitely not be such gifts in the form of weak reports from the United States. Selling the euro, which has more fundamental grounds, will be better after overcoming the critical Kijun-sen line.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

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

Dollar: the staggering throne

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The US currency is facing turbulence again this week. The volatility of the dollar is facilitated by the introduction of US duties on the import of steel and aluminum from Brazil, as well as active criticism of the Fed's actions by the head of the White House. Such measures undermine the greenback, taking away its chances of a dominant position.

Experts do not exclude that the statements of Donald Trump are not always a guide to action, however, regular calls to the Federal Reserve on the devaluation of the national currency are not in vain for the USD. The dollar responded by sagging these attacks, and its recovery was complicated by a report on weak US production data. The current turmoil negatively affected the EUR/USD pair. At the same time, the European currency felt better, having made growth attempts, although in the future it again lost ground.

The EUR/USD pair consolidated above the correctional level of 1.1057 on Tuesday, December 3, and began to move to 1.1080. Experts consider this bar a key level for the pair. Subsequently, the pair rose to the levels of 1.1081–1.1082, but could not stay there for long.

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Analysts assumed that the pair will be able to reach the most important level of 1.1100, but this did not happen. On the contrary, it showed a downward trend. The EUR/USD pair is trading in the range of 1.1075–1.1076 today, making desperate attempts to overcome the appeal of these numbers.

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After some time, this attempt was successful, and the pair rose to 1.1083–1.1084. Now the EUR/USD pair is trying to gain a foothold at these levels, pushing off from them in order to move on. According to experts, a radical reversal is possible only if the 1.1160 bar is overcome. Note that a 200-day moving average passes through this level, and there are two previous peaks of the EUR/USD pair on it.

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At the beginning of the week, the EUR/USD pair showed strong growth, and the greenback entered the peak, being on the verge of collapse. Specialists drew attention to the market decline at the same time as the dollar, which is a rare combination than their parallel growth. A significant driver of the greenback's fall was the rapid rise of the Australian dollar. The AUD/USD pair rose by 0.8% due to disappointing data on the index of business activity in America. Recall, after this report, the greenback sharply dipped in relation to most world currencies.

According to analysts, the current situation may be extremely negative for the dollar. At the moment, its weakening is recorded, although the greenback is still not going to give up its positions. Experts believe that the stock markets will try to return to the rise amid the US currency's fall. Another scenario is also likely: markets may continue to fall due to fear of trade conflicts. In any case, the greenback will have a hard time, especially when its dominant position is under threat.

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

EUR/USD: weak ADP report allowed the pair's bulls to show character

The euro-dollar pair made another attempt to leave the price range of 1.0970-1.1090 today, in which it has been trading since the beginning of November. Last week, the bears tested the lower boundary of this band, while the bulls seized the initiative this week and sent the price to the area of the 11th figure. Today's attempt also failed - the bullish momentum faded and the pair retreated. But at the same time, it is worth recognizing that EUR/USD buyers are clearly taking advantage of the current situation: the European currency feels indirect support from the European Central Bank (which, according to rumors, is ready to adhere to a wait-and-see attitude), while the dollar is actively losing its position against the background of Donald Trump's belligerent mood and disappointing statistics. In addition, a stream of positive news regarding Brexit's prospects also provides indirect support to the EUR/USD pair. All this makes it possible for buyers to test multi-week highs based on a trend reversal.

However, it is too early to talk about a trend reversal. Correctional growth of the pair is now mainly due to the dollar's weakness than the strengthening of the euro. For the US currency, the "black bar" has come - both from the side of the external fundamental background, and from the side of internal statistics. Following the release of the extremely weak ISM manufacturing index, a weak report was released today from the analytical agency ADP, after which the dollar index continued to decline. If you believe the specialists of Automatic Data Processing agency, the US private sector created only 67 thousand jobs in November. Such a low result was the worst in the last five months, since this indicator reached 41 thousand in May - while Nonfarm was at 72 thousand. Last month's results were also revised downward. The situation is even worse in the manufacturing sector - job losses have been recorded here (-18 thousand jobs).

It is worth recalling that on the eve of the May reports, the ADP report likewise alerted traders, foreshadowing the weak Nonfarm. As it turned out later, the agency's specialists confirmed their reputation: official figures came out worse than forecasts, causing concern not only among experts, but also among Federal Reserve members. Today the situation is repeating, only now the rates are slightly higher: if Friday's data confirms the weakening labor market, this will be a serious argument in favor of lowering the interest rate at the beginning of next year.

The ISM manufacturing index is also worth mentioning here: the industrial activity index in the US fell to 48.1 points, contrary to analysts' forecasts, who expected its growth in November. The ISM composite index for the non-manufacturing sector also came out in the red zone, not reaching forecast values: instead of rising to 54.5, it fell to 53.9 points. And although in this case the decline is low, this fact also put pressure on the greenback in the context of other events. The situation was slightly mitigated by a fairly strong employment component in the ISM report.

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Despite such a gloomy fundamental background for the dollar, the EUR/USD pair could not gain a foothold in the 11th figure today. After reaching the daily price peak (1.1116), the pair attracted sellers, after which the price returned to the range indicated above. On the one hand, this indicates the uncertain positions of the EUR/USD bulls. On the other hand, such a rapid rise in prices (1.0980 last week and 1.1116 today) indicates the vulnerability of the dollar, and therefore the riskiness of short positions.

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In general, it can now be assumed with great certainty that official data on Friday will also disappoint the market, although a consensus forecast suggests the opposite. According to most analysts, the figure will reach 189 thousand. In other words, now the EUR/USD pair is at a crossroads: either the bulls will continue to correct on Friday, or the pair will return to the bottom of the 10th figure again, followed by a test of the lower boundary of the range of 1.0970-1.0190. But it is worth noting here that if official data on the labor market come out even better than expected, the pair is unlikely to consolidate below 1.0970. Yes, the impulse response will be bearish, but the downward movement will be limited, since the US currency is now under the yoke of its own problems - primarily in view of the uncertainties regarding US-China trade negotiations.

Thus, at the moment it is advisable for the pair to take a wait-and-see attitude. Buyers of EUR/USD are still not confident in their abilities, while the dollar looks too vulnerable - not only when paired with the euro, but throughout the entire market.

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

EUR/USD left a trap for buyers

Good evening, dear traders! I present the trading idea for the EUR/USD pair.

Today, December 4, at 14:00 Universal time, data on employment in the non-productive sphere of the United States were released and at the same time, statements by the Bank of Canada were passed, which significantly strengthened the Canadian dollar. Against this background, the dollar strengthened locally, including relative to the euro.

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On the daily time frame, the EUR/USD pair closes with a "double bottom" at a quote of 1.10650. It is behind this minimum that buyers have been hiding for the last two days:

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How to earn profit and/or not to lose? Very simple.

1. If you are in short positions - I recommend taking profit at a quote of 1.10650.

2. If you are not in position - develop the target of 1.10650.

3. If you are in the "longs" - I do not recommend putting a stop below the level of 1.10650 - it will be removed by a true or false breakdown.

Good luck in trading and see you tomorrow at the morning review!

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

GBPUSD and EURUSD: British pound received a new charge of vigor. Euro continues to stagnate after mixed service sector reports

The British pound continues to hit highs after news that the Conservative Party could get a majority in Parliament in the December 12 general election. Such a scenario will allow incumbent Prime Minister Boris Johnson to secede from the EU and bring into play the agreed Brexit plan.

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In the morning, I noticed that according to the Kantar report, the ruling Conservative Party of Great Britain increased its margin from the Labour Party to 12 points, which supports the pound, as it changes investors' attitude to risk for the better. But do not forget that the closer we get to the election date, the more attention investors will pay to the survey results.

The pound buyers' optimism was also filled with enthusiasm by the UK services activity report, which was revised upward after preliminary data. Despite the fact that the index is below the mark of 50 points, it showed a slight increase in November from a preliminary estimate. According to the IHS Markit report, the index of procurement managers for the UK services sector was 49.3 points in November against a preliminary estimate of 48.6 points. However, one growth to the level of 50 points is clearly not enough, as the British economy continues to feel insecure. IHS Markit economists still expect a quarterly decline in GDP of about 0.1%.

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As for the technical picture of the GBPUSD pair, the breakthrough of the large resistance of 1.3010, to which I paid attention in the morning, led to a powerful upward momentum. Now the bulls are focused on a new high in the area of 1.3125, the breakout of which will provide a direct path to a resistance of 1.3170. The downward correction will be limited to the first support level of 1.3055, and there is no need to talk about the trading instrument's return to a low of 1.3010.

EURUSD

Buyers of the European currency were not so optimistic after the data on the service sector, which indicated the persistence of problems in the eurozone economy. However, they turned out to be enough to prevent the bears from breaking below yesterday's lows, which preserves the upward potential in the pair.

According to IHS Markit, PMI for the Italian services sector in November was at 50.4 points versus 52.2 points in October. Given that economists had forecast a decline to 51.4 points, this did not add any particular problems to the market. But the PMI for the French services sector remained above 52 points and amounted to 52.2 points in November compared to 52.9 points in October. An indicator above 50 points indicates an increase in activity.

In Germany, there was a surge in service activity, where the PMI reached 51.7 points in November against 51.6 points in October this year, with a forecast of decline to 51.3 points.

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In the eurozone as a whole, the service sector has slightly decreased, but this did not upset traders. According to the report, PMI for the eurozone services sector fell to 51.9 points in November. Economists predicted that the figure would drop to 51.5 points.

But the composite index, which already includes the manufacturing sector and the services sector, still indicates a weak economic growth in the eurozone in the fourth quarter of this year.

According to IHS Markit, eurozone PMI Composite was finalized at 50.6 points compared to 50.3 points in October and the preliminary value of the same 50.3 points. All this once again suggests that the economic growth of the eurozone will remain weak in early 2020, however, the actions of the European Central Bank will help maintain growth. The fears that the problems of the manufacturing sector extend to the service sector are decreasing with each report.

Nothing has changed in EURUSD from a technical point of view. Bulls ran into a resistance of 1.1095 and cannot get above this range. Only its breakthrough will provide risky assets with a new impetus, which will lead to the renewal of highs in the areas of 1.1131 and 1.1180. If pressure on the euro returns, and for this, sellers of risky assets only need to push the trading instrument below the support of 1.1060, we can expect EURUSD to fall to the lows of 1.1030 and 1.1000.

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