EUR/USD. Result of the week. How will "coronavirus" affect the results of the US presidential election in 2020?

24-hour timeframe

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Another trading week on the Forex market has ended, and we are summarizing its results. The EUR/USD currency pair spent most of the trading week trading with an increase, which led to the end of the week to overcome the critical Kijun-sen line and change the trend to an upward one. Given the fact that the pair has updated the previous local high and low over the past 7 trading days, we can assume that the consolidation process is complete and traders are ready to form a new trend. But what will it be like? Movements in the past week speak in favor of the formation of a new upward trend. At the same time, until the Ichimoku cloud is overcome, the Golden cross buy signal (which is not even formed yet) will remain weak. Moreover, even if you close your eyes to the entire fundamental and macroeconomic background, which in any case is ignored by traders, it is very difficult to find the fundamental reasons for the growth of the euro currency. Thus, we recommend that traders continue to adhere to the indicator readings on the 4-hour chart to determine the trend.

Meanwhile, market participants not only continue to ignore all macroeconomic reports but also have cooled down to the news on the topic of "coronavirus". If at the very beginning of the epidemic, markets were literally shocked by what is happening in the world, now no one is particularly surprised by almost 3.4 million cases of the disease, and many people again treat the "coronavirus" as seasonal flu, just more dangerous for humans. Despite 238,000 deaths from the epidemic worldwide (and this is just official statistics), many countries are beginning to relax quarantine measures and open up their economies. In fact, it is difficult to blame them for this, since there is still no vaccine and representatives of the medical field say that it should not be expected until the fall of 2020. And this is an extremely optimistic scenario. More realistic forecasts suggest that it will take from a year to 18 months to create a vaccine. It is impossible to imagine a "lockdown" that will last for another 18 months. Since after this period, there will be nothing to restore. Thus, many governments have taken a decision to relax quarantine measures to restart the economy and to function in the more loyal of quarantine measures. Most likely, in practice, it will look like this. Almost the entire business will open, but the rules of personal hygiene, mask mode, and social distancing will still apply. In the case of new outbreaks, the strict quarantine will be re-introduced. We can only evaluate how these actions of governments will be effective and correct.

Despite the fact that the ECB and the Fed held meetings last week, and GDP data were published, more interesting topics remain the investigation of the origin and causes of the COVID-2019 virus leak, possible sanctions from around the world (183 countries were infected) against China, as well as the US presidential election, which will be held in November this year. According to many media outlets, the current US President treated the possible infection with disdain and that is why now the United States is leading in the number of diseases and in the number of deaths. This opinion is indirectly confirmed by the early statements of Trump, where he flippantly declared in his own manner that "the coronavirus does not pose a threat to Americans" and "will not survive the warm season of the year." As it turned out, nothing has changed with the arrival of the warm season, and the number of Americans who "will not suffer from the virus" already exceeds 1.1 million. And, probably, these mistakes would have been forgotten, as well as many others, over time, if only this year there were no presidential elections coming up. As practice shows, when the population is faced with a choice, they prefer the candidate with whom there is less negativity. Joe Biden was not the President of the United States and did not dirty his reputation with dubious stories, was not involved in international scandals, and did not provoke trade wars. Thus, according to many polls, it is the Democratic candidate who leads in political ratings. Trump can only shift the responsibility for what is happening to others (WHO, China, the chief epidemiologist of the United States), in order to at least try to "bleach" before the election. Trump has already lost all three of his main trump cards (low unemployment, high employment, and high economic growth) thanks to an epidemic that he himself treated with disdain. Thus, it is not clear what he will say to the American population in the framework of the election campaign, in which it will be necessary not only to make new promises but also to take stock of his four-year reign.

But it will be much easier for the Democratic candidate, Joe Biden, to shape his election program. The former Vice President of the United States is free to criticize the current President. And there was much to criticize Trump for during his entire term of office. The US leader constantly provokes scandals, quarrels with the Democrats without hesitation, and calmly ignites international conflicts and trade wars. Thus, Biden just needs to draw the attention of Americans to Trump's discouraging actions and show that they did not bring any benefit to America. And the main topic that can help Biden become President is "coronavirus." Yes, unfortunately, the highest political circles in the United States believe that the politicization of "coronavirus" is absolutely normal. And Biden has already begun to act in this direction. More recently he stated: "The unpleasant truth is that Donald Trump has made America vulnerable to a pandemic. He ignored the warnings of experts in the field of health and intelligence, who instead trusted Chinese leaders. And now we are paying the price." Biden also focused the attention of Americans on the fact that Trump stopped funding the program for tracking epidemics and reduced by 60% the number of specialists on China in the centers for disease control and prevention. At the same time, Biden very competently bypasses the issues of WHO funding, which Trump refused, accusing the organization of failing to prepare for the pandemic and overly focusing its activities on China. If Biden had criticized Trump for refusing to fund WHO, then Trump could have accused Biden of approving taxpayer-funded organizations that treat the United States "unfairly."

Now, Trump, in fact, has only one way to go. He needs to get China and WHO to admit their guilt in the spread and failed attempts to contain the "coronavirus" so that he himself can appear before the American people completely innocent. Especially if the US population believes that if it were not for the current government, the human losses would be much higher. How the US President will do this is still unknown. But there are reasons to assume that through the mechanism of sanctions, threats and pressure already known to the whole world.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair continues to try to form a new upward trend. The nearest target is the Senkou Span B line, which almost coincides with the resistance level of 1.1086. However, on the 4-hour timeframe, which we continue to recommend using as the main one, a downward correction is expected on Monday and Tuesday. In general, the upward trend has already been formed and it can be rejected.

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