Crisis in the Middle East will continue to guide the markets (we consider it possible to buy gold and sell USD/JPY pair)

The beginning of the new year has fully demonstrated that the presidential election in America will be the main impulse that will have an impact on the financial markets. And this is primarily due to the growing aggressiveness of the White House, which is directed outside due to the uncompromising domestic political struggle of D. Trump and the Democratic Party for the presidency. Moreover, we believe that the crisis in the Middle East will expand in the worst case, and simply smolder at best, preventing investors from fully concentrating on economic factors that affect the dynamics of certain assets.

A slight pullback towards demand for risky assets on Monday can also be explained, in addition to the lack of negative news, by the publication of positive economic statistics from Europe and the United States. Thus, the published data of business activity indexes in the services sector in Germany, the eurozone, Britain and the USA supported the demand for shares of companies, as well as contributed to the appreciation of the single currency and the pound.

According to the data presented, business activity indexes in the services sector in Germany, the eurozone, Britain and the United States rose to 52.9 points, 52.8 points, 50.0 points and 52.8 points, respectively.

Of course, this is good news, but, in our opinion, they could only locally support the demand for risky assets, since, it can be recalled that the crisis in the Middle East is likely to continue to have a significant impact on the markets. And here, interestingly, the importance of the US-Chinese trade negotiations that have been conducting the markets for the past year and a half, and the expected signing of the first "phase", which is scheduled for January 15, is fading into the background. As a result, we believe that the topic of the conflict between Tehran and Washington will be the main one this year, since first of all, Trump needs it for the internal political struggle. Given this, we believe that the demand for protective assets will continue. In this regard, gold, government bonds of economically strong countries, primarily the USA, Japanese yen and Swiss franc will remain in favor. Thus, we consider that the overall dynamics in the currency market will remain sluggish and subject to local, speculative movements.

Forecast of the day:

Our spot gold forecast remains valid. We expect quotes to rise to 1600.00 after a pullback to 1557.00 against the backdrop of the escalation of the crisis in the Middle East.

We also keep our forecast for the USD/JPY pair. We consider it possible to sell it with a target of 107.20.

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GBP/USD. Brexit again: British Parliament is returning from vacation today

Over the past two weeks, the pound-dollar pair has been guided only by the behavior of the American currency, due to the lack of "own" fundamental factors. However, the situation will return to normal today: on Tuesday, the British parliament is returning from vacation, and the first question should be considered amendments to the Brexit bill. In addition, Ursula von der Leyen, the new President of the European Commission, will visit the UK this week, which will hold preliminary talks with Boris Johnson. As you know, the "divorce proceedings" between London and Brussels is a priority topic for GBP/USD, so from today, traders of this pair will primarily monitor the news flow regarding the prospects for further relations between the Alliance and the country of Foggy Albion.

Let me remind you that the Conservative Party won its most convincing victory in the parliamentary elections in the last 30 years in mid-December, gaining 365 seats in the House of Commons. This allowed Boris Johnson to form his own majority in parliament with a significant "margin" (365 votes with the required 325). At one of their first sessions, members of the House of Commons easily approved a bill to withdraw Britain from the European Union. 358 deputies voted for the bill, which includes a deal agreed upon with the EU on the conditions of the "divorce proceedings", while only 234 parliamentarians voted against.

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The bill passed assumes that the transition period ending December 31 of next year will not be extended, and that concluding a trade agreement with the EU after Brexit could do without the consent of the House of Commons. However, it is worth noting here that this document was not finally adopted - it will have to undergo a third reading this month, and after which it will be sent for approval to the House of Lords. Now, it can be assumed that with a high degree of probability, parliamentarians will already cope with this task this week, after which preliminary negotiations with the EU will begin within the transition period.

Despite such a predictable scenario, the pound can still fall into the price turbulence zone today. Traders of the GBP / USD pair are seriously concerned about the 11-month transition period - according to most experts, the parties will not have time to coordinate all the related issues during this time and, accordingly, will not be able to conclude a trade agreement. If Britain de facto leaves the European Union without a deal, then it will be forced to follow the rules of the WTO in matters of foreign trade, with all the ensuing consequences in the form of inevitable barriers. In this case, the recession of the British economy is expected within 2-4% of GDP, not counting long-term losses, which will also be very significant.

Given the background of the issue, it can be assumed that Boris Johnson is now playing a political game, forcing Brussels to make certain concessions to London. In the middle of last year, his team behaved in a similar way - the prime minister, with all his behavior, showed readiness for the implementation of the "hard" Brexit (from among the ministers an appropriate headquarters was created to prepare for the country's exit from the EU). But subsequently, he nevertheless agreed to prolong the negotiation process from October to January, thereby acting contrary to his own promises. Apparently, Johnson now started a similar game, proposing to legislatively limit the transition period.

However, the pound reacts quite sharply to such proposals despite the obviousness of a "political bluff". Therefore, today's discussion of this issue within the walls of the British Parliament may put pressure on the GBP/USD pair. The fact is that the Labor Party made its amendments, which should be considered during the third reading of the "Brexit Bill". In turn, oppositionists demand legislatively to consolidate the continuation of the transitional period until 2023, if an agreement is not reached by June of this year. Obviously, conservatives will not support this idea, and this fact may put background pressure on the pound.

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It is also worth noting that Ursula von der Leyen will visit London this week for the first time as the head of the European Commission (although there is still no exact date for the visit). It is worth recalling that according to the agreements reached earlier, the transition period can be extended once for a period not exceeding two years. The new President of the European Commission is actively lobbying for this idea, pointing out the need for this extension. Apparently, she will take a similar position on Downing Street, despite Johnson's categorical in this matter. Thus, the pound will receive significant support if the British prime minister even admits the possibility of an extension of the transition period (which is unlikely). However, if their meeting ends on a minor note, the bears of GBP/USD will receive a significant reason for the downward movement in the region of the 29th figure.

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EUR/USD: What changes await the European Central Bank's policy in the first quarter of 2020? How will it affect the euro?

Earlier this year, after a slight correction, euro continued to recover against the US dollar. Yesterday, good data on the services sector helped the pair in regaining a number of positions against the US dollar, however, short-term positive factors alone are not enough to form a more stable trend. Most likely, the Euro zone economy will start the year with stagnation. The active persistence of Germany against increasing fiscal spending, as well as the probability of the European Central Bank reviewing its attitude regarding the target inflation rate and monetary policy will create problems to the buyers of risky assets at the beginning of this year. We can talk about the formation of a stable demand for euro only after solving the problems in the economy, as well as after the European regulator talks again about tightening the monetary policy. Let me remind you that such conversations at the end of 2018 resulted in another economic downturn. Time will tell how it will be this time, however, it is still too early to think about it.

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As I said above, only the change of Germany's course in increasing fiscal spending will help euro to form a medium-term upward trend against several currencies. According to a number of economic agencies, only such an approach will quickly support the German economy's problem of being on the verge of a recession. All that was required of the European Central Bank was done last year, including the deposit rates's reduction to a new negative level, as well as the return to the bond repurchase program. Now, much will depend on the positions of the central banks of the leading European economies. The European Central Bank's head, Christine Lagarde, has repeatedly drawn attention to this. Experts note the possibility of creating a banking or fiscal union as one of the options for increasing budget expenditures,

Another important problem for the European currency at the beginning of this year is ECB's option of changing the approach to its strategy on monetary policy and inflation. Last year, there were hints from the regulator on the probability of changing the target inflation rate in the Eurozone, which is now about 2.0%. If the ECB reacts differently to inflation and interest rates, it will provoke tensions within the Eurozone, and will lead to a disagreement among central bankers, particularly Germany, as it has long been an opponent of the soft exchange rate-monetary policy.

And so, the exchange rate of the European currency in the first quarter will directly depend on the changes that will occur or will not occur in the minds of the European Central Bank leaders.

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As for the fundamental data on the US economy, yesterday's report from Markit regarding the services sector led to only a slight strengthening of the US dollar against a number of world currencies. According to the report, the purchasing managers' index (PMI) for the US services sector rose to 52.8 points in December this year, which is slightly higher than economists' forecasts who expected that in December, it will remain unchanged at 52.2 points, similar to that of November last year.

During an interview yesterday, the former president of the Federal Reserve Bank of New York, William Dudley, said that the current system of control over interest rates, such as the REPO mechanism that the Fed conducts to eliminate the lack of liquidity in the market, is working very well and can take its place on a permanent basis. The rationality of this approach really helped keep short-term interest rates from excessive fluctuations that occurred against the background of a sharp lack of liquidity during the early autumn of 2019. It is likely that the Fed may seriously resort to longer-term REPO operations to maintain the balance sheet. Still, it is better than the other asset buyback program, through which the economy was pumping billions of dollars.

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As for the technical picture of the EUR/USD pair, the level of 1.1210 remains in front of the bulls. The upward trend, which is aimed at the highs of 1.1240 and 1.1270, will only continue if a breakthrough of this area will take place. If buyers of risky assets do not get on with their task, it is likely that a downward correction will happen in the area of support levels 1.1175 and 1.1150.

USD/CAD

The Canadian dollar continues to strengthen its position against the US dollar on the background of rising oil prices and yesterday's report of a rise in producer prices in November last year. According to the National Bureau of Statistics of Canada, the price index in the Canadian industry increased by 0.1% in November, as compared to the previous month. The increase in prices was directly related to the rise of the price of dairy and meat products. Meanwhile, producer prices fell by 0.4% in November, as compared to the same period of the previous year.

As for the technical picture of the USD/CAD pair, the upward trend of the Canadian dollar, which was formed at the beginning of December last year, may continue, however, dealing with important levels is quite necessary. We are talking about the price in 1.2900 and the larger range of 1.2780 in particular, as the strengthening of oil prices will only contribute to the movement of the USD/CAD pair to these levels.

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Technical analysis of ETH/USD for 07/01/2020:

Crypto Industry News:

The average block time of the Blockchain Ethereum chain decreased by almost a quarter after reducing mining difficulties.

The data presented on the Etherscan block explorer show that from January 1 to January 4, the daily average block time of the chain decreased from 17.16 seconds to 12.96, which translates into a decrease of 24.48%.

Of course, the shorter time resulted in more blocks mined per day and higher ether inflation. According to the number of Ethereum blocks and the Etherscan reward table, on January 1, miners created 4980 new blocks and 10.237 ETH. Meanwhile, on January 4, network miners created 6,570 new blocks and 13,437 new ETHs. It is almost a 32% increase in the number of blocks and over 31% increase in block awards.

The changes described above are the consequences of the recent implementation of Muir Glacier's hard fork. This fork is to delay the so-called Ethereum Ice Age. The Ice Age protocol increases the difficulty of mining the network over time until it virtually prevents chain mining.

The ice age will occur through a series of difficulty bombs, which ultimately aims to prevent the further extraction of the old Ethereum chain after the implementation of the Ethereum 2.0 chain.

Technical Market Overview:

The ETH/USD pair has broken through the technical resistance located at the level of $139.90 and made a local high at the level of 4144.19. The momentum behind the move up looks strong, so there is still a chance to continue the rally towards the next target located at the level of $150.95. The nearest technical support is seen now at three levels: $139.90, $138.10 and $136.77. This move up might be the beginning of a new impulsive wave up since the corrective cycle had been terminated at the level of $116.15 in form of a Pin Bar candlestick pattern.

Weekly Pivot Points:

WR3 - $152.72

WR2 - $144.64

WR1 - $140.53

Weekly Pivot - $132.09

WS1 - $127.41

WS2 - $119.97

WS3 - $115.08

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is down. All the shorter timeframe moves are still being treated as a counter-trend correction inside of the downtrend. When the wave 2 corrective cycles are completed, the market might will ready for another wave up.

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Technical analysis of BTC/USD for 07/01/2020:

Crypto Industry News:

The Chinese Central Bank (PBoC) reports that work on the government-supported digital currency is "running smoothly." The bank issued a statement during a working conference held in Beijing on January 2-3, according to an official announcement.

China devoted five years of research and development to the new Central Bank Digital Currency (CBDC) and began its first real-world currency pilot in December 2019.

As a form of digital legal tender - unlike private, decentralized cryptocurrency - CBDC will be controlled by PBoC and 100% backed by reserves that commercial institutions pay to the institution.

As mentioned, the PBoC made a brief statement on progress in the field of digital yuan as part of the conference on "studying and implementing the spirit" of the fourth plenary session of the 19th Central Committee of the Communist Party of China in October 2019 and the annual December Central Labor Conference. Commerce.

During the conference, which was spoken by the president of PBoC Yi Gang and secretary of the Chinese communist party Guo Shuqing, the work of PBoC in 2019 was summarized and the bank's key tasks regarding further development of "Chinese socialism" in 2020 were outlined.

The tasks of the bank in 2020 under the aegis of the Central Committee of the Party and the Council of State will include making "countercyclical adjustments" in monetary policy, counteracting financial risk and striving for continuous liberalization of the national economy.

Technical Market Overview:

The BTC/USD pair has been rallying higher towards the level of technical resistance located at $7,934 after the Bullish Engulfing pattern was made around the level of $6,789. If the rally persists, then the next target for bulls is seen at the level of $8,049 or $8,298. Moreover, the Bitcoin has broken out of a narrow range located between the levels of $6,345 - $7,601, just as other main cryptocurrencies like ETH and BCH done earlier. The larger timeframe trend remains down and there are no signals of any trend reversal just yet.

Weekly Pivot Points:

WR3 - $8,248

WR2 - $7,819

WR1 - $7,642

Weekly Pivot - $7,179

WS1 - $6,988

WS2 - $6,550

WS3 - $6,318

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still down. All the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend. When the wave 2 corrective cycles are completed, the market might will ready for another impulsive wave up of a higher degree and uptrend continuation.

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Technical analysis of GBP/USD for 07/01/2020:

Technical Market Overview:

The GBP/USD pair has been continuing the move higher after the bounce from the 61% Fibonacci retracement of the last wave up and the area of the main channel lower boundary. In this situation, the bulls have taken control of the market and pushed the price towards the level of 1.3121, which is the local technical resistance level. The momentum has changed from neutral to positive, so the odds for another move up are high. The target for bears is seen at the level of 1.3017 or 1.2988.

Weekly Pivot Points:

WR3 - 1.3419

WR2 - 1.3347

WR1 - 1.3185

Weekly Pivot - 1.3120

WS1 - 1.2957

WS2 - 1.2894

WS3 - 1.2801

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up. All downward moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down, the key level for bulls is seen at 1.2756 and it must be clearly violated. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3509.

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Technical analysis of EUR/USD for 07/01/2020:

Technical Market Overview:

The EUR/USD pair has broken above the local technical resistance located at the level of 1.1174 and made a new local high at the level of 1.1205, just above the technical resistance at 1.1199. The momentum behind the move is still positive but is now decreasing, so if this level is not clearly violated soon, then the bears will continue the sell-off towards the nearest technical support located at the level of 1.1106 - 1.1091. The larger timeframe trend remains down.

Weekly Pivot Points:

WR3 - 1.1326

WR2 - 1.1283

WR1 - 1.1212

Weekly Pivot - 1.1166

WS1 - 1.1101

WS2 - 1.1048

WS3 - 1.0979

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.1040 and the technical resistance at the level of 1.1267.

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Indicator analysis: Daily review on GBP / USD on January 7, 2020

Trend analysis (Fig. 1).

On Tuesday, the price may continue to move up with the target of 1.3197, the retracement level of 61.8% presented in a red dashed line. If this line is reached, a continuation of work up with the target of 1.3230, the retracement level of 76.4% presented in a red dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, the price may continue to move up.

An unlikely scenario is possible, where, from the level of 1.3169, which is yesterday's close of the daily candle, work down with the target of 1.3114, the 13 average EMA presented in a yellow thin line.

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Indicator analysis: Daily review on EUR / USD on January 7, 2020

Trend analysis (Fig. 1).

On Tuesday, the price may continue to move up with the first target of 1.1209, a retracement level of 61.8% presented in a blue dashed line. If this level is achieved, the next target is at 1.1241, the upper fractal presented in a red dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - up;

- Volumes - down;

- Candlestick analysis - neutral;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

An upward trend is possible today.

An unlikely scenario is possible, where, from yesterday's close of the daily candle at 1.1199, the price will go down to the pullback level of 38.2% which is at 1.1142 presented in a red dotted line.

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Geopolitical risks have not done much to help the dollar, euro remains bullish, and pound goes sideways

Geopolitics remains the main driver of markets on Tuesday morning. Iran announced a decision to withdraw from the nuclear deal and not comply with any restrictions on uranium enrichment, the Iraqi parliament voted to expel American troops, and Trump promises the most severe measures to everyone who entered into an in-depth discussion with him.

Moreover, retaliation from Iran will in fact be very restraine, while the markets assess the probability of military escalation as low. The markets react as expected, but there is no increase in panic. Meanwhile, gold updated a 6-year high, the yield on 10-year US Treasuries fell to 1.8%, and EUR/USD is trading at the lower end of the range. In turn, oil remains in the region of half-year highs, supporting commodity currencies, but the first emotional reaction of the market turned out to be generally not very strong and has already partially won back, that is, markets are looking for new levels of equilibrium and are not ready to develop panic movement.

EUR/USD

The euro is on a growth wave after the publication of revised PMI data. According to which, the German economy finally resumes growth for the first time since August, the combined PMI was 50.2p against 49.5p, the data for Spain and Italy also exceeded expectations, and the fact that the eurozone summary PMI did not fall below 50p. As a result, it looks like a clear addition for the euro.

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The leading indicator of the business climate in the Eurozone, Sentix grew in January to 7.9p against 0.7p a month earlier, while a fall was forecasted, rather than an increase.

On the other hand, short-term EUR/USD remains weak bullish. The nearest support is 1.1160 / 80, and below which, a decrease is unlikely. At the same time, resistance is consistently 1.1215, 1.1225, 1.1240. The maximum is unlikely to increase, since the growth of geopolitical risks will not contribute to the sale of the dollar.

GBP/USD

The first data from the UK this year looks mixed. The decline continues in the manufacturing and construction sectors: with PMI indices of 47/5 and 44.4 in December, which is close to November levels. Moreover, there is a slight recovery in the services sector - the index has grown from 49p to 50p, however, we are not talking about a long-term reversal in sentiment.

In connection to this, Brexit's theme remains dominant on news feeds, but its importance is gradually declining. The UK is about to leave the EU by January 31, but the process is still far from over by law. After this period, EU leaders should agree on an agenda for negotiations. On February 25, approval of the mandate at the EU summit is expected, and the negotiations themselves will begin in March.

The terms are extended, which means that the emphasis at this time will be shifted to the economy and the Bank of England, which remained in the background for quite some time. Two out of 9 BoE members voted in favor of a rate cut at the last two meetings. The economy looks weak, and therefore, a 0.25% rate cut will become quite likely in the near future. This is possible even in January, but rather, the Bank of England will announce the need to collect more data, so the decline will be postponed to the spring, and the pound will accordingly be under pressure in the coming months.

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Meanwhile, business conditions go into the stabilization zone, so investors will wait for signals to resume activity in long-term projects. However, inevitable future difficulties in the negotiations (negotiations began in March, and after July 1 extension of the transition period is excluded, which will inevitably lead to time pressure) will not allow to count on the completion of the period of uncertainty.

Thus, the pound still looks weak for a long time. The EUR/GBP rate will continue to recover and will move to the level of 0.87 as problems are voiced in the negotiation process. Against the dollar, the pound will look a little stronger, so consolidation is the most likely scenario for the next two days. Support is found at 1.3120 / 30, while further decline to the next support 1.3040 / 50 is unlikely. The border of the channel is 1.2980 / 90. Growth is limited by the zone 1.3230 / 60 and the chances of testing the December maximum 1.3512 are extremely small.

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Elliott wave analysis of GBP/JPY for January 7, 2020

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GBP/JPY has extended the correction from 140.81 a bit higher, than first expected, but it does not alter our view, that more downside pressure towards support in the 137.31/137.57 should be seen before the correction in wave iv is complete and the final rally to above 147.85 should take hold.

Short-term a break below minor support at 142.53 will indicate that the correction has come to an end and the next part of the expected decline into the support zone between 137.31/137.51 is developing.

R3: 143.92

R2: 143.49

R1: 142.95

Pivot: 142.53

S1: 142.16

S2: 141.59

S3: 141.15

Trading recommendation:

We sold GBP at 142.50 and have placed our stop at 143.50.

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Elliott wave analysis of EUR/JPY for January 7 - 2020

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EUR/JPY has corrected a bit higher than expected but it does not change our view. More downside pressure towards 119.26 should be seen before the correction in wave 2 has completed and a new rally can begin. In the short-term, we will be looking for a break below minor support at 121.18 to confirm the ongoing correction from 120.14 has completed and the final dip lower to 119.26 is unfolding.

At 119.26 EUR/JPY will have corrected 50% of the leading diagonal in wave 1 and will at the same time test the bottom of wave iv of one lesser degree which is a very common target for corrections.

R3: 122.03

R2: 121.76

R1: 121.46

Pivot: 121.18

S1: 120.88

S2: 120.68

S3: 120.44

Trading recommendation:

We sold EUR at 121.20 and has placed our stop at 122.20.

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Control zones of NZDUSD on 01/07/2020

Downward movement is an impulse. The main resistance is still the WCZ 1/2 0.6707-0.6701. While the pair is trading below the specified zone, the probability of updating the monthly low will be 75%. The main objective of the decline is the weekly control zone 0.6633-0.6621. A test of this zone will allow you to record part of the sales opened earlier. The location of recent Asian sessions indicates the formation of a local accumulation zone.

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It is important to note that the upward movement of December allows us to talk about the formation of a medium-term impulse, and the current fall is a correctional model, so sales require constant consolidation in significant support areas.

This week there was a return to the monthly control zone of December. The probability of this event was estimated at 90%, since the close of trading last month occurred above the zone. After working out the return model, it is necessary to consider the possibilities for finding a favorable price for the purchase of an instrument. Weekly control zone, which is now the goal, may become a turning point, therefore, its test must be considered for forming a pattern for the purchase.

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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 zone formed by important marks of the futures market, which changes 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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Technical analysis: Important intraday Level For EUR/USD, January 07,2020

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Retail Sales m/m, Italian Prelim CPI m/m, Core CPI Flash Estimate y/y, and CPI Flash Estimate y/y reports from the euro area are due today. The US will publish such economic data as Factory Orders m/m, ISM Non-Manufacturing PMI, and Trade Balance. So, amid the reports, EUR/USD will move in a low to medium volatility during this day.TODAY'S TECHNICAL LEVEL: Breakout BUY Level: 1.1245. Strong Resistance: 1.1239. Original Resistance: 1.1228. Inner Sell Area: 1.1217.Target Inner Area: 1.1191. Inner Buy Area: 1.1165. Original Support: 1.1154. Strong Support: 1.1143. Breakout SELL Level: 1.1137. (Disclaimer)

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Technical analysis: Important intraday Level for USD/JPY, January 07,2020

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The 10-y Bond Auction and Monetary Base y/y reports from Japan are on tap. The US will unveil such economic data as Factory Orders m/m, ISM Non-Manufacturing PMI, and Trade Balance. So, there is a probability that the USD/JPY pair will move with low to medium volatility during this day.TODAY'S TECHNICAL LEVEL: Resistance. 3:109.02. Resistance. 2:108.81. Resistance. 1:108.60. Support. 1:108.33. Support. 2:108.12. Support. 3:107.91. (Disclaimer)

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Forecast for EUR/USD on January 7, 2020

EUR/USD

The euro took a correction from the previous two-day fall on Monday. The 1.1215 target was not reached, probably prevented by the technical situation on the lower timeframe. The signal line of the Marlin oscillator continues to develop in its own channel. Leaving the price below 1.1180 opens the closest target signal of 1.1155 at the Fibonacci level of 110.0%. Consolidation under this level opens the working target of 1.1045 - support of the enclosed line of the blue price channel.

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On a lower scale, the H4 correction was muffled by the reversal of the signal line of the Marlin oscillator from the boundary with the growth territory. The price is still above the indicator lines of balance (red) and MACD (blue).

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Consolidating under the signal level of 1.1180 on the considered scale will correspond to price consolidation under the balance line. The target level at 1.1155 coincides with the support of the MACD line, consolidating under which, accordingly, opens the way to lower goals.

Working off at the price of the upper level of 1.1215, of course, is possible without violating the main scenario, but consolidation above it opens an alternative growth scenario to 1.1250.

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Forecast for GBP/USD on January 7, 2020

GBP/USD

The British pound grew by 87 points on Monday, reflecting on the support of the balance line (red indicator) and the MACD line (blue) on the daily chart. The Marlin oscillator also showed a reversal from the boundary with the decline territory. The nearest target at 1.3205 is already close.

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In the main scenario, we are waiting for a price reversal to a new decline branch - overcoming Monday's low and moving the price to 1.2820. But it will be difficult to make a price, there is strong support around 1.3050: the line of balance and MACD on the daily, the Fibonacci level of 23.6% and the MACD line on H4.

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On the H4 chart, the only sign of the expected reversal is the movement of the signal line of the oscillator along the boundary with the growth territory. But even here, Marlin, as a leading indicator, currently does not show an intention to reverse. It is worth waiting for the situation to develop. Trading in any direction is associated with great risk the next day.

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Forecast for AUD/USD on January 7, 2020

AUD/USD

Since the beginning of the week, the Australian dollar has been consolidating to support the embedded price channel line near 0.6926 (daily). Overcoming Monday's low opens the target on the MACD line of 0.6865. The Marlin oscillator is still in the growth zone, but is in a hurry to infiltrate the negative trend zone. Overcoming 0.6865 will make it possible for the price to achieve the second goal by supporting the embedded line of the price channel at 0.6830.

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On the four-hour chart, consolidation took place under the MACD line, which more clearly shows the market's intention to move down. Consolidation at 0.6926 will be a condition and a signal to continue the aussie's fall. The signal line of the Marlin oscillator formed a wedge - a figure of the continuation of the trend.

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GBP/USD: plan for the European session on January 7. Bulls will push the pound to the resistance of 1.3215, but subject to

To open long positions on GBP/USD you need:

Pound buyers used good data on the service sector yesterday and immediately picked up two levels 1.3108 and 1.3154. At the moment, while trading is above resistance at 1.3154, demand for the pound will continue. The formation of a false breakout in this range in the first half of the day will be an additional signal for opening long positions, the aim of which will be the highs 1.3212 and 1.3282, where I recommend taking profits. Important fundamental statistics for the UK are not expected to be released today, therefore, with the scenario of pulling down GBP/USD to the level of 1.3154, it is best to return to long positions only after updating the low of 1.3108, or buy the pound immediately for a rebound from 1.3064.

To open short positions on GBP/USD you need:

Sellers will try their best to push the pair below support at 1.3154, since the pound's direction depends on it. Consolidating below this range will help the bears break through the moving averages and regain market position, which will lead to updating lows 1.3108 and 1.3064, where I recommend taking profits, as this range will be actively protected by buyers. If the growth of the pound continues in the morning, then with the opening of short positions it is better not to rush. The first optimal level will be a high of 1.3212, where the formation of a false breakout will be a sell signal. Immediately on the rebound, I recommend selling GBP/USD only from the area of 1.3282, which is a high of December 31, 2019.

Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which indicates a shaky advantage for pound buyers.

Bollinger bands

In the event of a decline, the pound will be supported by the lower boundary of the indicator at 1.3105. A break of the upper boundary at 1.3212 will lead to a larger upward trend of the pair.

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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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EUR/USD: plan for the European session on January 7. Bulls draw a triangle to continue growth. Breakthrough at 1.1207 will

To open long positions on EURUSD you need:

Yesterday's data on the US services sector caused only a slight downward correction in the pair, but the bulls managed to keep the market under their control. Now a triangle is forming to continue the upward trend, however, this requires a breakthrough of resistance at 1.1207, above which it was not possible to get out yesterday. A breakout of this range will lead EUR/USD to the highs of 1.1239 and 1.1263, where I recommend taking profits. In case the pair declines in the first half of the day, which can happen if the inflation data in the eurozone and retail sales are weak, long positions can be looked at if a false breakout is formed in the support area of 1.1178, or you can buy the euro immediately for a rebound from a low of 1.1152.

To open short positions on EURUSD you need:

Sellers defend the level of 1.1207, however, opening short positions from it today is best after the formation of a false breakout, which can be formed as a result of weak data on inflation in the eurozone, with the growth of which the European Central Bank has problems. In case the euro is under pressure in the region of the level of 1.1207, I recommend considering short positions only after updating the high of 1.1239, or even higher, to rebound from resistance at 1.1263. An equally important task for sellers will be the return of EUR/USD to the support area of 1.1178, which was missed yesterday. Consolidating the pair below this area will increase pressure on the euro, which will return the pair to the lows of 1.1152 and 1.1127, where I recommend taking profits.

Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which preserves the advantage of euro buyers over sellers.

Bollinger bands

If the pair decreases, support will be provided by the lower boundary of the indicator in the region of 1.1178. The upper boundary of the indicator in the area of 1.1207 will act as resistance, a break through which will lead to an increase in 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

Fractal analysis for major currency pairs on January 7

Forecast for January 7:

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1255, 1.1238, 1.1220, 1.1198, 1.1173, 1.1158, 1.1141 and 1.1123. Here, the subsequent development of the ascending structure of January 3 is expected after the breakdown of the level of 1.1198. In this case, the target is 1.1220. Price consolidation is near this level. The breakdown of the level of 1.1220 will allow you to count on movement to the level of 1.1238. For the potential value for the top, we consider the level of 1.1255. Upon reaching which, we expect a correction.

A short-term downward movement is possibly in the range of 1.1173 - 1.1158. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.1141. This level is a key support for the top. Its passage at the price will lead to the development of a downward structure. In this case, the first goal is 1.1123.

The main trend is the upward structure of January 3.

Trading recommendations:

Buy: 1.1199 Take profit: 1.1220

Buy: 1.1222 Take profit: 1.1238

Sell: 1.1173 Take profit: 1.1160

Sell: 1.1156 Take profit: 1.1141

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3417, 1.3338, 1.3282, 1.3199, 1.3097, 1.3061 and 1.3006. Here, we are following the development of the ascending structure of December 23. At the moment, the price is in the zone of initial conditions. The continuation of the movement to the top is expected after the breakdown of the level of 1.3200. In this case, the target is 1.3282. Short-term upward movement, as well as consolidation is in the range of 1.3282 - 1.3338. For the potential value for the top, we consider the level of 1.3417. Upon reaching which, we expect a pullback to the bottom.

Consolidated movement is possibly in the range of 1.3097 - 1.3061. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3006. This level is a key support for the top.

The main trend is the upward structure of December 23

Trading recommendations:

Buy: 1.3200 Take profit: 1.3280

Buy: 1.3283 Take profit: 1.3336

Sell: 1.3097 Take profit: 1.3061

Sell: 1.3058 Take profit: 1.3008

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9822, 0.9798, 0.9766, 0.9738, 0.9698, 0.9678 and 0.9644. Here, the price forms the potential for the upward movement of December 31 in the correction of the downward cycle of December 24. The continuation of the movement to the top is expected after the breakdown of the level of 0.9738. In this case, the target is 0.9766. Price consolidation is near this level. The breakdown of the level of 0.9766 will lead to a pronounced movement. In this case, the target is 0.9798. For the potential value for the top, we consider the level of 0.9822. Upon reaching which, we expect consolidation, as well as a pullback to the bottom.

Consolidated movement is possibly in the range of 0.9698 - 0.9678. The breakdown of the latter value will have the downward structure. In this case, the first target is 0.9644.

The main trend is the descending cycle of December 24, the correction stage

Trading recommendations:

Buy : 0.9738 Take profit: 0.9764

Buy : 0.9767 Take profit: 0.9796

Sell: 0.9698 Take profit: 0.9678

Sell: 0.9676 Take profit: 0.9645

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For the dollar / yen pair, the key levels on the scale are : 109.05, 108.76, 108.54, 108.17, 107.95, 107.70, 107.27 and 107.11. Here, the price forms the potential for the top of January 3. Short-term upward movement is expected in the range of 108.54 - 108.76. The breakdown of the latter value will allow us to count on movement to a potential target - 109.05. We expect consolidation near this level.

Short-term downward movement is possibly in the range 108.17 - 107.95. The breakdown of the last value will lead to the subsequent development of the downward movement of January 2. Here, the first goal is 107.70.

The main trend: a local descending structure of January 2; the formation of potential for the top of January 3

Trading recommendations:

Buy: 108.55 Take profit: 108.74

Buy : 108.77 Take profit: 109.05

Sell: 108.17 Take profit: 107.97

Sell: 107.93 Take profit: 107.70

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3058, 1.3045, 1.3019, 1.3000, 1.2950 and 1.2924. Here, we are following the development of the local descending structure of December 23. The continuation of movement to the bottom is expected after the breakdown of the level of 1.2950. In this case, the target is 1.2924. We expect a key reversal to the correction from this level.

Short-term upward movement is possibly in the range of 1.3000 - 1.3019. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3045. The range 1.3045 - 1.3058 is a key support for the downward structure. We expect the initial conditions for the upward cycle to be formed before it.

The main trend is the local descending structure of December 23

Trading recommendations:

Buy: 1.3005 Take profit: 1.3017

Buy : 1.3020 Take profit: 1.3045

Sell: 1.2950 Take profit: 1.2926

Sell: Take profit:

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.7007, 0.6980, 0.6964, 0.6923, 0.6905, 0.6867 and 0.6851. Here, we consider the descending structure of December 31 as a medium-term structure. Short-term downward movement is expected in the range 0.6923 - 0.6905. The breakdown of the latter value will lead to a pronounced movement. Here, the target is 0.6867. We consider the level of 0.6851 to be a potential value for the bottom. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is expected in the range 0.6964 - 0.6980. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.7007. This level is a key support for the descending structure of December 31.

The main trend is the descending structure of December 31

Trading recommendations:

Buy: 0.6964 Take profit: 0.6980

Buy: 0.6982 Take profit: 0.7005

Sell : 0.6923 Take profit : 0.6907

Sell: 0.6903 Take profit: 0.6868

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For the euro / yen pair, the key levels on the H1 scale are: 122.12, 121.85, 121.47, 121.10, 120.89, 120.64 and 120.13. Here, the price forms a pronounced potential for the top of January 3. The continuation of the movement to the top is expected after the breakdown of the level of 121.47. In this case, the goal is 121.85. We consider the level of 122.12 as a potential value for the ascending structure. We expect a consolidated movement near this level.

Short-term downward movement is possibly in the range of 121.10 - 120.89. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 120.64. This level is a key support for the upward structure.

The main trend is the formation of potential for the top of January 3

Trading recommendations:

Buy: 121.48 Take profit: 121.83

Buy: 121.86 Take profit: 122.12

Sell: 121.10 Take profit: 120.90

Sell: 120.87 Take profit: 120.65

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For the pound / yen pair, the key levels on the H1 scale are : 144.56, 143.96, 143.54, 142.95, 142.22, 141.75 and 140.66. Here, the price registered the expressed potential for the top of January 3 in the area of the descending structure on December 31. The continuation of the development of the upward trend is expected after the breakdown of the level of 142.95. In this case, the target is 143.54. Price consolidation is in the range of 143.54 - 143.96. For the potential value for the top, we consider the level of 144.56. Upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 142.22 - 141.75. The breakdown of the latter value will lead to the development of a downward trend. In this case, the first potential target is 140.66.

The main trend is the descending structure of December 31, the formation of the upward potential of January 3.

Trading recommendations:

Buy: 142.95 Take profit: 143.54

Buy: 143.97 Take profit: 144.55

Sell: 142.20 Take profit: 141.76

Sell: 141.70 Take profit: 140.70

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

GBP/USD. January 6. Results of the day. Most absurd parliamentary elections can be held by the British people for many years

4-hour timeframe

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Amplitude of the last 5 days (high-low): 148p - 83p - 179p - 135p - 106p.

Average volatility over the past 5 days: 131p (high).

The British pound followed the example of the European currency and jumped on the first trading day of the new week. At the moment, the GBP/USD pair has worked out a critical line and is now preparing to either bounce off this line or overcome it. In the first case, the downward trend will resume, which, from our point of view, is most fundamentally justified at this time. In the second case, the bulls will get a chance to form an upward trend, which has very little fundamental support. One way or another, and Monday, January 6, was held in fairly active trading and not without macroeconomic reports, which played an important role, determining the mood of traders.

First, consider macroeconomic statistics, which in the UK were expressed by only one report - the index of business activity in the service sector for December. This indicator unexpectedly increased and amounted to 50.0. Thus, the first of three indexes of business activity in Britain left the area of decline and this is certainly optimistic news. It was against this background that the British currency began to grow, which, however, continued at the US trading session, despite the strong business activity indexes published in America. Okay, write off the fact that market participants ignored these indices due to their weak significance. More important are the ISM business activity indices, the first of which has already been published (in the industrial sector) and failed. Tomorrow the second will be published, in the services sector.

Meanwhile, a month after the parliamentary elections in the UK took place, we would like to analyze their results in more detail. Indeed, the future of Great Britain in the next few years will depend precisely on these results. I would immediately like to note the fact that these were the most paradoxical and most unusual elections in the last few decades. The defeat of Jeremy Corbyn and the Laborites was associated with the lack of a clear position on Brexit among them. However, we believe that such an interpretation in itself is ambiguous. How should any parliamentary election be held? Voters should study the election promises of each party and vote for one or another politician, based on the closeness of party principles. How was the last election in Britain? In fact, the question was whether Brexit (the struggle between Labour and the Conservatives) would take place, the smaller political forces were elected on the principle of "we want or do not want to stay in the European Union". As a result, we have a Conservative victory, not because over the past few months Boris Johnson has sharply gained several tens of percent of popularity, but because most of the British people are simply tired of the incomplete Brexit, of uncertainty. Therefore, almost everyone in a row voted for the Conservatives, who simply wanted the Brexit issue to be completed as quickly as possible.

By the way, official voting results say that Conservatives won in the largest number of districts, but in these districts themselves their advantage over competitors is low. For example, Conservatives gained about 40% of the vote in many districts, which was enough to win. That is, it is easy to guess that Laborites in such districts gained 30-35% each. Hence the conclusion: the popularity of the Conservatives has slightly grown, the Labour Party has decreased, and the Liberal Democrats, Scottish Nationalists and Greens have increased. Such a mess led to the result expected by all, since he was the only one that gave a definite answer to the question "how long will the country be in limbo?" Experts also note that a sufficiently large number of votes previously given to the Labour Party did not go to the Conservatives, but to other political forces, which supported ... the Conservatives, thanks to the essence of the current electoral system in the UK.

Now Britain is still facing the same "hard" Brexit, the loss of Scotland, the riots on the island of Ireland, questions about Gibraltar and many other charms. But now the fate of the United Kingdom is tightly squeezed in the hands of Boris Johnson, who has full power in the country and can, in fact, do whatever he wants. All opposition forces combined will not be able to stop Johnson, even if they want to. This is the main danger to the British people and the whole country. In fact, there will not be any democracy in Great Britain now. Any bill proposed by Johnson will be approved almost automatically. Such a monarchy could lead Britain to a standstill, completely change its foreign policy course and in general it is not clear how to end.

From a technical point of view, the pound/dollar currency pair is now being adjusted. We expect the upward correction to complete near the Kijun-sen critical line and the resumption of the downward trend.

Trading recommendations:

The GBP/USD pair started a correction. Thus, traders are advised to wait for the price to rebound from the Kijun-sen line and resume trading with lower lots for the purposes of 1.2993 and 1.2948. It is recommended that purchases of British currency be returned no earlier than when the price consolidates above the Kijun-sen line with the first target at 1.3210.

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 indicators 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

EUR/USD. January 6. Results of the day. Business activity indices unexpectedly triggered the euro's growth

4-hour timeframe

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Amplitude of the last 5 days (high-low): 93p - 49p - 42p - 59p - 55p.

Average volatility over the past 5 days: 60p (average).

The first trading day of the week ends with growth for the euro/dollar currency pair. The upward movement is absolutely characteristic in strength for Monday and completely fits into the current framework of volatility. The only thing is that the direction of movement does not correspond to the general trend. In fact, the currency pair continued to adjust, and the overall size of the correction made it possible for quotes to go beyond the critical line, so now formally a downward trend has again changed to an upward one. We still believe that the general fundamental background remains in favor of the US currency, however, recent events regarding the military conflict between the United States and Iran, a weak business activity index in the US ISM services sector, and also today's macroeconomic statistics still give a definite advantage to the European currency. The main question now is whether traders will take advantage of the provided weakness of the US currency.

The military conflict between the United States and Iran, has no special effect on foreign exchange markets so far. However, it could have, if it develops, if the parties continue to exchange blows, each of which will be human lives and deaths. Moreover, potentially we are talking about possible terrorist attacks, about open attacks on the United States and Iran. America's military capabilities are, of course, disproportionately greater, but this does not mean that Baghdad will remain unanswered. Therefore, we believe that if the conflict is not resolved in the near future, then in the long term, subject to the deployment of full-scale military operations, the US currency may begin to feel pressure on itself. So far, anonymous sources report that the Iranian government has stepped up the increased combat readiness of all missile forces in the country.

Meanwhile, European macroeconomic statistics pleased traders for the first time in a long time. According to the results of November, retail sales in Germany grew by 2.8% Y/Y which is much higher than the forecasts +0.8%. Indices of business activity in the services sector of the EU countries all turned out to be better than forecasted values. The same can be said of composite business activity indices. In Spain, the service sector showed growth to 54.9, in Italy to 51.1, unchanged at 52.4 in France, to 52.9 in Germany, and in the EU as a whole - to 52.8. It should also be noted that even the British index of business activity in the service sector increased and returned to the growth zone - 50.0. Thus, such values of business activity in the EU countries are indeed the basis for the growth of the euro by 30-40 points, but hardly more. We recommend that traders do not make hasty conclusions in the current situation. Yes, business activity in the service sector has shown positive dynamics, but this does not mean that the EU economy is now on the path to recovery and acceleration. Recall that the industrial sector and business activity in it remain at extremely weak levels. Thus, today's macroeconomic publications have deservedly provided local support for the euro, but the overall picture, in fact, does not change.

Furthermore, one cannot fail to note the business activity index in the US services sector for December, which grew from 52.2 to 52.8, as well as the composite business activity index, which showed growth to 52.7. Thus, macroeconomic statistics from overseas turned out to be positive, and at the US trading session caused restrained purchases of the dollar. In fact, we even get more or less identical situations. In the eurozone and the United States, manufacturing business activity is below 50 (in America, judging by the ISM index). Thus, it is in these indicators that even a certain equality of economies can be noted. However, this is practically the only indicator in which such equality can be recorded. Much more significant indicators of industrial production, GDP, inflation, unemployment, wages remain in favor of the United States. Thus, we continue to stand our ground and expect a new downward trend for the euro/dollar pair.

The technical picture of the pair now, by and large, does not signal anything discouraging. The upward correction is currently getting stronger than originally expected. Yes, now it is even possible to resume an upward trend, as in the framework of the previous downward movement, the bears failed to work out the important line of Senkou Span B. Tomorrow two important macroeconomic reports will be published - preliminary inflation in the EU for December and the ISM index of business activity in the US for December.

Trading recommendations:

The EUR/USD pair is still being adjusted and is preparing to resume the downward movement. Thus, now it is recommended for traders to wait for the correction to finish, to consolidate the price back below the Kijun-sen line and to trade lower Senkou Span B line with the first goals and the support level of 1.1109. You can formally consider buying the pair now, but we believe that the likelihood of continued upward movement is still low.

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 indicators 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