Technical analysis of BTC/USD for 30/01/2020:

Crypto Industry News:

The municipality of Zermatt in Switzerland is now second place in Switzerland where taxpayers can officially pay taxes in Bitcoin. To enable the new tax payment option, Zermatt authorities have partnered with the largest Swiss crypto company Bitcoin Suisse.

As announced by Bitcoin Suisse, Zermatt began to accept Bitcoin as a means of payment for local taxes and transactions on January 28, 2020.

By working with Bitcoin Suisse, Zermatt authorities are now able to convert taxpayer Bitcoins to Swiss francs through a company that then transfers the amount in fiscal currency to the municipality's bank account.

Local taxpayers will be able to pay taxes in Bitcoins using the sales tool installed in the Zermatt city hall or on the online payment portal. However, to pay taxes using Bitcoin online, taxpayers will have to apply directly to the Zermatt tax office for a cryptographic payment solution.

Romy Biner-Hauser, mayor of Zermatt, emphasized that the new tax payment option aims to meet the increased demand for Bitcoin-based tax payments:

While Switzerland is still developing its industry of crypto-financial services in terms of Bitcoin-based tax payments, some global authorities have recently found this option too risky due to the high volatility of Bitcoin values.

Technical Market Overview:

The BTC/USD pair has made yet another higher high overnight, this time it was located at the level of $9,383 and bulls are now consolidating the recent gains. The level of $9,130 will now act as short-term technical support, together with the level of $8,836. The strong and positive momentum supports the short-term bullish outlook and the next target for bulls is seen at the level of $9,539. There is only a couple of days to complete the month of January and the Bitcoin chart still looks very bullish.

Weekly Pivot Points:

WR3 - $9,339

WR2 - $9,028

WR1 - $8,796

Weekly Pivot - $8,458

WS1 - $8,222

WS2 - $7,890

WS3 - $7,647

Trading Recommendations:

There is a possibility that the wave 2 corrective cycles are completed at the level of $6,345, so the market might be ready for another impulsive wave up of a higher degree and uptrend continuation. This strategy is valid as long as the level of $7,582 is not violated. Nevertheless, the larger timeframe trend is still down and all the shorter timeframe moves are still being treated as a counter-trend correction inside of the uptrend until the level of $10,278 is clearly broken.

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EUR/USD. Virus not a hindrance to the Federal Reserve: US central bank held a boring meeting

The euro-dollar pair reacted minimally to the results of the January meeting of the Federal Reserve. However, the Fed also did not provide any reasons for volatility. The first meeting this year turned out to be completely "passing", contrary to the expectations of some experts. In general, the January meeting is almost completely similar to the December meeting. The same wording, the same intentions and the same decisions. Therefore, the US currency remained indifferent to yesterday's events, continuing to focus on the external fundamental background.

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The US regulator expectedly left all the parameters of monetary policy unchanged. The probability of this scenario was 100%, so the main attention of traders was focused on the key of the accompanying statement and the rhetoric of Jerome Powell. The text of the final communique nearly did not differ from the December one. However, there are still some differences. First, the regulator increased (from 1.55% to 1.6%) the rate on surplus bank reserves (IOER). The overnight repo rate was also increased (from 1.45% to 1.5%). At the same time, the Fed extended REPO operations until the end of April. All these adjustments were technical in nature, so they did not cause a stir in the market.

Secondly, there have been minimal changes in the wording. If the Fed characterized consumption growth rates as "high" in December, then it lowered its assessment to "moderate growth" in January. It is worth recalling that the main index of expenditures on personal consumption shows a downward trend (year on year), so the regulator only reflected the current state of affairs.

The rest of the Fed's accompanying statement was identical to the December one. The regulator "closed its eyes" to the rather slurred Nonfarm (especially in the context of wage growth), noting that "the labor market continues to strengthen, while the economy as a whole is growing at a moderate pace." The Fed has traditionally been worried about the weak growth in the export sector, as well as the level of consumption. According to the Fed, the weak point is inflation indicators , which are still below the target two percent level. At the same time, the regulator noted that the indicators of inflationary expectations, which are based on surveys, "almost did not change their structure." Summing up the January meeting, the Federal Reserve confirmed the preservation of a wait-and-see attitude, emphasizing the effectiveness of current policy. It is noteworthy that in the accompanying statement, the regulator did not reflect the signing of the first phase of the trade deal, nor the hysteria with the spread of coronavirus. In this context, the central bank limited itself to only one vague phrase that "the Committee continues to monitor the impact of incoming data, including events in the world."

Thus, members of the Fed did not provide any reasons for volatility. On the one hand, they did not succumb to general panic (for example, it might have been worried about a possible slowdown in the global economy due to the Chinese pneumonia epidemic). On the other hand, the Fed actually ignored the very alarming signals that came in January from macroeconomic reports. In particular, according to the latest data, the average hourly wage level fell to 0.1% on a monthly basis - this is the worst result since September last year, when it fell to zero. In annual terms, this indicator rose by only 2.9% - this is also a kind of anti-record (the weakest growth rate since July 2018).

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But the fact remains: the US regulator remained faithful to its December guidelines. At his press conference, Powell repeated the main points of the accompanying statement, supplementing them with his comments, but without saying anything significant. He noted that despite a trade ceasefire, uncertainty factors still persist, and coronavirus joined in with these factors. However, Powell did not assess the risks and make any predictions about the possible consequences. As for the dynamics of macroeconomic statistics, the Fed chief expressed surprise that with such low unemployment, the growth rate of wages remains extremely weak. By the way, Janet Yellen spoke about this at the time when she was the head of the Federal Reserve - in her opinion, such dynamics negatively affects inflationary processes. But Powell remains optimistic in this context - according to him, inflation will reach the target level "in the near future". The rest of his phrases were "on duty" in nature: the theses voiced boiled down to the fact that the central bank will continue to "closely monitor conditions in the money markets" and will respond if necessary.

Thus, the US regulator made it possible for the dollar to continue to focus on the external fundamental background. The Fed did not put pressure on the greenback, but also refrained from hawkish notes in its rhetoric. The focus of the market has returned to the theme of the spread of coronavirus, which continues to pace the planet. The number of infected at the moment has reached almost eight thousand, while the death toll has reached 170 people. According to experts, the peak incidence is still ahead, so the dollar will still prove to be a defensive tool. With an increase in anti-risk sentiment, the EUR/USD pair may return to the 9th figure, reaching in the near future the strongest support level of 1.0940 (the lower line of the Bollinger Bands indicator on the weekly chart).

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EUR/USD Makes False Breakdown, But Bias Still Bearish. Technical Analysis For 30.01.2020

EUR/USD has declined as low as 1.0992 yesterday, but the sellers weren't able to keep the price below the 1.1000 psychological level. The currency pair is trading at 1.1011 level at this moment as the USDX has come back down to retest the 98.00 level.

As you already know, the Federal Reserve left the Federal Funds Rate steady at 1.75%, as expected, but unfortunately, the USD was punished by the poor US data. The Goods Trade Balance widened from -63.0B to -68.3B, much below the -64.5B estimate, while the Prelim Wholesale Inventories edged down by 0.1%, though analysts had expected a 0.1% uptick.

Pending Home Sales plunged by 4.9% in December, whereas economists had expected to see a 0.5% increase after a 1.2% gain in the previous month. You should keep an eye on the economic calendar today, as the Advance GDP, Advance GDP Price Index and the Unemployment Claims from the US could bring life to EUR/USD. If the figures are better than expected, the USD could drive the pair much lower.

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EUR/USD has failed to stabilize below the 1.1 level, but the bias remains bearish as long as the price stays below the median line (ml) of the descending pitchfork. The price has failed to reach and retest the median line (ml), so EUR/USD remains under high selling pressure.

A further increase of the USDX after the 98.00 level retest will signal a EUR/USD drop below the 1.1000 level again. More sellers will be attracted if EUR/USD will make a valid breakdown (close and stabilize) below the 1.1 psychological level.

  • Trading Recommendation and Forecast

We can go short on EUR/USD after a valid breakdown below the 1.1000 level after a lower low with potential targets at 1.0925 and at the lower median line (lml) of the descending pitchfork. Stop Loss should be placed above 1.1027 level. The outlook is bearish as long as the pair is trading below the median line (ml).

Right now, I can't talk about a potential rebound, but you should know that another false breakdown (rejection) below the 1.1 level and a breakout above the median line (ml) could signal bullish momentum on the short term towards the upper median line (uml). This scenario could happen only if the price fails to close and stabilize below the 1.1 psychological level.

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Fed takes a break and will continue to monitor the situation on the market (we mainly expect consolidation in the ranges

As expected, the Fed's decision on monetary policy, as well as subsequent comments by its leader J. Powell, did not have a significant impact on the market.

The American regulator made the expected decision to maintain the parameters of monetary policy during the first meeting this year. The Central Bank left the target range for federal funds 1.50% -1.75%. At the same time, the interest rate on surplus reserves was also increased, up to 1.6% against 1.55%. The discount interest rate remained at around 2.25%. The decision of the voting members of the Open Market Committee (FOMC) was unanimous.

The regulator's resolution states that he will conduct the purchase of short-term treasury bonds throughout the year, while overnight repo transactions are planned to be maintained until the end of the first quarter. In general, the bank stated that inflation expectations and the hope that it would grow to the target level of 2.0% were maintained. The Bank also made it clear that consumption remains moderate, while exports and imports are weak. The labor market is strong amid moderate growth in the national economy.

On the other hand, Powell's speech did not contain any surprises. He expressed dissatisfaction with the persistently low inflation, which is kept below the 2.0% mark, expressed concern about the situation around the coronavirus and indicated that wages are growing mainly in the low wages segment.

In turn, the markets reacted to the final decision of the Federal Reserve and the speech of its head is restrained and without special emotions. The focus of investors remains the topic of the Chinese coronavirus and Britain's exit from the EU on January 31, as already decided by the local parliament. However, this pathetic event is expected on Friday, and today, the attention of market participants will be focused on the outcome of the meeting of the Bank of England on monetary policy. It is assumed that the regulator will leave all the parameters of monetary policy unchanged. The key interest rate at 0.75%, and the amount of asset repurchase in the amount of 435 billion pounds.

The focus of the market will also be the speech of the head of the Central Bank, M. Carney, from whom forecasts on monetary policy for the near future will be expected.

In our opinion, Carney will try not to rock the economic "boat" of Britain in anticipation of the fact of Brexit. Thus, in general, we do not expect any noticeable and radical changes in the currency exchange market today.

Forecast of the day:

The GBP / USD pair is consolidating in the range 1.2965-1.3165 in anticipation of the final decision of the Bank of England on monetary policy, as well as the fact that Britain will exit the EU, which will take place on January 31. We expect the pair to decline only if the bank unexpectedly decides to lower interest rates or M. Carney makes it clear in his speech. In this case, the droppings fall to 1.2900.

The USD / JPY pair is consolidating in a narrow range of 108.75-109.25 in the wake of reducing the fear that the situation with the coronavirus will turn into a pandemic. It is likely that the pair will consolidate today in this range, unless, of course, another negative with the coronavirus appears again in the news top.

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Technical analysis of GBP/USD for 30/01/2020:

Technical Market Overview:

The GBP/USD pair keeps trading inside of a narrow horizontal zone located between the levels of 1.3168 - 1.2962 and currently it is reaching the lower zone levels. The next target for bears is seen at the levels of 1.2988 and 1.2962. If the last support is clearly violated, then the sell-off will continue towards the level of 1.2939. The weak and negative momentum supports the bearish outlook, but the global market participants await the Brexit anyway and the market reaction to this historical event.

Weekly Pivot Points:

WR3 - 1.3380

WR2 - 1.3270

WR1 - 1.3179

Weekly Pivot - 1.3070

WS1 - 1.2967

WS2 - 1.2843

WS3 - 1.2751

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up, so all downward market moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down in the longer term, 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 30/01/2020:

Technical Market Overview:

The EUR/USD pair has made a marginally lower low at the level of 1.0990 before the local slight bounce occurred. The bounce has been capped at the level of 1.1024, so the next trading range is being established as the liquidity dries up in the last days of January. The market conditions are extremely oversold on this timeframe, but due to the weak and negative momentum that is still hovering below its fifty level, the odds for another leg down are still high. The next target for bulls, if the breakout is genuine, is seen at the level of 1.1040, but the real gamechanger is seen at the level of 1.1076. Please notice that the downside is limited by the lower channel line as well, so the support might help the price to move higher.

Weekly Pivot Points:

WR3 - 1.1171

WR2 - 1.1139

WR1 - 1.1072

Weekly Pivot - 1.1044

WS1 - 1.0977

WS2 - 1.0946

WS3 - 1.0872

Trading Recommendations:

Not much has changed since the last week in a bigger perspective. Still, 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 1.0981 and the technical resistance at the level of 1.1267.

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FOMC January Report

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The information received after the meeting of the Federal Committee on Open Markets in December suggests that the labor market remains strong and that economic activity is gradually growing. Jobs have grown steadily on average in recent months, while the unemployment rate has remained low. Although household spending grew, investment in fixed assets and exports remained weak where the total inflation fell below two percent for the current year. The Committee believes that the current position of monetary policy is suitable to support sustained growth in economic activity and keep inflation at a level not exceeding 2%.

Decisions regarding the implementation of monetary policy:

The Board of Governors of the Federal Reserve System voted unanimously to set the interest rate on the mandatory and excess reserve balance at 1.60% starting January 30, 2020.

"Starting January 30, 2020, the Federal Committee for Open Markets instructs the Department to conduct operations on the open market as necessary to maintain the federal funds rate in the target range of 1 1 / 2 to 1 3 / 4 percent. The Committee instructs the Office to continue the procurement of treasury bills at least in the second quarter of 2020 to maintain a sufficient reserve level that prevailed in the early stages. The Committee also instructs the Office to participate in dollar coupon exchange and coupon exchange operations, as necessary, to facilitate settlements on Federal Reserve transactions with mortgage-backed securities. "

In this regard, the Board of Governors of the Federal Reserve System unanimously voted to approve the establishment of the primary loan rate at the existing level of 2.25 percent. This information will be updated as necessary to reflect the decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve's operational instruments and the approach used to implement monetary policy.

The Monetary policy action was voted by the following: Chair Jerome H. Powell, Vice Chairman John C. Williams, Michelle W. Bowman, Lael Brainard, Richard H. Clarida, Patrick Harker, Robert S. Kaplan, Neel Kashkari, Loretta J. Mester, and Randal C. Quarles.

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What did the US Federal Reserve say on January 29?

The US Federal Reserve kept the rate at 1.625% and said:

The information received after the Fed's meeting on open markets in December indicates that the labor market remains strong, and economic activity is growing at a moderate pace. In recent months, the average employment growth has been significant, while the unemployment rate has remained low. Although household spending is growing at a moderate pace, the business investment in fixed assets and exports remains weak. On a 12-month basis, the overall rate of inflation and inflation for goods other than food and energy is less than 2 percent. Market indicators of inflation remain low; The indicators of long-term inflation expectations based on survey results have not changed much.

In accordance with its statutory mandate, the committee seeks to promote maximum employment and price stability. The committee decided to maintain the target range for the Federal funds rate at 1-1 / 2 to 1-3/4 percent. The committee believes that the current position of the monetary policy is appropriate to support the sustainable expansion of economic activity, strong labor market conditions, and the return of inflation to the committee's target of 2% equilibrium. The committee will continue to monitor the impact of incoming information on the economic outlook, including global changes and restraining inflationary pressures, as it assesses the appropriate path of the target range for the Federal funds rate.

In determining the timing and amount of future adjustments to the target range for the Federal funds rate, the committee will evaluate the realized and expected economic conditions relative to its maximum employment goal and its symmetrical 2% inflation goal. This assessment will take into account a wide range of information, including indicators of labor market conditions, indicators of inflationary pressure and inflation expectations, as well as indications about financial and international events.

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Indicator analysis: Daily review on EUR/USD for January 30, 2020

The pair continued to move down yesterday while testing the support line for the downward channel at 1.0995, presented in a red bold line. After that, the price went up. Today, strong calendar news for the euro is expected at 08:55 UTC and for the dollar at 13:30 UTC. On Thursday, a retraceable upward movement is possible.

Trend analysis (Fig. 1).

An upward movement is possible today with the first target of 1.1029, the retracement level of 14.6% presented in a blue dashed line. Upon reaching this level, continue to work upward with the goal of 1.1052, the retracement level of 23.6% presented in a blue dashed line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

An upward movement is expected today with the first target of 1.1029, the retracement level of 14.6% presented in a blue dashed line.

An unlikely but possible scenario is from the level of 1.1013, yesterday's closing candle, the price will go down to the support line 1.0994, presented in a red bold line, and then work up.

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USD Index try to test the 98.19 For Today Jan 30, 2020

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The USD Index is still inching up. It is likely to test the daily chart buy-side liquidity pool at 98.19. This scenario should unfold before February 2020 because the seasonal tendency for USD Index in February is bearish, especially if the 4-hour chart breaks at 97.94 (red circle).

(Disclaimer)

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The Equal Low 0.6500 potential to be tested by NZD/USD today on Jan 30, 2020

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As we see on the 4-hour chart, NZD/USD made an Equal Low at 0.6500 which means Liquidity pool (SELL Side) right there, so that level is lkely to be tested by this pair today. If this level is broken successfully today, the odds are that NZD/USD will continue its downward move at least for testing the Fair Value Gap Main Threshold at 0.6462. As long as the Kiwi does not retrace or climbs higher than 0.6550, the NZD/USD pair is set to follow the bearish trajectory.

(Disclaimer)

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Trading plan on EUR/USD for January 30, 2020. The Fed and the Chinese virus

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So, the Fed meeting was held. The interest rate remains at the level of 1.625%, as the Fed said that it will not raise the rate until inflation accelerates steadily above 2%. A rate cut is only possible in the event of a sharp deterioration in the economy, which is not yet observed.

The main topic is still the new epidemic flu in China, with 170 deaths as of Thursday morning.

The Chinese authorities are taking all possible measures to stop the epidemic.

Important news today: the first report on US GDP for the 4th quarter is at 14:30 London time. Forecast +1.8:+1.9%.

EUR/USD

Euro's sellers tried to push the currency below 1.1000 after the Fed's decision. However, it failed and they retreated.

Meanwhile, keep selling from 1.1084.

Selling from 1.1050 or higher is possible.

Cancel sales on 1.1110.

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GBP/USD: plan for the European session on January 30. Pound awaits Bank of England's decision on interest rates. Breakout

To open long positions on GBP/USD you need:

Yesterday, I paid attention to the support level of 1.2990 and said that a new lower boundary of the ascending channel could be formed from it, which, in fact, happened. At the moment, the bulls' primary goal is to break and consolidate above the resistance of 1.3030, which will lead to the demolition of stop orders of sellers and a larger upward correction to the area of highs 1.3065 and 1.3102, where I recommend taking profits. However, this scenario will only be possible after the Bank of England leaves interest rates unchanged. At the same time, a second test of support at 1.2990 cannot be ruled out. If the bulls do not have enough strength to cope with the pressure of sellers in the area of 1.2990, and the English regulator lowers rates, then in this scenario, purchases are best delayed until the lows 1.2963 and 1.2939 are updated, which will mean a bearish trend return.

To open short positions on GBP/USD you need:

Bears still need to form a false breakout around 1.3030, since only in this case the market will again come under their control, which will push the pair to support 1.2990, near which the lower boundary of the new rising channel was formed yesterday. However, the pound's direction today is completely dependent on the BoE's decision, so it is only possible to talk about technical analysis as guidelines. Consolidation below 1.2990 will quickly push GBP/USD to lows 1.2963 and 1.2939, where I recommend taking profits. If there is no pressure from sellers in the area of resistance at 1.3030, and the central bank leaves the rates unchanged, then in this case, short positions are best postponed until the test of highs 1.3065 and 1.3102.

Signals of indicators:

Moving averages

Trade is conducted in the region of 30 and 50 moving averages, which indicates market uncertainty before the release of important fundamental statistics.

Bollinger bands

A break of the upper boundary of the indicator at 1.3030 will lead to a surge in pound purchases. A break of the lower boundary at 1.3000 will raise pressure on the pound.

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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 30. False breakout at 1.1000 leaves euro buyers in the game

To open long positions on EURUSD you need:

Yesterday's meeting of the Federal Reserve was fairly calm, and the results coincided with the expectations of market participants, which did not make it possible for the US dollar to continue to strengthen against the euro. At the moment, the bulls have the task of overcoming the resistance of 1.1030, and it depends only on this level whether the pair will continue to grow further and whether the downward trend will be broken. Consolidation above 1.1030 will lead to the renewal of highs in the region of 1.1060, but a larger bullish impulse is formed only if the data indicates an increase in consumer sentiment in the eurozone and a good state of the labor market. Do not forget about the report on the growth of the US economy at the end of last year, the release of which is scheduled for the afternoon. With the option of pulling down the pair in the morning, you can still return to long positions after the formation of a false breakout in the support area of 1.1000, but I recommend buying the euro immediately for a rebound only after updating the lows of 1.0982 and 1.0964.

To open short positions on EURUSD you need:

Yesterday, bears coped with the task of updating support for 1.1000, but failed to close the trading day below this range, which indicates an active rebuff from buyers of the euro. The bulls took advantage of weak statistics on the US economy and the Fed's decision, which fully coincided with the forecasts of economists, which led to the recovery of EUR/USD in the afternoon. The task of euro sellers today is to form a false breakout in the resistance area of 1.1030, which will be the first signal to open short positions. Consolidation below the level of 1.1000 will push the pair to the lows of 1.0982 and 1.0964, where I recommend taking profits. In the EUR/USD growth scenario above the resistance of 1.1030, short positions are best postponed until the highs of 1.1060 are updated, or sell immediately for a rebound in the resistance area of 1.1088.

Signals of indicators:

Moving averages

Trade is conducted in the region of 30 and 50 moving average, which indicates the formation of a side channel in the short term.

Bollinger bands

A break of the upper boundary of the indicator in the region of 1.1020 will lead to an increase in demand for the euro. Support will be provided by the lower boundary in the area of 1.0990.

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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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Forecast for EUR/USD on January 30, 2020

EUR/USD

The results of yesterday's Fed meeting were completely neutral. The US central bank has identified the current economic situation as stable by including coronavirus in the risk factor. Current repo operations will continue until May without substitution for long-term repurchase of securities. Exchange rates did not respond to this information.

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The euro nearly touched the target level at the Fibonacci level of 1.0986 yesterday, at the moment the price is below the line of the price channel and the probability of further decline remains, but correctional growth has been outlined on a smaller chart.

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The main sign of correction for H4 is the convergence of the Marlin oscillator, its signal line has already penetrated into the growth zone. There are two resistances on the path of price correction: 1.1046 - the MACD line on H4 and 1.1080/90 - the area of the Fibonacci level of 123.6% and the MACD line on the daily chart. We look forward to the completion of the correction and further weakening the euro.

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Forecast for GBP/USD on January 30, 2020

GBP/USD

Yesterday, the British pound, in anticipation of today's decision by the Bank of England on monetary policy, traded in a small range, which only strengthened the technical signs of an upward price movement. On the daily chart, the signal line of the Marlin oscillator outlined a reversal up and thereby formed a wedge with the same probability of exiting from it in any direction.

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To break this triangle down, the price needs to gain a foothold at the Fibonacci level of 161.8% (1.2968), the target of the movement will be the Fibonacci level of 138.2% at the price of 1.2820. If the triangle breaks up, prices will go above 1.3070. In this case, the MACD line will be the target level, located near the Fibonacci level of 200.0%, near the price level of 1.3220. Moreover, growth may not stop there.

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On the four-hour chart, the signal level 1.3070 corresponds to the MACD line. This strengthens the significance of the level. The driver of the movement, obviously, will be the outcome of the Bank of England meeting. Changes in monetary policy are unlikely to be, as the economic situation in the UK remains neutral, and today's meeting will be Mark Carney's final for the central bank, his term of office will expire. The main intrigue in the distribution of votes for maintaining the rate. The consensus forecast is 3-6 versus 2-7 at the last meeting, but the forecast range itself is wider, up to 4-5, and it is precisely such a voting result that can send the pound to growth much higher than the first target 1.3220.

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Forecast for USD/JPY on January 30, 2020

USD/JPY

Yesterday's Fed meeting had a neutral effect on stock indices: Dow Jones added 0.04% while the S&P 500 fell 0.09%. Today in the Asian session, the Japanese Nikkei 225 lost 1.02%, the Australian S&P/ASX200 shed 0.19%, and the South Korean Kospi SEU index was down 0.45%. The yen is trading in the range of January 27-28 with a falling mood: on the daily chart, the price returned below the balance line, the signal line of the oscillator turned down in the bearish trend zone.

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The purpose of the movement is the level of 108.50 - the peak of September 18, 2019. Consolidation under the level opens the more significant goal of 107.87 - the point of intersection of two trend lines of price channels: declining red and rising green.

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On the H4 chart, the price reversed yesterday from the red indicator line of the balance, the price returned to the range of January 27-28. The Marlin oscillator is also returning to the bears zone. We are waiting for the price to fall to the magnetic point of 107.87.

In an alternative scenario, after the price goes above yesterday's peak, growth may continue to the MACD line in the 109.70/85 range - here the resistance of this line is close on the charts of both scales.

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

Fractal analysis of the main currency pairs for January 30

Forecast for January 30:

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: 1.1084, 1.1052, 1.1035, 1.0995, 1.0964 and 1.0945. Here, we are following the descending structure of January 16. The continuation of the movement to the bottom is expected after the breakdown of the level of 1.0995. In this case, the target is 1.0964. For the potential value for the bottom, we consider the level of 1.0945. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.1035 - 1.1052. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 1.1084. This level 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 descending structure of January 16

Trading recommendations:

Buy: 1.1035 Take profit: 1.1051

Buy: 1.1054 Take profit: 1.1082

Sell: 1.0995 Take profit: 1.0970

Sell: 1.0964 Take profit: 1.0947

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3080, 1.3050, 1.3029, 1.2967, 1.2934, 1.2890 and 1.2867. Here, we are following the development of the downward cycle of January 24. The continuation of the movement to the bottom is expected after the breakdown of the level of 1.2967. In this case, the target is 1.2934. Price consolidation is near this level. Its price passage should be accompanied by a pronounced downward movement to the level of 1.2890. For the potential value for the bottom, we consider the level of 1.2867. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 1.3029 - 1.3050. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3080. This level is a key support for the bottom.

The main trend is the descending structure of January 24

Trading recommendations:

Buy: 1.3029 Take profit: 1.3050

Buy: 1.3052 Take profit: 1.3080

Sell: 1.2965 Take profit: 1.2936

Sell: 1.2932 Take profit: 1.2890

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9809, 0.9778, 0.9758, 0.9743, 0.9715, 0.9699 and 0.9673. Here, we are following the development of the ascending structure of January 16. Short-term upward movement is expected in the range of 0.9743 - 0.9758. The breakdown of the latter value will lead to a movement to the level of 0.9778. Price consolidation is near this level. We consider the level of 0.9809 to be a potential value for the upward movement; upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 0.9715 - 0.9699. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9673. This level is a key support for the top.

The main trend is the upward cycle of January 16

Trading recommendations:

Buy : 0.9743 Take profit: 0.9756

Buy : 0.9758 Take profit: 0.9776

Sell: 0.9715 Take profit: 0.9700

Sell: 0.9697 Take profit: 0.9675

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For the dollar / yen pair, the key levels on the scale are : 109.43, 109.20, 109.01, 108.65, 108.47 and 108.25. Here, we are following the downward cycle of January 17. Short-term downward movement is possible in the range of 108.56 - 108.47. The breakdown of the last value will lead to a movement to a potential target - 108.25, and upon reaching this level, we expect a pullback to the top.

Consolidated movement is possibly in the range of 109.01 - 109.20. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 109.43. This level is a key support for the downward structure.

Main trend: potential downward structure of January 17, correction stage

Trading recommendations:

Buy: Take profit:

Buy : 109.23 Take profit: 109.40

Sell: 108.65 Take profit: 108.48

Sell: 108.45 Take profit: 108.25

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3312, 1.3271, 1.3238, 1.3198, 1.3178, 1.3157 and 1.3126. Here, we are following the development of the upward cycle of January 22. The continuation of the movement to the top is expected after the breakdown of the level of 1.3198. In this case, the target is 1.3238. Price consolidation is near this level. There is a short-term upward movement in the range of 1.3238 - 1.3271. Hence, a reversal to a correction is also possible. The potential value for the top is considered to be the level of 1.3312.

Consolidated movement is possibly in the range of 1.3178 - 1.3157. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3126. This level is a key support for the top.

The main trend is the local ascending structure of January 22, the correction stage

Trading recommendations:

Buy: 1.3198 Take profit: 1.3236

Buy : 1.3240 Take profit: 1.3270

Sell: Take profit:

Sell: 1.3155 Take profit: 1.3130

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6803, 0.6781, 0.6768, 0.6750, 0.6737 and 0.6716. Here, we are following the development of the descending structure of January 16. Short-term downward movement is expected in the range 0.6750 - 0.6737. The breakdown of the latter value will lead to movement to a potential target - 0.6716. We expect a pullback to the top from this level.

Short-term upward movement is expected in the range of 0.6768 - 0.6781. The breakdown of the last value will lead to an in-depth correction. Here, the target is 0.6803. This level is a key support for the bottom and before it, we expect the initial conditions for the upward cycle to be formed.

The main trend is the descending structure of January 16

Trading recommendations:

Buy: 0.6768 Take profit: 0.6780

Buy: 0.6783 Take profit: 0.6800

Sell : 0.6750 Take profit : 0.6737

Sell: 0.6736 Take profit: 0.6716

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For the euro / yen pair, the key levels on the H1 scale are: 120.90, 120.59, 120.37, 119.93 and 119.44. Here, we are following the descending structure of January 16. The continuation of movement to the bottom is expected after the breakdown of the level of 119.90. In this case, the potential target is 119.44. We expect a pullback in correction upon reaching this level.

Short-term upward movement is possibly in the range of 120.37 - 120.59. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 120.90. This level is a key support for the downward structure.

The main trend is the descending structure of January 16

Trading recommendations:

Buy: 120.37 Take profit: 120.57

Buy: 120.61 Take profit: 120.90

Sell: 119.90 Take profit: 119.48

Sell: Take profit:

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For the pound / yen pair, the key levels on the H1 scale are : 143.28, 142.85, 142.53, 142.11, 141.74, 141.21, 140.92 and 140.30. Here, we are following the development of the downward cycle of January 22. Short-term downward movement is expected in the range of 142.11 - 141.74. The breakdown of the last value should be accompanied by a pronounced downward movement. Here, the goal is 141.21. Price consolidation is in the range of 141.21 - 140.92. For the potential value for the bottom, we consider the level of 140.30. We expect a pullback to the top upon reaching this level.

Short-term upward movement is expected in the range of 142.53 - 142.85. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 143.28. This level is a key support for the downward movement.

The main trend is the descending structure of January 22

Trading recommendations:

Buy: 142.53 Take profit: 142.85

Buy: 142.87 Take profit: 143.28

Sell: 142.10 Take profit: 141.76

Sell: 141.72 Take profit: 141.25

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

GBP/USD. January 29. Results of the day. Great Britain leaves the EU and 73 British deputies leave the European Parliament

4-hour timeframe

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Amplitude of the last 5 days (high-low): 52p - 89p - 118p - 54p - 118p.

Average volatility over the past 5 days: 87p (average).

After a slight upward correction, the British pound resumed the downward movement on Wednesday, January 29. No important macroeconomic reports have been made today in either the United States or the United Kingdom. Britain is on the verge of leaving the European Union; the process began 3.5 years ago. The last vote on Brexit (pure formality) will take place in the European Parliament today, and in the European Council (the same formality) tomorrow. Thus, we can assume that all the formalities have already been settled and the UK can only wait until January 31 and officially set foot in the "transition period". Another extremely important event will take place until January 31 - a meeting of the Bank of England, within which the key rate can be lowered. This is a really important event, as the meeting will be the last for the head of the bank, Mark Carney. Is it worth mentioning once again that the BoE's decisions can have a strong impact on the British currency, on its rate paired with the US dollar? Also, the movement of the currency pair can be seriously affected by the Fed's meeting today, from which, however, traders expect much less than from the BoE meeting. Nevertheless, both of these events could potentially turn things upside down. We have long been waiting for the British currency to resume the downward trend, as we continue to believe that the UK economy is now experiencing serious problems. And most importantly, it will continue to experience them throughout 2020. What will happen after 2020, for example, if a trade agreement cannot be signed with the European Union, I don't even want to think now. In any case, even if the US economy begins to experience problems (again), we believe that almost any currency will look stronger together with the British pound at this time.

We have already said that the transition period essentially does not change anything for the UK and its economy. All conditions of coexistence with the European Union will remain the same. The only thing is that Britain will lose the opportunity to take part in the EU's administration. Simply put, the British deputies of the European Parliament will leave their seats. At the moment, the UK office in the European Parliament is one of the largest and has 73 seats. Accordingly, 73 seats will be empty in the Parliament on February 1. It has already been decided that 27 deputy mandates will be divided between EU member states, and another 46 will remain unoccupied and will be available for new members of the EU. Of the 27 seats that will be distributed among the participants of the bloc, it is expected that five will get France and Spain, three each - Italy and the Netherlands, one each - Croatia, Finland, Slovakia, Romania, Poland, Denmark, Austria, Sweden, Estonia.

Meanwhile, the question of further negotiations between London and Brussels regarding trade relations after the completion of Brexit is becoming increasingly acute. Michel Barnier just recently gave an extensive interview, which highlighted the most important issues and contradictions in the negotiation process between the countries. The main problems, according to the EU's main negotiator, are Britain's wrong expectations ("the British will not be able to use the privileges of EU membership while outside the EU"), as well as tight deadlines (Boris Johnson does not want to extend the transition period and, accordingly, you need to reach a deal in 11 months). Barnier also said that the EU will closely monitor the implementation of the minutes of the exit agreement. The main difficulty of this deal is that Northern Ireland will have access to European markets over the next four years without tariffs, quotas, inspections and controls. At the same time, Northern Ireland will leave the EU together with Great Britain and, accordingly, a border should appear between the EU and the UK. According to the plan developed by European and British politicians, there will be no tight border between Ireland and Northern Ireland, so as not to provoke riots and popular uprisings among the inhabitants of the island, which barely managed to be repaid in 1998. Thus, a semblance of a border will pass along the Irish Sea, that is, between the island of Ireland and the rest of Great Britain. This is a very subtle mechanism that has a whole host of inconsistencies, various loopholes and places where it can frankly break. The British need peace of mind on the island of Ireland, respectively, London can turn a blind eye to some points, just to prevent unrest on the island. Of course, the EU does not like this position and Barnier warns the British that all agreements must be implemented exactly.

From a technical point of view, the downward movement has now resumed. Therefore, the downward trend persists. The Ichimoku indicator continues to indicate a movement up and down and allows you to trade lower. A strong support area is near the support level of 1.2963. The pound/dollar pair has rebounded from it at least three times.

Trading recommendations:

GBP/USD is trying to resume a downward trend. Thus, traders are advised to resume selling the euro/dollar pair while aiming for 1.2963 and 1.2935. Purchasing the pair can be considered if the price returns to the area above the Kijun-sen line with targets at 1.3113 and 1.3176. Tonight, it is recommended to be extremely careful with any positions, since the reaction of traders to the Fed meeting can be unpredictable.

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 dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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

EUR/USD. January 29. Results of the day. US economy is slowing again. Will Fed and Jerome Powell confirm this?

4-hour timeframe

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Amplitude of the last 5 days (high-low): 28p - 73p - 42p - 28p - 28p.

Average volatility over the past 5 days: 40p (average).

The third trading day of the week ends the same as the previous two - a sluggish, calm, low-volatility downward movement. There were certain hopes for increased volatility or for the beginning of an upward correction yesterday, when sufficiently important data on orders for durable goods were published in the United States. However, by the end of the day, we can say that the volatility remained low (28 points), and instead of the correction there was only one name. Today, the euro/dollar pair has reached the level of 1.0990, which it has not yet managed to overcome. As we said earlier, such a weak movement can be very long and recoilless. Thus, it is possible that it will continue today without any gain. Although we are waiting for an extremely important event in its name in the evening, which, most likely, will become completely passing. This is the Fed meeting, and it is on it that we will dwell in more detail, since no other macroeconomic events have been planned to date.

With a probability of 99%, the Fed meeting will end with rates remaining unchanged. Thus, the monetary policy parameters will remain unchanged. In these parameters, one should take into account not only the Fed's key rate, but also the volume of monthly asset buybacks from the open market, which the Fed itself prefers not to mention, not to call them a "quantitative easing program", and when questions are asked, answer repurchase of short-term bills in order to ensure stable liquidity of the financial sector. A very convenient interpretation, which can be used in almost any action of the Fed. In fact, this means that the Fed stimulates the US economy every month in the amount of $60 billion. This program began in the fall of 2019, and in the first months it really seemed that this was a short-term measure. However, January is already ending, and no statements have been received on the completion of this program on the markets. Thus, in fact, we are dealing specifically with the QE program.

Furthermore, in light of the fact that the Fed has been stimulating the US economy with money for at least four months, this means that this very economy needs such stimulation. We mentioned earlier that the main indicators that cause the most concern are industrial production, GDP, and business activity in the manufacturing sector. It seems that the Fed also shares these concerns of traders and investors, but does not want to sow panic and to announce a resumption of the quantitative stimulus program. As you can see, this is very good for the US dollar. Because if Jerome Powell announced the restart of the quantitative easing program, then a wave of disappointment would certainly have swept the dollar bulls. However, in the light of this information, it is worth asking a question whether the US economy will slide into the same recession in the coming months of the second half of 2019 and because of which the asset repurchase program was resumed and the key rate was reduced three times. If so, then the prospects for the US currency are becoming more vague than just a few months ago. Recently, we regularly said that the US economy looks much stronger than the European one in the eyes of investors. This fact remains so. However, if the US economy shrinks at a faster pace than the European, which is now more in stagnation, then sooner or later it will catch up with it. Sooner or later, the Fed will start lowering the rate again, and everyone will understand that "monthly repayment of short-term bills" is not just a solution to short-term liquidity tasks, but a full-scale support for the economy, which, accordingly, is experiencing problems.

In general, it will be of great importance what exactly Powell will say today and what the Fed's accompanying statement will be. I also recommend paying attention to the conformity of what Powell said with the real picture of things, because if the Fed chairman says that the industrial sector is doing well, then there will be much less reason to trust his words. In fact, changes in the rhetoric towards the dovish may mean that the US economy may require more serious incentives in the near future. And also the fact that the loud signing of the first phase of the trade deal with China so far has not had any positive impact on the US economy. Have you noticed how sharply the criticism of Trump towards the Fed and Jerome Powell ended?

Trading recommendations:

EUR/USD continues to move down. Thus, it is recommended to hold open short positions with the targets of 1.0990, 1.0982 and 1.0956, until the start of the correctional movement (rebound from any target or MACD indicator upward with a parallel increase in price). It will be possible to consider purchases of the euro/dollar pair no earlier than traders of the Kijun-sen line are traded in small lots with the goals of resistance level 1.1088 and Senkou Span B. 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 indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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

EUR/USD: will the Fed lend a helping hand to the euro?

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The start of the year, which was not optimistic for the global economy, made investors forget about the Federal Reserve for some time.

Today, the regulator will announce the results of the first meeting this year.

Should we expect any surprises from the central bank, whose representatives almost say that the US economy is still on its feet, and monetary policy is in the right place?

The Treasury yield curve for some time went into the red zone for the first time since October last year. The chances of monetary expansion by the Fed until the end of the year are growing by leaps and bounds. It gives market participants food for thought.

Short-term consolidation of the EUR/USD pair near the psychological mark of 1.1000 resembles the calm before the storm. Apparently, the US central bank managed to return attention to its person.

The fact that the Fed will keep the interest rate at 1.75% at the end of the January meeting is practically beyond doubt among investors. However, the issue of reducing the balance of the regulator seriously worries them.

In order to stabilize the situation in the US money market, the Fed began buying short-term promissory notes worth $60 billion every month, as a result of which the portfolio of assets of the central bank increased from $3.8 trillion to $4.1 trillion.

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Fed Chairman Jerome Powell prefers not to call buying assets QE, and it is understandable: at one time, hints of curtailing asset purchases provoked negative sentiment in the financial markets. Obviously, the US central bank does not want to get on the same rake. Therefore, the regulator is unlikely to change anything in January.

Reducing the balance of the Fed would increase the cost of borrowing. This is not good news for a country whose budget deficit is expected to grow by $1 trillion annually over the next few years. In addition, according to estimates of the Congressional Budget Office, the volume of public debt to national GDP will expand from 81% (in 2020) to 98% (in 2030).

Do not forget about the correction of the S&P 500 index associated with the outbreak of coronavirus in China. There is an opinion on the market that stock indices are growing primarily due to the support of the Fed. If the central bank begins to tighten monetary policy, then US stocks will lose an important growth driver.

The inversion of the Treasury yield curve, which in the recent past forced the Fed to take on preventive monetary expansion, the pullback of the S&P 500 index, as well as increased international risks, makes it possible to count on the dovish tone of statements by Powell following the results of the next FOMC meeting. If this happens, then the EUR/USD pair will be able to cling to an important level of 1.1000.

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The main currency pair's downwards path is largely due to the epidemic of coronavirus in China. The point is not only its negative impact on the global economy, but also the decline in oil prices and the associated peak in European five-year inflation expectations from 1.33% noted at the beginning of the year to 1.26%. As a result, the chances of easing the ECB's monetary policy in 2020 began to grow.

Thus, only the Fed can stop the fall of EUR/USD.

As for the medium-term prospects of the main currency pair, they will depend on how quickly the Chinese authorities manage to deal with the coronavirus and whether a new trade war breaks out - between the United States and the European Union. Getting answers to these questions will clarify the fate of not only the global economy, but also the euro.

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

USD/JPY. Yen takes a break in anticipation of a new wave of panic

The Japanese currency traditionally reflects the general mood of the foreign exchange market. As a defensive asset, the yen is keenly responsive to the external fundamental background, reflecting an increase or decrease in demand for safe haven instruments. In mid-January, the currency significantly fell - including paired with the dollar. As soon as the US-Iran conflict moved to the economic plane (and the threat of the third world, respectively, passed), the price of USD/JPY grew sharply, reaching 110.30. The pessimistic results of the January meeting of the Bank of Japan only fueled interest in long positions in the pair, and it is likely that the price would have settled in the 111th figure at the end of this month, if not for one "but". An unexpected outbreak of pneumonia in China returned interest in defensive assets, after which the yen returned to service, rapidly increasing momentum. In other words, the Japanese currency now (however, as always) acts as a weather vane of anti-risk sentiment in the foreign exchange market: if the Japanese rises in price, then there is still panic among traders.

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That is why yesterday's dynamics of the USD/JPY pair aroused some interest. The price has been falling nearly without pulling back for almost a week and a half (to be more precise, since January 21), losing more than 150 points. But yesterday, the downward momentum faded, and buyers were able to develop a slight correction. Comparing this price dynamics with the news flow regarding the spread of coronavirus, we can conclude that the bearish prospects of USD/JPY are based only on the nervousness of market participants. And as soon as traders hear a more or less encouraging informational occasion, the bears' grip instantly wanes.

All this suggests that the downward trend is uncertain and unsteady - as soon as the situation with the incidence is stabilized, the pair will sharply turn up. Anti-risk sentiment is the main driving force of USD/JPY - there are no other arguments for revaluing the yen. The Bank of Japan continues to take an extremely cautious and pessimistic position, and key macroeconomic reports of Japan have a weak effect on the dynamics of the pair.

But back to the "chronicle of the coronavirus." Yesterday's correction was due to two factors that have similar roots. First, Hong Kong developed a vaccine against the ill-fated coronavirus. True, the details of this fact are no longer so optimistic - according to scientists, they will test the created drug in animals for several months and only after that they will conduct clinical trials in humans. In total, this process will require at least a year. Nevertheless, amid all sorts of apocalyptic scenarios, this informational occasion carried positive features, so the market reacted accordingly. In addition, similar news came from Australia yesterday. There they managed to create a laboratory copy of the Wuhan Coronavirus. According to experts, this will help to quickly create the necessary vaccine. In addition, a laboratory copy of the virus can help diagnose coronavirus in infected people in the early stages - even before symptoms appear.

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These news drivers helped reduce the degree of heat in the financial markets. The yen also reacted accordingly, slowing its growth paired with the US currency. However, the subsequent flow of information offset the "germs of optimism" - the number of infected people exceeded the 6,000th mark, and the death toll reached 132 people. More than 400 patients are in critical condition. Obviously, in the coming days, these indicators, alas, will only increase, thereby supporting interest in defensivee tools. Since the new coronavirus has an incubation period (within 10-12 days), all the observed statistics today are an epidemiological picture within the previous 10-day period, that is, when quarantine has not yet been entered. In other words, the active spread of the virus through human contacts has already taken place, and the symptoms are only now appearing. Therefore, over the next one and a half weeks, experts predict a peak in incidence, after which the increase will go to a gradual decline. At least, many experts adhere to this scenario.

Such prospects allow the bears of the USD/JPY pair to regain a few dozen points. For example, when the number of infected people exceeds the 10,000th mark (this will happen in the coming days), the yen will again be in demand in the wake of anti-risk sentiment. But if the situation develops within the framework of the scenario stated above, then the pair is unlikely to overcome the support level of 108.10 (the lower line of the Bollinger Bands, which coincides with the lower boundary of the Kumo cloud on the daily chart). If the panic disappears ahead of schedule, then the pair will return to the area of the 110th figure in a matter of days, especially if today's Fed meeting will be held at least in a neutral manner.

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

EURUSD and AUDUSD: Fed meeting to be held quietly for the market. When to buy the aussie?

There is still no risk appetite for investors, since the problem with China's coronavirus remains at a fairly high level, and meetings of world central banks are forced to take a wait-and-see position. Safe-haven assets are now of greater interest.

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Data on improving consumer sentiment in Germany at the beginning of the year will not greatly affect the improvement of the situation in the economy. According to a GfK research group report, the leading consumer confidence index in Germany will rise to 9.9 points in February from 9.7 points in January. The indicator for January was revised upwards. Despite this, no one was willing to buy the euro, which led the EURUSD trading instrument to return to the area of weekly lows. Economists predicted that the figure would remain unchanged in February.

The agency noted that revenue growth contributed to improving consumer sentiment. The index of economic expectations rose to -3.7 points from -4.4 points in December, while the indicator of expectations regarding income rose to 44.6 points against 35.0 points in December 2019. Most likely, it is private consumption that will remain one of the most important components for the German economy in 2020. Private spending is projected to rise in the region of 1%.

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French consumer confidence index data did not have a positive effect on the euro, even with growth. According to the report, confidence rose to 104 points in January against 102 points in December, with the forecast of economists who expected the index to remain unchanged.

As I noted above, all attention this afternoon will be focused on the decision of the Federal Reserve on interest rates. The interest rate is expected to remain unchanged, which will have a limited impact on the US dollar. It is another matter what statements Fed Chairman Jerry Powell will make. Many experts expect that his rhetoric will not change and also restrained in relation to further changes in credit policy.

In my morning review, I focused on overnight rates and the prospects for the Fed's balance sheet, which the markets are now interested in no less than interest rates. Currently, the repurchase asset purchase program has already inflated the central bank's balance sheet to $4.1 trillion from $3.8 trillion last September, when the program started. Whether such operations will be preserved is also a very important point, since their curtailment can seriously affect the course of the US dollar towards its growth. However, skeptics have a number of doubts about the fact that the Fed will present a complete and detailed plan for balance. Therefore, all emphasis will be reduced to statements by the head of the Fed on this subject.

As for the technical picture of the EURUSD pair, it remained unchanged with the exception that the bears managed to return to the support of 1.1000, and whether the pair will be able to break through and the future direction of the pair will depend on it. The nearest support levels are visible in the area of 1.0960 and 1.0910. Softer statements by the Fed chief may lead to increased demand for the euro, but it will be all limited. The nearest resistance levels are visible in the area of 1.1030 and 1.1060.

AUDUSD

The Australian dollar completely lost its position against the US dollar after rising amid good data on rising consumer prices in Australia in the fourth quarter of last year, which slightly reduces tension from the Reserve Bank of Australia and puts off the likelihood of further lower interest rates.

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According to the Australian Bureau of Statistics, the consumer price index increased by 0.7% in the fourth quarter of 2019 compared to the third quarter and by 1.8% compared to the fourth quarter of 2018. Economists had expected prices to rise 0.6% from the previous quarter and 1.7% from the same period of the previous year.

However, it must be understood that core inflation continues to remain below the RBA target range of 2-3%, which sooner or later, especially if this growth is only temporary, will force the bank to return to the path of further reduction in rates. A sharp increase in retail sales and the December unemployment rate, which declined, advocate maintaining the current policy unchanged.

As for the technical picture of the AUDUSD pair, it is still too early to talk about the reversal of the current trend. The first major support is seen at the low of October 16 last year in the region of 0.6723 and the low of October 10 - 0.6709. An upward correction in the pair will be possible only after a break and consolidation above the resistance of 0.6780.

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