Indicator analysis: Daily review on GBP/USD for February 4, 2020

Trend analysis (Fig. 1).

An upward pullback movement is possible today with the first target 1.3031, the resistance line in a red bold line. In case of testing this level, there is a downward movement with the first target at 1.2975, the lower fractal presented in a red dashed line.

analytics5e390fdd80b9f.png

Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - up;

- Volumes - down;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - up.

General conclusion:

The price can roll back today.

A downward scenario is unlikely but quite possible. That is from the resistance line 1.3031, presented in a red bold line, work up with the target 1.3075, the pullback level of 50.0% presented in a red dashed line.

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Pound declined after Johnson's aggressive statements; euro is under pressure due to the threat of a trade war with the United

The dollar returned to the leading position of the G10 currencies, receiving strong support after the publication of the ISM Manufacturing January report. Thus, the roller coaster continues - if the index declined below the forecast value in December and the overall picture of the US industry looked quite gloomy, then in January, everything changed magically - there is growth to 50.9p from 47.8p which significantly exceeded forecasts. Moreover, the index surprisingly ignores both the threat of the coronavirus and the Boeing problem (the Chicago regional index, where the company's headquarters is located, declined in January from 48.9p to 42.9p).

At the same time, there is a danger of a sharp decline in February since the data on the current report were collected before January 20, and ISM will return again to the reduction zone. Most likely, we see markets moving the conclusion of the first phase of a trade agreement between the United States and China.

analytics5e39096b6a5d9.jpg

Prior to the publication of the ISM index on the services sector on Wednesday, the dollar is likely to feel confident, because it will benefit both economic factors and a new wave of panic. On the other hand, the demand for oil in China declined by 20%, which led to a strong drop in quotes. Today, an unscheduled meeting of the OPEC + technical committee will begin. Volatility is likely to remain high before the ministerial meeting on February 14-15, which will also indirectly support the dollar and protective instruments.

There are no reasons to expect a reduction in panic yet; signals for a reversal may be reports of a slowdown in the spread of coronavirus or progress in vaccine development. Despite the growth of stock indices after a wave of strong decline, demand for bonds does not decline, which indirectly indicates a high probability of a new wave of panic.

EUR/USD

In the Eurozone, the manufacturing sector did not leave the contraction zone unlike the United States. The updated Markit index was 47.9p in January, which is slightly better than the December 46.3p. The emerging reversal, which added optimism after the positive reports of Ifo and ZEW, has not yet received support.

analytics5e39097fb5ecf.jpg

The calendar in the eurozone is not saturated this week, so the euro will be based more on market reactions to macroeconomic reports in the US and the general dynamics of the tension associated with the spread of coronavirus.

The technical picture is still bearish, despite a strong pullback from a 2-month low. The resistance zone of 1.1080 / 1100 has survived and on Tuesday, trading in the range of 1.1020 / 80 is likely with a tendency to the lower boundary.

GB/PUSD

The pound also quickly returned to the range, as it tried to get out of it. There are several reasons for this: the strong ISM in the USA, which contributed to the strengthening of the dollar, as well as the surpassing the reaction of the market to Johnson's confrontational statements regarding future negotiations with the EU. Johnson insists on a new policy to build rules for building relations between the UK and the EU, citing Australia's example of a number of close trading partners. London is not happy with current EU standards, and despite a rather mild reaction from EU chief negotiator Bernier, who promised to "give the UK maximum access to its market" if EU standards are respected, the pound returned to the lower end of the range with a threat to go below support zone 1.2950 / 70.

However, London is firmly committed to concluding a trade deal by the end of 2020. This is possible only in one case - if we abandon the established practice, abandon the accepted procedure and follow the path of the United States, forcing China to make a deal in an emergency. Johnson probably expects to be on the right side after the US embarks on a siege of the EU to revise trade relations in the same way as with China.

For the short term, the pound remains under bearish pressure. The threat of a rate cut by the Bank of England is more than real. Growth to the resistance zone of 1.3025 / 40 can be used for sales and the goal is to break through the resistance of 1.2950 / 70 and move to the low of December which is particularly the level of 1.2902.

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Indicator analysis: Daily review on EUR / USD for February 4, 2020

Trend analysis (Fig. 1).

An upward movement is possible today with the first goal of 1.1098, the upper fractal in a red dashed line. Upon reaching this level, there is a continuation of work upward with the goal of 1.1117, the pullback level of 50.0% presented in a blue dashed line.

analytics5e390a5921ecf.png

Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly schedule - up.

General conclusion:

An upward movement is expected today with the first target 1.1098, the upper fractal in a red dashed line.

An unlikely but possible scenario is from a retracement level of 38.2% equivalent to 1.1058, presented in a red dashed line, the price will go down to 1.1033, the retracement level of 61.8% presented in a red dashed line.

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

GBP/USD: plan for the European session on February 4. Pound returns to critical levels around 1.2990

To open long positions on GBP/USD you need:

Yesterday I wanted to talk so much about the pound's further growth after the UK left the EU and about the breakout of the upper boundary of the medium-term triangle in favor of buyers, today bulls need to think about how to protect themselves from the breakout of the lower boundary in the region of 1.2990, which is the last hope for the pound's recovery in the short term. As long as trading is above 1.2990, we can expect the pair to return to the resistance area at 1.3030, consolidating on which is an equally important task, since it depends on whether the bulls will be able to update highs 1.3065 and 1.3102, or not. In case there is a breakout of support at 1.2990, it is best to return to long positions only after a test of a low of 1.2963, and it is better to look even lower when buying the pound, in the areas of 1.2939 and 1.2896. Today's UK construction data is unlikely to make any significant changes to the market.

To open short positions on GBP/USD you need:

Pound sellers have already returned the pair to the support area of 1.2990 and are now fully focused on the breakout of this level. Consolidation under this range will indicate complete surrender of the bulls that have been gaining long positions in this area since January 20, which will cause the pair to sharply drop to the area of the lows 1.2963 and 1.2939, however, the bears' further target will be the 1.2896 area, where I recommend consolidating profit. In the upward correction scenario, sellers will show themselves after unsuccessful consolidation above the resistance of 1.3030, and if there is no pressure from major players there, it is better to postpone short positions until the test of a high at 1.3065. Considering what movements are now taking place in the British pound, do not forget about the placement of stop orders.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving averages, which indicates a gradual change in market sentiment in favor of sellers.

Bollinger bands

In case the pound declines further, support will be provided by the lower boundary of the indicator at 1.2963. Growth will be limited by the upper level of the indicator in the area of 1.3065.

analytics5e3908a162f80.png

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

Elliott wave analysis of GBP/JPY for February 4 - 2020

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GBP/JPY is expected to dip to the ideal target-zone between 139.26 - 139.82 to complete the ongoing correction in wave iv. In the short-term, we could see a minor pop close to the 141.84 - 142.12 resistance-area before turning lower again towards the expected target-area between 139.26 - 139.82.

It will take an unexpected break above resistance at 143.30 to indicate the completion of wave iv.

R3: 142.39

R2: 142.12

R1: 141.84

Pivot: 141.53

S1: 141.24

S2: 140.95

S3: 140.54

Trading recommendation:

We are short GBP from 143.95 and we will move our stop lower to 143.35.

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

Elliott wave analysis of EUR/JPY for February 4 - 2020

analytics5e3903883ade9.png

EUR/JPY is now in the final stages of the sideways correction in wave iv that began on January 28. We expect this sideways correction to spike slightly above 120.42 before turning lower in wave v close to the 118.85 - 119.24 target area to complete wave 2 and set the stage for the next impulsive rally above 122.65.

In the short-term, a break below minor support at 120.03 will confirm the completion of wave iv and the onset of wave v lower to the target-area between 118.85 -119.24.

R3: 120.86

R2: 120.59

R1: 120.42

Pivot: 120.03

S1: 119.76

S2: 119.50

S3: 119.24

Trading recommendation:

We will sell EUR at 120.40 with a 121.26 stop and take-profit at 119.25

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

EUR/USD Projection HOD/LOD For FEB 04, 2020

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The High Of The Day (HOD) and Low Of The Day (LOD) from the Flout Range from the Fiber today usually form at STDV 2-STDV 4 in the normal condition market but sometimes can reach to the STDV 5-STDV 6. Here's today level:

STDV 10 - 1.1112.

STDV 9 - 1.1107.

STDV 8 - 1.1102.

STDV 7 - 1.1098.

STDV 6 - 1.1093.

STDV 5 - 1.1088.

STDV 4 - 1.1083.

STDV 3 - 1.1079.

STDV 2 - 1.1074.

STDV 1 - 1.1069.

FLOUT - 1.1065.

==================

FLOUT - 1.1056.

STDV 1 - 1.1052.

STDV 2 - 1.1048.

STDV 3 - 1.1044.

STDV 4 - 1.1040.

STDV 5 - 1.1036.

STDV 6 - 1.1032.

STDV 7 - 1.1028.

STDV 8 - 1.1024.

STDV 9 - 1.1020.

STDV 10 - 1.1016.

Pay attention to the level between today and the previous range such as 1.1112, 1.1048, 1.1032, & 1.1016 as it can be a potential turning point level.

(Disclaimer)

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

GBP/USD Projection HOD/LOD For FEB 04, 2020

analytics5e38f9755f276.jpg

Today's high (HOD) and low (LOD) from the Central Bank Dealer Range (CBDR) usually form at STDV 2-STDV 4 in the normal condition market but sometimes can reach to the STDV 5-STDV 6. Here's today level:

STDV 10 - 1.3200.

STDV 9 - 1.3180.

STDV 8 - 1.3160.

STDV 7 - 1.3140.

STDV 6 - 1.3120.

STDV 5 - 1.3100.

STDV 4 - 1.3080.

STDV 3 - 1.3060.

STDV 2 - 1.3040.

STDV 1 - 1.3020.

CBDR - 1.3000.

==================

CBDR - 1.2980.

STDV 1 - 1.2960.

STDV 2 - 1.2940.

STDV 3 - 1.2920.

STDV 4 - 1.2900.

STDV 5 - 1.2880.

STDV 6 - 1.2860.

STDV 7 - 1.2840.

STDV 8 - 1.2820.

STDV 9 - 1.2800.

STDV 10 - 1.2780.

Pay attention to the level between today and the previous range such as 1.3101 & 1.2920 as it can be a potential turning point level.

(Disclaimer)

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

EUR/USD: plan for the European session on February 4. Euro buyers keep the market under control. Nearest target at 1.1085

To open long positions on EURUSD you need:

Euro buyers have everything under control so far, despite the fact that yesterday they missed the level of 1.1058, around which the main trade is now conducted. The growth of manufacturing activity in the eurozone and the US did not lead to market changes, since a slight improvement in the situation can only be a temporary phenomenon amid the spread of coronavirus. Today, the bulls require protection at the level of 1.1058, from which they will try to return the pair to resistance at 1.1085. Consolidating above this range will testify in favor of the euro's continued growth to the highs of 1.1107 and 1.1131, where I recommend taking profits. In the event of a weak report on producer prices in the eurozone and consumer prices in Italy, the data for which will be released in the morning, pressure on the euro may return, which will lead to a second test of important support at 1.1035, from which it is best to open long positions if a false breakout is formed there. But I recommend buying EUR/USD immediately for a rebound at the low of 1.1009, the test of which will mean a reversal of the current upward trend.

To open short positions on EURUSD you need:

Bears will wait for the release of the above reports, and bad data can lead to a breakout of support at 1.1058, the protection of which remains a priority for buyers of the euro today. If sellers manage to gain a foothold even below this level in the morning, then you can count on an instant return of EUR/USD to the support area of 1.1035, where I recommend taking profits. No less important will be the resistance defense of 1.1085, to which the bulls will try to return the pair today. The formation of a false breakout there will be a signal to open short positions, otherwise I recommend selling immediately for a rebound from a high of 1.1107, or even higher, in the resistance area of 1.1131. A break of support of 1.1035 will indicate the formation of a new downward trend in the EUR/USD pair.

Signals of indicators:

Moving averages

Trade is carried out in the region of 30 and 50 moving average, which indicates the formation of short-term lateral movement.

Bollinger bands

A break of the lower boundary of the indicator in the region of 1.1050 will be an additional signal to open short positions in the euro. Growth will be limited by the upper level in the area of 1.1071, a breakthrough of which will lead to new purchases of the euro.

analytics5e3907995039a.png

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

Forecast for EUR/USD on February 4, 2020

EUR/USD

The market returned to normal on Monday. The dollar index rose 0.4% with the British pound as the leader, which collapsed by 209 points due to fears of a disorderly Brexit at the end of the year - according to news agencies, Boris Johnson allegedly does not seek a good deal that can give the rules of the Customs Union, the EU and the WTO, and is developing more stringent conditions for the legal justification of distancing from these rules.

analytics5e38ef38979d9.png

The euro lost 32 points, breaking the support of the uncertainty range of 1.1065-1.1100. The U-turn came from the MACD line and the line of balance. The Marlin oscillator turned down without leaving the declining trend zone. The 1.1020 target is open on the support of the embedded price channel line.

analytics5e38ef4e99896.png

On the four-hour chart, the price still remains in the growth trend - the price is above all indicator lines and Marlin is in the growth zone. To fully consolidate the downward trend, the price needs to gain a foothold under the MACD line, which almost coincides with the target level on the daily chart (taking into account its further decrease). As a result, an aggressive correction is possible from the level of 1.1020.

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

Forecast for GBP/USD on February 4, 2020

GBP/USD

The British pound finally showed its true intentions. Yesterday, Prime Minister Boris Johnson announced two main scenarios of Britain's likely relationship after Brexit, but investors rated them either as difficult to achieve (a large-scale treaty modeled on the Canada-EU framework), or as "not the best than before Brexit," a tortured version, the beginning of which was laid by Theresa May. The pound lost 209 points. What we have been talking about over the past few weeks and even months has come to pass - the pound will collapse, since any Brexit option will obviously be worse than the previous state of Great Britain in the EU bloc.

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There is not much price left until the first bearish target of 1.2968 at the Fibonacci level of 161.8%. Consolidation below the level opens the second target of 1.2820 - the Fibonacci level of 138.2%. According to the Marlin oscillator, the price left from the back of its own wedge-shaped structure, confirming the falsity of the previous exit from the wedge up.

analytics5e38eeb83d6c6.png

On a four-hour chart, the situation is completely in a downward trend - the price is under both indicator lines, Marlin is in the zone of negative values. The task for the price today is to gain a foothold under the level of 1.2968.

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

Forecast for AUD/USD on February 4, 2020

AUD/USD

The Australian dollar managed to grow yesterday amid a general fall in counter-dollar currencies. However, taking into account its previous decline against market growth, the slowdown in the fall can be taken as more independent. A positive moment for the ATP instruments yesterday was a certain abatement of fears regarding the Chinese coronavirus. Stock indices even showed growth: S&P500 +0.73%, today the Australian S&P/ASX200 is growing by 0.28%. The Japanese Nikkei 225 index fluctuates near zero.

analytics5e38ee42d4f74.png

But nothing has changed for the Australian dollar as a whole; it continues to move towards supporting the embedded price channel line to the area of 0.6640. A little lower is the Fibonacci level of 223.6% at the price of 0.6624. A correction of the price from this area (0.6624/40) is likely.

analytics5e38ee58ba3a4.png

On the H4 chart, the price is gradually decreasing below the indicator lines, but technical support appears in the form of a trend line for the signal line of the Marlin oscillator. To overcome it, the price needs to go below 0.6670.

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Fractal analysis for major currency pairs on February 4

Forecast for February 4:

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: 1.1134, 1.1113, 1.1104, 1.1092, 1.1073, 1.1061 and 1.1048. Here, we monitor the development of the upward cycle of January 29. The continuation of the movement to the top is expected after the breakdown of the level of 1.1092. In this case, the target is 1.1104. Price consolidation is in the range of 1.1104 - 1.1113. For the potential value for the top, we consider the level of 1.1134, upon reaching which, we expect a rollback to the correction.

Short-term downward movement is possibly in the range of 1.1061 - 1.1048. The breakdown of the latter value will lead to the formation of initial conditions for the downward cycle. In this case, the potential target is 1.1028.

The main trend is the upward cycle of January 29, the stage of deep correction

Trading recommendations:

Buy: 1.1092 Take profit: 1.1104

Buy: 1.1113 Take profit: 1.1134

Sell: 1.1058 Take profit: 1.1048

Sell: 1.1045 Take profit: 1.1030

analytics5e38d2ec6ec30.png

For the pound / dollar pair, the key levels on the H1 scale are: 1.3086, 1.3042, 1.3013, 1.2958, 1.2932, 1.2889 and 1.2834. Here, the price has canceled the development of the upward trend and at the moment we are following the development of the downward structure of January 31. Short-term downward movement is expected in the range of 1.2958 - 1.2932. The breakdown of the last value will lead to a movement to the level of 1.2889. Price consolidation is near this value. For the potential value for the bottom, we consider the level of 1.2834. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.3013 - 1.3042. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3086. This level is a key support for the top.

The main trend is the descending structure of January 31

Trading recommendations:

Buy: 1.3013 Take profit: 1.3040

Buy: 1.3043 Take profit: 1.3084

Sell: 1.2958 Take profit: 1.2933

Sell: 1.2931 Take profit: 1.2890

analytics5e38d30852e75.png

For the dollar / franc pair, the key levels on the H1 scale are: 0.9714, 0.9685, 0.9661, 0.9644, 0.9610, 0.9590, 0.9556 and 0.9538. Here, we are following the downward cycle of January 29. At the moment, the price is in the correction zone. Short-term downward movement is expected in the range 0.9610 - 0.9590. The breakdown of the last value should be accompanied by a pronounced downward movement. Here, the target is 0.9556. For the potential value for the bottom, we consider the level of 0.9538. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Consolidated movement is possibly in the range of 0.9644 - 0.9661. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9685. This level is a key support for the downward structure. Its passage in price will lead to the formation of an upward structure. Here, the potential target is 0.9714.

The main trend is the downward cycle of January 29

Trading recommendations:

Buy: 0.9664 Take profit: 0.9682

Buy: 0.9686 Take profit: 0.9712

Sell: 0.9610 Take profit: 0.9593

Sell: 0.9588 Take profit: 0.9557

analytics5e38d326241fa.png

For the dollar / yen pair, the key levels on the scale are: 109.26, 108.83, 108.65, 108.29, 108.07, 107.87 and 107.63. Here, we determined the subsequent goals for the downward movement from the local structure on January 29. The continuation of the movement to the bottom, we expect after the breakdown of the level of 108.29. In this case, the target is 108.07. Price consolidation is in the range of 108.07 - 107.87. For the potential value for the bottom, we consider the level of 107.63. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 108.65 - 108.83. The breakdown of the latter value will favor the formation of an ascending structure. Here, the potential target is 109.26.

Main trend: local descending structure of January 29

Trading recommendations:

Buy: 108.65 Take profit: 108.80

Buy: 108.85 Take profit: 109.20

Sell: 108.27 Take profit: 108.08

Sell: 108.05 Take profit: 107.88

analytics5e38d344c655a.png

For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3389, 1.3337, 1.3312, 1.3271, 1.3240 and 1.3195. Here, we are following the development of the upward cycle of January 22. Short-term upward movement is expected in the range of 1.3312 - 1.3337. Hence, there is a high probability of a turn to the bottom. For the potential value for the top, we consider the level of 1.3389. We expect movement to this level after the breakdown of the level of 1.3337.

Short-term downward movement is possibly in the range of 1.3271 - 1.3240. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.3195. This level is a key support for the top.

The main trend is the local ascending structure of January 22

Trading recommendations:

Buy: 1.3313 Take profit: 1.3335

Buy: 1.3337 Take profit: 1.3387

Sell: 1.3370 Take profit: 1.3242

Sell: 1.3238 Take profit: 1.3195

analytics5e38d36177790.png

For the Australian dollar / US dollar pair, the key levels on the H1 scale are: 0.6776, 0.6750, 0.6734, 0.6694 and 0.6651. Here, the price is near the limit value for the descending cycle of January 16. We expect a rollback to correction from the level of 0.6694. Its passage by the price will be accompanied by an unstable movement to the bottom. Here, the potential target is 0.6651, but it is not recommended to work towards this value.

Short-term upward movement is expected in the range of 0.6734 - 0.6750. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.6776. 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 - we expect a correction

Trading recommendations:

Buy: 0.6734 Take profit: 0.6750

Buy: 0.6752 Take profit: 0.6774

Sell: Take profit:

Sell: 0.6680 Take profit: 0.6655

analytics5e38d386ee3bd.png

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 mainly expect a correction given the situation for the pound / yen. 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 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.

The main trend is the descending structure of January 16, the correction stage

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:

analytics5e38d3a4bd1b5.png

For the pound / yen pair, the key levels on the H1 scale are : 142.18, 141.74, 141.38, 140.85, 140.21, 139.75 and 139.11. Here, the price has canceled the development of the upward trend and at the moment, we are following the downward structure of January 31. The continuation of the movement to the bottom is expected after the breakdown of the level of 140.85. In this case, the goal is 140.21. Short-term downward movement, as well as consolidation is in the range of 140.21 - 139.75. We consider the level 139.11 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 of 141.38 - 141.74. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 142.18. This level is a key support for the bottom.

The main trend is the descending structure of January 31

Trading recommendations:

Buy: 141.38 Take profit: 141.71

Buy: 141.75 Take profit: 142.18

Sell: 140.85 Take profit: 140.32

Sell: 140.20 Take profit: 139.75

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

Overview of the GBP/USD pair. February 4. Michel Barnier: Britain will have to make concessions to get a trade deal without

4-hour timeframe

analytics5e38d64961f9f.png

Technical details:

Higher linear regression channel: direction - up.

Lower linear regression channel: direction - sideways.

Moving average (20; smoothed) - down.

CCI: -84.9747

A strong downward movement for the USD continues on February 4, which was partially triggered by the statements of British Prime Minister Boris Johnson, but was brewing to a greater extent a long time ago, even after the pair took off to the level of 1.3500. Thus, we are now observing a logical development of events after a two-month break. At the moment, the pound/dollar has again fallen to a strong support area, near the psychologically important level of 1.3000. The pair has already bounced off this area at least five times, but it cannot do this forever. Sooner or later, the overcoming will take place, and we believe that it will happen in the near future. If this happens, the formation of a downward trend will resume with renewed vigor. We recall that most of the fundamental and macroeconomic factors now speak precisely in favor of moving down. Since the pair has consolidated below the moving average line, the trend has changed downward, respectively, and technical factors are now speaking in favor of continuing the downward movement.

Today, the UK is set to publish a secondary index of business activity in the construction sector in January. Recall that earlier the indexes of business activity in the services and production spheres have been revived, however, the construction sector seems to remain in the recession zone, although forecasts predict growth from 44.4 to 46.6. Of greater importance now, as we see, are the negotiations between London and Brussels regarding a trade deal. Or is it already relative to at least some kind of transaction. As you can see, the European Union and Britain have radically different views on future agreements, which may lead to the absence of these agreements at the end of the negotiations, or more simply to the "hard" Brexit. On the one hand, the participants in the negotiation process are aware that they want different deals. On the other hand, a huge number of obstacles already now suggests that there will simply be no agreement. Michel Barnier, the EU's chief negotiator, said on Monday that the EU is ready to work on partnerships with the UK, but they will definitely not be as large as before. In principle, the European Union immediately said that London should not expect that it would continue to use all the preferences, without making contributions to the EU budget, not being a member of bloc and having complete freedom of action. Barnier just said: "The best partnerships are when you are a member of the EU. When you do not enter the EU, the situation becomes different, more complicated. " Great Britain wants to conclude a trade agreement with zero duties and quotas, as between the EU and Canada. However, negotiations with Canada took seven years. Johnson wants to reach the same deal in ten months talks will begin only in March). Moreover, the British prime minister does not want to remain under the jurisdiction of Brussels on any issue. Barnier said that such a deal would be possible if London agreed to provide guarantees that European and British companies would compete on equal terms. Barnier will also demand concessions regarding fishing. "A free trade deal will not mean continued interaction as before. After all, we will now have two markets, not one," concluded Barnier.

After all this information, questions about why the pound is currently falling do not arise. The British currency came under serious market pressure due to the seriously lower chances of concluding at least some kind of agreement with the EU, not to mention a free trade deal. The UK economy will suffer enormous losses after 2020, much more voluminous than it currently bears (about $70 billion a year), without a deal. What will it result in? In a new fall in GDP and other macroeconomic indicators, in a new fall in the British currency. That is why we believe that the pound will be a tidbit for bears until there are serious reasons to expect a trade deal between the EU and the UK.

From a technical point of view, the downward movement may continue, as the Heiken Ashi indicator continues to be directed downward. However, the pair now needs to confidently overcome the support area of about 1.3000.

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The average volatility of the pound/dollar over the past five days has grown to 121 points. According to the current level of volatility, the working channel on February 4 will be limited by the levels of 1.2872 and 1.3114. Continuation of the downward movement will be very logical, however, a reversal of the Heiken Ashi indicator upward will indicate a round of corrective movement against a downward trend.

Nearest support levels:

S1 - 1,3000

S2 - 1.2970

S3 - 1.2939

The nearest resistance levels:

R1 - 1.3031

R2 - 1.3062

R3 - 1.3092

Trading recommendations:

GBP/USD has started a new downward movement. Thus, traders are now advised to sell the pound while aiming for 1.2939 and 1.2909 before the Heiken Ashi indicator turns up. It is recommended to return to purchases of the British currency after the pair is re-secured above the moving average line with the first goals of 1.3114 and 1.3153.

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

Explanation of illustrations:

The highest linear regression channel is the blue unidirectional lines.

The smallest linear channel is the purple unidirectional lines.

CCI - blue line in the indicator regression window.

Moving average (20; smoothed) - a blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

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

Possible price movements:

Red and green arrows.

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

Overview of the EUR/USD pair. February 4. Euro has chance at growth, but with no macroeconomic support

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - up.

Lower linear regression channel: downward direction.

Moving average (20; smoothed) - up.

CCI: 78.3586

The first trading day of the week passed in a corrective movement, however, the EUR/USD pair worked out a moving average line, but failed to gain a foothold below it, which saves the bulls chances of a new upward trend. In principle, following the euro's two day growth, the pair has been corrected as expected and now technical factors allow us to count on the resumption of the upward movement. However, in addition to technical factors, there are also fundamental, as well as macroeconomic ones. In brief, I recall that the fundamental factors remain on the side of the US currency for the following reasons: a stronger US economy, a more hawkish monetary policy by the Federal Reserve, the same pace of slowdown in the economies of the United States and the European Union, as well as the same signs of economic recovery. Macroeconomic factors are also in favor of the dollar this week so far: US manufacturing activity indices have increased and left the red zone below 50.0, business activity indices in the manufacturing sector of the EU have shown low growth, but most of them remained in the recession zone. Thus, at the moment, we have a certain conflict between fundamental and technical factors, and we believe that the upward movement will not be strong and long.

Only minor macroeconomic publications are planned in the EU and US on Tuesday, February 4. For example, the producer price index for December will be released in the EU, which, according to experts, will decrease by 0.7% y/y. Production orders for December will be published in the US, with a forecast of +1.1% m/m. However, it is unlikely that traders will react to any of these reports. We can only note the value of the producer price index, as it can affect the value of inflation.

We already said in the final article for February 3 on the EUR/USD pair that Donald Trump can already be considered acquitted. Democrats were not able to attract even more witnesses to the case, but managed to stretch the entire process of considering it in the Senate as much as possible. In principle, the fact that the Senate refuses to impeach Trump was known with a probability of 99% from the very beginning. We have already said that the essence of the entire trial for the Democrats was the trial itself. The longer it lasts, the longer Trump is exposed in an unsightly light for himself before the electorate, which already in November 2020 will have to make a choice. Thus, we can only wait for the official results of the Senate vote on Wednesday and put a bullet in this matter. As for Trump's ratings, many agencies note that at this time they are at their highest values. But will these values be enough for the American people to choose an odious president for the second time? Social surveys say that 52% of Americans believe that Trump really violated the law by blocking military assistance to Ukraine, and also urging Vladimir Zelensky to launch an investigation into the activities of the Biden Democrats in Ukraine. 53% of Americans believe that the president did obstruct Congressional work by refusing to cooperate with the investigation of his own impeachment case. Thus, more than half of the electorate is now opposing Trump.

Trump himself feels calm, has stopped criticizing the Fed and Jerome Powell, has stopped scribbling daily opuses on Twitter about the "witch hunt" and in his exceptional style has managed to call Michael Bloomberg, one of the main Democratic presidential contenders, "short." "It's all right," Trump said, "you can be short. He (Michael Bloomberg) wants the box to stand on during the debate, but there is nothing wrong with that." Naturally, Bloomberg's spokesman Julie Wood immediately reacted, saying the US president was lying again. "He's lying all the time, he's a pathological liar," said Wood.

From a technical point of view, we are now waiting for the price to rebound from the moving and resumption of the upward movement with the update of the previous peak price. The macroeconomic background will be extremely weak tomorrow, so nothing should prevent the influence of technical factors on the pair's movement. In the event of consolidating the euro/dollar quotes below the moving average, the trend will change again to a downward trend.

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The average volatility of the EUR/USD currency pair has increased due to trading on Friday and Monday to 47 points per day. Now this value is already average. Thus, on the second trading day of the week, we expect movement between the boundaries of the volatility band at 1.1012 and 1.1106. The steam will tend to lean towards the development of the upper boundary.

Nearest support levels:

S1 - 1.1047

S2 - 1,1017

S3 - 1,0986

The nearest resistance levels:

R1 - 1,1078

R2 - 1,1108

R3 - 1,1139

Trading recommendations:

The euro/dollar began to adjust. Thus, purchases of the European currency with goals of 1.1078 and 1.1106 are relevant now, but we recommend that you wait for the correction to complete and only then should you start buying. It is recommended to return to selling the EUR/USD pair no earlier than consolidating the price below the moving average line, which will change the current trend to a downward trend, with targets at 1.1017 and 1.0986.

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

Explanation of illustrations:

The highest linear regression channel is the blue unidirectional lines.

The smallest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - a blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

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

Possible price movements:

Red and green arrows.

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

GBP/USD. February 3. Results of the day. Boris Johnson provokes a new collapse of the British pound's quotes

4-hour timeframe

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Amplitude of the last 5 days (high-low): 118p - 54p - 118p - 132p - 126p.

Average volatility over the past 5 days: 91p (average).

The British pound showed a real collapse on the first trading day of the week and month, losing almost two cents against the US dollar in less than a day. Well, we foresaw this scenario. We have repeatedly pointed out the fact that, from a fundamental point of view, the British currency's growth is not completely justified. In the last two trading days, it was connected, with NOT changing the key rate by the Bank of England, NOT changing the balance of power when voting by the monetary committee of the British regulator, and also amid the approaching Brexit, which a certain part of traders and investors still consider very a positive development for the UK. However, in fact, nothing positive for the UK economy has happened in recent days. If the British prime minister was not Boris Johnson, who seems to have decided to completely and completely adopt the behavior of his "elder brother," then the pound could probably have started the month more calmly. However, Johnson managed to make some very important statements during the weekend and on Monday, so traders rushed to get rid of the British pound with the opening of trading. We have already mentioned the main reason why the pound may continue to fall in price throughout 2020, and it has not changed - this is a very likely failure in the trade negotiations between London and Brussels. Johnson confirmed the high probability of just such an outcome through his statements.

Johnson, who is due to speak to entrepreneurs today, February 3, may declare (according to many media reports) that after leaving the EU, the UK will not follow EU standards and comply with rules on environmental protection, workers' rights and government subsidies. According to insider information that some periodicals provide, Johnson wants to get a trade deal from the EU, like with Canada, or at worst, like with Australia. In essence, this means that the British prime minister wants to get an agreement only in the field of trade, having no obligations to Brussels in other areas and spheres of life. Representatives of the EU, in particular Michel Barnier and others, have repeatedly stated that the UK, firstly, will not be able to enjoy all the EU membership preferences outside the bloc, and secondly, after Brexit, it will have to adhere to EU rules and standards if it wants to get a trade deal. However, Johnson makes it clear that he is ready to completely withdraw from negotiations that have not even started and will begin no earlier than March 3, if he understands that London cannot get the trade deal that he wants. If the parties fail to make a deal, then trade between them starting in 2021 will take place according to WTO rules, that is, with customs duties. The agreement between the EU and Canada implies the absence of tariffs and duties on most goods, but also the presence of customs and VAT checks. That is, in other words, Johnson wants to completely remove Britain from the jurisdiction of Brussels, and Brussels wants to maintain maximum influence on Britain by signing a profitable trade deal with London. In this situation, one cannot even say who is right and who is not. Thus, we are simply forced to state a fact: Johnson's desire to rid the United Kingdom of the influence of the EU may be remarkable, but the absence of a trade deal will be another blow to the British economy. And if the UK economy gets another blow, then all its macroeconomic indicators will again begin to slow down and almost certainly pull the British currency down.

Well, how can I not mention the statement of the President of the European Commission, Ursula von der Leyen, that the EU is well prepared for the "hard" Brexit. If the parties fail to agree on all aspects of the agreement (which, in the EU's opinion, should not only be "commercial"), and Boris Johnson will not change his mind about the terms of the transition period, then, in essence, a hard Brexit will happen, which for at least two years, the British Parliament, the European Union parliament tried to avoid, and in the end it is he who now has the greatest probability of implementation. According to Ursula, the UK, which exports half of its goods to the EU, will suffer significant financial losses. "Citizens Rights, Financial Agreement, Island of Ireland. We have already taken care of all this. We (the European Union) are in a very strong position for the upcoming negotiations," said von der Lajen. However, Johnson believes that he is in a strong position ... And how strong is Johnson's position, currency traders show all Monday, getting rid of the pound ...

The pound continues free fall. High probability of resumption of a strong downward trend. From a technical point of view, it is difficult to draw any conclusions now, since the last three days we have been seeing strong movements without pauses and corrections, therefore, the Ichimoku indicator and others do not have time to respond to what is happening.

Trading recommendations:

GBP/USD has started a downward trend. Thus, selling the British pound is currently relevant with a target support level of 1.2894. The pair's purchases can again be considered if the price returns to the area above the Kijun-sen line with the target of 1.3283. All targets are quite distant, and the price makes sharp turns. Extra caution is recommended when opening any positions.

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

GBPUSD and EURUSD: What is the reason for the pound's decline after Friday's rise

The British pound fell into the abyss after the promising growth that took place last Friday after the UK finally left the EU. Now both parties have entered a transitional period, which will last until the end of this year, and during which the UK and the EU intend to conclude a trade deal. Formal negotiations will begin in March this year.

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The reason for the sharp drop in the pound was British Prime Minister Boris Johnson's statement that Britain would refuse to follow the EU rules in a potential trade deal, while the European side, on the contrary, requires unification of legislation. EU chief negotiator Michel Barnier said today that the EU is seeking a very ambitious trade deal with the UK, and in order to get zero duties and no quotas, the UK must guarantee fair competition. Barnier also noted that the deal should cover not only fishing and import and export duties for goods, but a wider range of services. In this case, we are talking about online trading, public procurement, telecommunications, etc. The EU has repeatedly drawn attention to the need to regulate UK financial services that do not meet their standards.

As a result of these statements, the pound lost more than 1.0%, wasting all Friday's growth, returning to support area 1.3060. European Commission President Ursula von der Leyen also warned British Prime Minister Boris Johnson of the futility of his tough stance in the Brexit talks. In her opinion, now there is no concept of free access to a single market. Now the relationship between the UK and the EU will be purely subject to mutual rights and obligations.

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The pound did not help the data on activity in the manufacturing sector, which is again under threat, now due to the spread of coronavirus. According to the IHS Markit report, the PMI for Purchasing Managers Index for the UK manufacturing sector rose to 50.0 points in January this year from 47.5 points in December. An index above 50 points indicates a recovery in activity and signals stabilization in the sector. The preliminary index for January was 49.8 points. However, the worldwide spread of coronavirus again risks putting pressure on the manufacturing sector, which will lead to an increase in inventories and a decrease in demand for new orders, thereby slowing down the investment of companies.

As for the technical picture of the GBPUSD pair at the moment, the collapse and return of the pair to the area of a low at 1.3060 again puts the market participants in limbo, who will guess the trading instrument's further direction. The upward trend, which was formed from January 28-29, has not yet been broken, so after a slight stabilization of the situation, we can expect a return on demand for the pound, but much will depend on the direction in which negotiations between the EU and the UK develop. A break of the 1.3030 low will only increase the pressure on the pair, which will return GBPUSD to the January lows in the areas of 1.2990 and 1.2960.

EURUSD

As I noted above, improvements in the manufacturing sector at the beginning of this year may be temporary. Growth was noted in many countries of the eurozone. According to Markit, the PMI Purchasing Managers Index for Italy's manufacturing sector rose to 48.9 points in January against 46.2 points in December with a forecast of growth to 47.3 points. In France, a similar indicator in January reached 51.1 points with a forecast of 51 points and a December figure of 50.4 points.

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In the eurozone as a whole, the PMI for the manufacturing sector also moved closer to 50 points in January and amounted to 47.9 points against the forecast of 47.8 points. Back in December, the figure was at the level of 46.3 points. The recovery of the manufacturing sector after the signing of the first phase of the trade deal between the United States and China may continue, but, as I already said, a new threat of the spread of coronavirus has appeared, which will certainly hit the global economy and, first of all, the manufacturing sector, which is already in a very shaky position.

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Technical picture of the EURUSD pair remains unchanged. Support is already provided by the area of 1.1060, but larger buyers of risky assets can release the market to a low of 1.1035, where, most likely, a new lower boundary of the current rising channel will form. The bulls return to themselves the resistance of 1.1090 will open a direct path for the pair to grow to the area of highs 1.1115 and 1.1140.

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

Analysis of EUR/USD and GBP/USD for February 3. Euro and pound fall synchronously amid lack of positive news

EUR/USD

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On January 31, the EUR/USD pair added about 60 base points and continued, therefore, the quotes moved away from previously reached lows as part of building a new upward wave structure. The supposed wave Y is completed, as well as the entire bearish section of the trend, originating on December 31. Thus, now the instrument can proceed to the construction of an upward trend section, which is likely to also take a 3-wave form and a zigzag shape. If this assumption is true, then the instrument may return to area 12 of the figure in the coming weeks.

Fundamental component:

The news background on Friday was again very strong for the euro-dollar instrument. The foreign exchange market worked out a large number of various economic reports, despite being illogical. Almost all European reports showed negative dynamics, some were very disappointing. Nevertheless, the euro was in demand last Friday. At first, the report on retail sales in Germany, which showed a decrease of 3.3% y/y, was disappointing. A little later, the consumer price index in the eurozone was 1.4% y/y, as expected by the markets. Positive dynamics were not observed here. The most important indicator of GDP fell to +0.1% q/q and to 1.0% y/y, although the markets were already expecting a slowdown, but not as strong. Thus, the euro's growth on Friday raised some questions. Economic data from the US was more neutral. Personal income of Americans grew by 0.2%, and expenses - by 0.3%. Forecasts howled a little higher. Chicago's PMI index unexpectedly crashed down to just 42.9 in January, but this figure reflects business activity in only three states — Illinois, Indiana, and Michigan. On the contrary, US consumer confidence index grew and reached 99.8. Thus, the US continues to experience problems with business activity in the manufacturing sector, but there are much more problems in the eurozone, judging by economic statistics. Today, it seems, the time has come to repay debts and the euro has sharply dropped.

General conclusions and recommendations:

The euro-dollar pair has allegedly completed the construction of a downward set of waves. Thus, before a successful attempt to break through the low of wave Y, I recommend buying the euro using MACD signals "up" with targets located near the calculated marks of 1.1115 and 1.1144, which equates to 50.0% and 61.8% Fibonacci from the previous downward trend section.

GBP/USD

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The GBP/USD pair gained about 115 base points on January 31. Thus, the alleged wave 2 or b acquired a complex three-wave internal structure. If this is true, then a sharp decline in the instrument's quotes today could mean the completion of the construction of the internal wave from 2 or b. If this assumption is true, then the tool is now moving on to building a descending wave of 3 or with targets located much lower than 1.2950.

Fundamental component:

The news background for the GBP/USD instrument on Friday was minimal. Markets were completely focused on Britain's exit from the EU and in anticipation of this event, they bought the pound. However, not only did the pound sharply fall today, but it collapsed. Moreover, the decline in quotes began at night, so the reasons are not in the economic reports on Monday. Economic reports from Europe and the UK just pleased. Business activity in the manufacturing sector of Britain grew to 50.0, in the EU - 47.9, in Germany - to 45.3. As you can see, relatively good data did not save the euro, and good data on Britain had absolutely no effect on the pound. Data on business activity in the US manufacturing sector will be released today. Perhaps if the numbers are not very good, then the decline in both the euro and pound could stop, but I believe that the decline will continue, given its grounds, which are not the Monday news background.

General conclusions and recommendations:

The pound/dollar instrument supposedly moved to the construction of a downward wave of 3 or s. Thus, now I recommend selling the pound with targets located around 1.2764, which equates to 50.0% Fibonacci, and lower. The internal wave structure of wave 2 or b appears to be fully stocked.

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

Yen hits the US market

The serious concern of investors about the impact of coronavirus on the global economy and the growing likelihood of a weakening Fed monetary policy have become catalysts for falling US Treasury bonds and stock indices. Such an external background is simply a haven for asset seekers. Including the Japanese yen, which managed to strengthen against the US dollar to a 3-week high. If the epidemic in China continues to gain momentum, and Boeing's problems force the US GDP to slow down, the USD/JPY pair has good chances to resume a downward track.

After the Bank of Japan began to target the yield curve, the yen became more dependent on US macroeconomic statistics than on domestic factors. Firstly, the Japanese is the main funding currency, and the S&P 500 rally naturally led to an overflow of capital from Japan to the United States, which contributed to the growth of USD/JPY. As soon as it began to smell fried, Japanese investors returned money to their homeland. There were plenty of such situations in past years. One trade war is worth it. In 2020, cataclysms became more frequent. And while stock indices did not respond to the conflict in the Middle East, fears of a slowdown in Chinese GDP growth to 4.5% in the first quarter forced them to go down.

The dynamics of the Dow Jones and USD/JPY

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Secondly, fixing the rates of the debt market, BoJ increased the sensitivity of the analyzed pair to macro statistics from the United States. US GDP growth of 2.1% in the fourth quarter did not mislead investors: the economy expanded beyond the light of net exports. Extremely unreliable driver. Domestic demand is weak, and here is Boeing with its 737 MAX. The company planned to sell $30 billion worth of aircraft in 2019, but not only was the operation of a new brand banned, who wants to fly it after several tragedies? The US economy runs the risk of missing 0.5 pp in the first quarter. And this is a serious argument in favor of resuming the cycle of the preventive easing of the monetary policy of the Fed. If at the beginning of the year the derivatives market did not believe in it, and a week ago it talked about November, now it gives a 60% chance that the FOMC will reduce the rate on federal funds in June. It is easy to understand how the US dollar feels in such conditions.

The dynamics of the yield of US bonds and USD/JPY

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Given the increased sensitivity of the yen to US statistics and the rich economic calendar for the United States, it is easy to guess which currency claims to be the most interesting one in the week of February 7th. The release of data on business activity in the manufacturing sector, services sector, as well as labor market will allow investors to understand whether the US economy will really lose steam in the first quarter?

Technically, the Expanding Wedge pattern continues to form on the daily USD/JPY chart. To complete the graphic configuration, quotes should fall below support at 107.65. In this situation, the risks of targeting will increase by 88.6% and 113% according to the Shark pattern.

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

EUR/USD. February 3. Did the bear traders miss the market? We are waiting for a breakthrough of the level of 1.1083 and buy

EUR / USD - 4 H.

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Good evening, dear traders! The EUR/USD currency pair on the 4-hour chart went up another 40 basis points as I expected on Friday and reversed near the top line of the downward trend range in favor of the US currency and resumed the decline. I expected just such a development of events and recommended selling the euro with an obvious rebound from one of the correction levels of 38.2% or 50.0% or 61.8%. Unfortunately, none of these levels rebounded, and the pair continued to increase until the market closes on Friday. Today, we see a mirror movement of the euro / dollar pair. For those who managed to start selling tonight - I recommend to be careful, since the downward trend may end if quotes declined from the Fibo level of 38.2% - 1.1061. In this case, I will wait for a reversal in favor of the European currency and another test of the upper line of the range, which will most likely be successful this time. And the pair's course going beyond the range will show that the mood of the traders has changed to "bullish". Therefore, it will be necessary to buy a pair in this case and not sell it.

Forecast on EUR / USD and recommendations to traders:

The new trading idea consists in further sales of the pair when closing below the Fibo level of 38.2% - 1.1061 with targets at 1.1034 and 1.0992. However, if the pair first rebounds from the level of 1.1061, and then goes beyond the range then I will recommend buying euros with the goals of 1.1104 and 1.1130.

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

GBP/USD. February 3. The pound is approaching the level of 1.2995 again. Brexit took place!

GBP / USD - 4H.

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Good evening, dear traders! In a Friday review, I did not recommend buying the pound, even if a close was made over the trend line. I was afraid that a strong information background, or rather, only one Brexit, could cause surges in the market. It turned out approximately as I expected. The rebound of the quotes worked already from the level of 23.6% - 1.3195 in favor of the American currency, and quotes declined again in the direction of the already familiar global correction line near the correction level of 76.4% - 1.2995. Thus, now, I recommend waiting for the decline to this level and near which, the pair will have several options. It is on the basis of these options that new trading ideas have been formed. Firstly, traders will be able to witness a new and next rebound from the level of 1.2995. After that, a reversal in favor of the British currency and a new growth will be made. Secondly, the long-awaited closing can be performed under the Fibo level of 76.4% and the correction line, which will allow traders to expect a strong decline of the pair. There is no emerging divergence today, and Monday's informational background is of secondary importance, although it has quite important economic data on business activity in the manufacturing sectors of European countries and the USA.

Forecast on GBP / USD and recommendations to traders:

A new trading idea is to sell the pound when fixing below the correction line with the target of 1.2904 (the first goal, the decline in quotes can be much stronger). At the same time, quotes rebound from 1.2995 - recommended purchases with a target of Fibo level of 50.0% - 1.3094.

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

Trading recommendations for EUR/USD pair on February 3

From the point of view of complex analysis, we see the long-awaited breakdown of a variable range of 1.0980 / 1.1040,which has slowly developed along the psychological level of 1,1000 for almost the entire past week. So the acceleration came that very day, which many were waiting for, where as a result the quote returned to the recently passed level of 1.1080 again, which means that the psychological level has resisted once again. What we traders got from this is a quick profit without any difficulties, and what we are faced with is further delaying an elongated correction. Let me remind you that the recent rapprochement with the psychological level of 1.1000 raised a lot of discussion regarding the recovery process, relying on the fact that behind was support for the downward movement since early January, as well as the fact that the correction process has been delayed for four months. The result is a repetition of November 2019, where the level of 1.1000 has stood, and the restoration of the elongated correction was postponed for months. Is it worth it to remove the recovery theory, I don't think, because the global downward trend has not yet undergone dramatic changes, and the price is still at the first stage of the recovery process.

In terms of volatility, we see a local acceleration after a four-day stagnation, where the Friday figure is 75% higher than the average daily.

Analyzing minute by minute on Friday, we see that the main round of acceleration occurred in the period 10:45 -15:00 [UTC+00 time on the trading terminal]. After that, there was a slight decrease in activity and updating daily highs.

As discussed in the previous review, traders have been stubbornly waiting for acceleration almost from the beginning of the week, carefully analyzing the coordinates of 1.0980 and 1.1040. The hour "X" has arrived, the price breaks the level of 1.1040 and we get deals almost at the beginning of the move, which were held up to the level of 1.1080. Moreover, subsequent actions were in terms of recovery points.

Considering the trading chart in general terms [the daily period], we see the process of fluctuation inside the oblong correction, where an assumption of a possible flat formation appeared, taking into account the sixth development of the psychological level of 1.1000.

On the other hand, Friday's news background contained inflation data in Europe, where the forecasts coincided and we saw accelerations from 1.3% to 1.4%. In fact, a moderate increase in inflation reduces the fear of a possible reduction in the ECB interest rate. After that, preliminary data on EU GDP came out, where expectations coincided in the form of economic growth rates from 1.2% to 1.0%. However, there was no market reaction at first, but the market turned around after a few hours and, most likely, against the background of a general weakening dollar.

In terms of general informational background, we have a conditional finish of the Brexit divorce proceedings, where negotiations on trade relations have not yet arrived, and the fear of the lack of agreement is already at its limit. Thus, the Prime Minister of Great Britain will not make concessions on issues related to standards and rules in the field of competition, subsidies and social protection during the upcoming March negotiations, since the British rules are more perfect. Naturally, the European Union does not like this and today we received a response from the European Union's chief negotiator for Brexit, Michel Barnier, who insists that a very ambitious trade deal will only be possible if Boris Johnson signs strict rules to prevent unscrupulous competition. Generally, such an unstable background hits the exchange rates, pound sterling and in a single currency.

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Today, in terms of the economic calendar, we have already received data on the Eurozone PMI, where acceleration in the manufacturing sector from 46.3 to 47.9 was recorded. In the afternoon, similar data on PMI but for the United States, was released, where a slowdown is predicted.

Further development

Analyzing the current trading chart, we see a pullback from the level of 1.1080, where the quote locally went down to 1.1055, but there have not yet been any fixations in this area. In fact, the fluctuation is still conducted within the level of 1.1080 [1.1060 / 1.1100], but the potential for reduction remains. There is an assumption that there is a kind of correlation from the GBP/USD pair , where in a similar period of time a cutting down was recorded just against the backdrop of a statement by Michel Barnier.

In terms of the emotional mood of market participants, we have a continuing speculative interest, which was set last Friday.

In turn, traders are trying to work on the rebound, but significant trading volumes have not yet been recorded. Thus, fixing the price lower than 1.1060-1.1055 relative to the H4 time frame is needed.

It is likely to assume that an ambiguous mood with local bursts of activity will still remain in the market, where at first we consider the range 1.1060 / 1.1100 as a temporary platform. After clear fixations outside the given framework, actions are already being taken. Regarding the trading approach, this time interval is more suitable for speculators, since we are talking about time fluctuations.

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Based on the above information, we derive trading recommendations:

- Buy positions will be considered in case of breakdown of accumulation and fixing prices higher than 1.1100.

- Sell positions will be considered in case of price fixing lower than 1.1060-1.1055.

Indicator analysis

Analyzing a different sector of timeframes (TF), we see multi-directional interest with respect to all time intervals, where the minute sections signal a sale, the hourly ones about a purchase, and the daytime ones about a sale. So, let's pay attention to the technical indicators that are actually in the neutral zone.

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Volatility per week / Measurement of volatility: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation calculated for Month / Quarter / Year.

(February 3 was built taking into account the time of publication of the article)

The volatility of the current time is 36 points, which is already close to the daily average. It is likely to assume that if the price is kept near the range of 1.1080, the volatility of the day will remain at the same limits as now, but if the borders fall, we can expect another acceleration.

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Key levels

Resistance zones: 1.1080 **; 1.1180; 1.1300 **; 1.1450; 1.1550; 1.1650 *; 1.1720 **; 1.1850 **; 1.2100

Support Areas: 1.1000 ***; 1.0900 / 1.0950 **; 1.0850 **; 1,0500 ***; 1.0350 **; 1.0000 ***.

* Periodic level

** Range Level

*** Psychological level

***** The article is built on the principle of conducting a transaction, with daily adjustment

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

EUR/USD. February 3. Results of the day. Donald Trump almost 100% justified. US business activity recovered

4-hour timeframe

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Amplitude of the last 5 days (high-low): 28p - 28p - 36p - 32p - 79p.

Average volatility over the past 5 days: 41p (low).

The first trading day of the new week, as we expected, held a downward movement for the EUR/USD pair. In the latest reviews, we pointed out that the last two trading days for the euro were moving upward, which required at least a correction. We pointed out that there are still few fundamental and macroeconomic reasons for the euro's growth. Once again we mentioned the paradoxical situation, which does not allow the US dollar to continue to rise in price, and the euro currency to start growth. As a result, a downward correction began on Monday, February 3. Traders began to buy the dollar again and get rid of the euro, even despite the macroeconomic data that were published today in the EU and the United States. At the moment, the euro/dollar has reached the critical Kijun-sen line, therefore, there is a chance of a rebound and the resumption of an upward movement, but we stick to our opinion: it is possible for the euro, but hardly strong or long.

Macroeconomic publications were present today and could have a certain impact on the movement of the euro/dollar pair. In the largest countries of the European Union, indicators of business activity in manufacturing sectors were published today. It was the data on business activity in industry that caused the greatest concern among investors when it came to the European Union and the United States. Problems of the industrial sector and the decline in GDP were associated with the fall in business activity in production. Thus, much depended on today's numbers. Looking a little ahead, we note that all these figures were ignored by market participants. At least all European numbers are accurate. The business activity index in Spain increased to 48.5, in Italy - up to 48.9, in France - up to 51.1, in Germany - up to 45.3, in the European Union - up to 47.9. Although not in all countries the growth was tangible compared to December, but everywhere there was a growth. Although most of the indicators remained in the recession zone, there was an improvement everywhere. Traders ignored this data, as we warned in the morning. The fact is that the technical need for correction simply turned out to be stronger.

But frankly pleased with the data from overseas. In recent weeks, we have repeatedly called into question the "good state of the US economy," which Jerome Powell spoke about at all recent Fed meetings. Recent weeks have indeed been weak enough for macroeconomic statistics from the United States. However, the new month openly pleased traders with at least an ISM indicator of business activity. It is the PMI ISM index that is considered the most important and significant, and it is this index that unexpectedly showed a decline in the last two months and went below the level of 50.0. In January, business activity recovered to the value of 50.9. The Markit business activity index also turned out to be higher than the forecast value and amounted to 51.9. Thus, both key Monday indexes in the US were in favor of the US currency. You can also add that the index of gradual acceleration of inflation ISM exceeded forecast values and amounted to 53.3, which is also a positive factor. In general, after a year and a half reduction in production growth rates, finally this indicator can begin to accelerate again, which will only add strength to the US dollar. But in the European Union, despite the restoration of business activity indicators in production, most of them remain in the recession zone, so the general situation remains the same: the EU economy remains weaker than the US economy in all respects. Thus, in the long run, we still expect the dollar to strengthen, if not for the paradoxical situation...

Meanwhile, one of the senators, Republican Lamar Alexander, said that all the articles under which Donald Trump is accused by the Democrats are not enough to impeach the president. In essence, this means that on a vote on Wednesday, almost 100% of Trump will be justified. Alexander said that Trump's appeal to Ukrainian President Vladimir Zelensky with a request to investigate the Biden activities in Ukraine is not a "serious violation". The senator calls Trump's actions "a mistake." "I think if the president was dissatisfied with the actions of Joe Biden and Hunter Biden in Ukraine, he should contact the US Attorney General William Barr," Alexander said. The senator also added that Trump's actions are very far from "treason, bribery and other serious crimes."

From a technical point of view, the euro/dollar may bounce off the Kijun-sen line and resume moving up. However, the buy signal from the Ichimoku Golden Cross is currently weak, since quotes failed to leave the Ichimoku cloud. Therefore, if longs are considered now, then it would be in extremely small lots.

Trading recommendations:

The EUR/USD pair began to adjust against a new upward trend. Thus, it is recommended to buy the euro in small lots while aiming for the resistance level of 1.1128, if the pair bounces off the Kijun-sen line. It will be possible to consider selling the euro/dollar pair with goals of 1.1024 and 1.0956, if traders manage to overcome the critical 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