Strength of the dollar lies in the weakness of the currencies that traded against it (we expect the resumption of the decline

The currency market responded to Fed Chairman J. Powell's speech on Tuesday by weakening the US dollar, which had previously received support on the wave of positive data from the US economy and a positive forecast from the Central Bank head for the near future.

Pressure on the dollar was exerted by the "dovish" essentially Powell's speech. In fact, in his own words, he confirmed the continuation of the "soft" monetary rate of the Federal Reserve, saying that he "expects" purchases of short-term Treasury bonds in the second quarter. This was enough to ensure that investors who previously bought the dollar began to close their positions, taking profits.

It can be recalled that the Federal Reserve has been pumping the financial system with dollar liquidity since the fall. This happened after it experienced a shortage in the summer. In fact, without acknowledging this, the regulator began programmatic incentive measures which are very similar to those that B. Bernanke had begun to carry out and continued by his successor J. Yellen. Thus, we believe that the active implementation of such a policy will weaken the dollar, or more precisely, restrain its growth in the currency markets.

Why can this be so? The fact is that the main currencies traded against the dollar themselves experience "weakness." Commodity and commodity currencies remain under pressure in the wake of existing fears that China will significantly reduce demand for commodity and commodity assets. It is enough to pay attention to the collapse in crude oil prices since the beginning of this year.

The euro and the British currency are under pressure from the effects of the "divorce" of the UK and the EU, as well as the general weak economic growth in Europe. Meanwhile, the Swiss franc and the Japanese yen are balancing on the background of either an increase in fears associated with coronavirus, or, conversely, their decline. In practice, it turns out that the dollar, having a good position against these currencies, does not decline due to their "weakness", but at the same time, it itself does not have enough strength to continue strong growth due to the monetary policy of the Federal Reserve.

It turns out that the dollar and its counterparts are balancing due to the "weaknesses" of each other. We believe that this picture will continue in the near future, which means that it is necessary to build strategies for buying and selling the dollar against major currencies, taking into account the above reasons.

Forecast of the day:

EUR/USD is trading above the level of 1.0905. We consider it possible to resume sales of the pair after it crosses this level with the local target of 1.0880 and 1.0840. The main reason for this dynamics is the slurred prospects of the monetary policy of the ECB.

USD/CAD pair is trading above the level of 1.3265. If the idea of lowering crude oil production will be supported, it will support the price of "black gold" and, accordingly, could cause the appreciation of the Canadian currency. Based on this, we believe that a decline in price below the level of 1.3265 may lead to a further decline in the pair to 1.3185.

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Trading plan on EUR/USD for February 12, 2020

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Most likely, the speech of the Federal Reserve's head will not cause noticeable movements in the market. The dollar has strengthened significantly, and it does not make sense for the Fed to conduct "verbal interventions" in the dollar. Nevertheless, the Fed will not reduce the rate further.

Update on the epidemic in China: the number of deaths has risen to 1,100. The growth rate of infected decreased from 10% per day last week, to just +5% per day. On the morning of February 12, 45 thousand cases were recorded.

Apart from that, the market is quiet.

EUR/USD: Euro is still under strong selling pressure.

The correction on Tuesday was very weak and only reached up to 1.0925.

Ahead, on the way down, is a strong level of 1.0880.

Keep selling from 1.0990.

Sales are also possible from 1.0950.

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Indicator analysis. Daily review of EUR/USD on February 12, 2020

Trend analysis (Fig. 1).

The market may continue to move down today with the target at 1.0892, the lower fractal (red dashed line) upon reaching the next lower target 1.0880, the lower fractal (blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - neutral;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

A continued downward movement is expected today with the target at 1.0892, the lower fractal (red dashed line).

An unlikely but possible scenario is from the resistance line 1.0914 (red bold line), the price will go up to 1.0943, the pullback level of 14.6% (red dashed line).

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Reducing panic supports NZD and AUD, but the long-term outlook is unchanged

US stock indices added slightly on Tuesday. On the other hand, Asian stock exchanges are trading in the green zone on Wednesday morning. The main reason is the reduction of concerns about the speed of spread of coronavirus. At the same time, oil rises in price by almost 2% while gold is slightly weakening, which generally indicates a decrease in anti-risk sentiment.

The expected speech by Fed Chairman J. Powell in Congress did not contain anything that could increase volatility. In particular, Powell noted that the FOMC assumes that the current monetary policy supports economic growth, a strong labor market and inflation, and as long as the incoming information is consistent with FOMC forecasts, there is no need to change the policy.

Meanwhile, the NFIB small business survey shows a significant increase in business optimism in January to 104.3p, which is higher than forecasts and above the level of December 102.7p. At the same time, the state of the labor market raises more and more questions. Earlier, we noted that the ISM report contained data on a strong slowdown in the labor market in January, while ADP and BLS (non-farms) claimed strong growth.

Here is another report. JOLTS reports that the number of vacancies decreased in December by 364 thousand, which, taking into account a decrease of 574 thousand a month earlier, gives a record drop of 938 thousand in the last two months of 2019.

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If different methods of evaluating the same labor market give directly opposite results, then what is the price of these methods?

As for the COVID-19 epidemic, everything is not clear with it. Markets are recovering on reports of a slowdown in the growth rate of new cases, but they ignore the report of the Chinese Health Commission, which no longer takes statistics into account with patients with a positive virus test, but without disease symptoms.

These considerations support the short-term growth of optimism, but do not allow forming a long-term positive outlook; a reversal to the next wave of sales can occur at any moment.

NZD/USD

As expected, the RBNZ left the current interest rate at 1% based on the results of the meeting that ended today, noting that "the monetary policy has time to adjust if necessary," taking into account the negative consequences of COVID-19.

The forecast for the rate has been revised upwards and reductions are not expected in the foreseeable future, but the endpoint is already higher.

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The forecast on the rate gives the kiwi a definite advantage, primarily against AUD, but is unlikely to lead to long-term consequences.

The first reaction of the market to the results of the RBNZ meeting was positive. NZD/USD increased, but failed to update the local maximum of 0.6502. The conclusion for the kiwi is disappointing - it still has no internal incentives for growth and will be under pressure as long as there is a threat of the spread of the epidemic and the associated slowdown in the Chinese economy.

Moreover, Kiwi will try to find support at 0.6447 and try to get to 0.6502 once again, but in case of failure, the most likely scenario is to go to the side range.

AUD/USD

Based on its own forecasts, RBA does not see the need for further rate cuts, which in theory, should support AUD, since even 0.75% is still slightly higher than the average G10 rate. At the same time, the market as a whole assesses the position of the RBA as overly optimistic. In particular, the NAB bank notes that private consumption remains at very low levels, and therefore, expectations for 4Q GDP growth are unlikely to be met.

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NAB does not also observe any positive dynamics in the business environment, wholesale and retail trade at historically low levels, companies do not see signs of approaching sustainable growth so far.

In addition, Friday's CFTC report showed a speculative increase of more than $ 1 billion to a net short of Australian currency and thus, there are no internal reasons for the reversal.

The support of 0.6658, which was formed on February 10, is unstable. The current corrective growth is based on a decrease in panic and a general increase in confidence in global markets. Meanwhile, the resistance zone of 0.6755 / 70 is most likely to stand. If you approach it, you can try to sell with the target of 0.6610 and stop just above the resistance zone.

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The Main Threshold Fair value Gap 1.6770 will be target for EUR/NZD on Feb 12, 2020

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At the 4-hour chart, EUR/NZD seems to be ready to test 1.6770 as the target today. However, there is a possibility today that 1.6956 will be re-tested first before the price drops to 1.6770 as long as the pair does not break out and closes above 1.7119. The Main Threshold Fair Value Gap at 1.6770 is still expected to be the target to reach today.

(Disclaimer)

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GBP/USD Projection HOD/LOD For Fed 12, 2020

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The High Of The Day (HOD) and Low Of The Day (LOD) from the Central Bank Dealer Range (CBDR) today is formed at STDV 2-STDV 4 under normal market conditions but sometimes they can reach the STDV 5-STDV 6. Here are the levels for today:

STDV 10 - 1.3134.

STDV 9 - 1.3117.

STDV 8 - 1.3100.

STDV 7 - 1.3083.

STDV 6 - 1.3066.

STDV 5 - 1.3049.

STDV 4 - 1.3032.

STDV 3 - 1.3015.

STDV 2 - 1.2998.

STDV 1 - 1.2981.

CBDR - 1.2964.

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

CBDR - 1.2947.

STDV 1 - 1.2930.

STDV 2 - 1.2913.

STDV 3 - 1.2896.

STDV 4 - 1.2879.

STDV 5 - 1.2862.

STDV 6 - 1.2845.

STDV 7 - 1.2828.

STDV 8 - 1.2811.

STDV 9 - 1.2794.

STDV 10 - 1.2777.

Pay attention to the level of confluence between today's & yesterday's range such at 1.2845, 1.2862, 1.2981 & the previous Day High 1.2967 with the Previous Day Low 1.2893. All these levels can be a potential turning point level.

(Disclaimer)

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Technical analysis of ETH/USD for 12/02/2019:

Crypto Industry News:

Pawnhub cryptographic loan startup has just become the first fully licensed and insured cryptocurrency lender in Hong Kong. Pawnhub also has offices in Switzerland, Great Britain, Taiwan and Thailand.

Pawnhub has big plans to become one of the leading cryptocurrency companies in the Asia-Pacific region. Asian nations have a high degree of technological efficiency and enthusiasm for cryptocurrency and blockchain projects.

Many Asian nations are home to some of the largest cryptocurrency markets, and have some of the most forward-looking cryptocurrency-friendly recipes. Singapore, Japan, South Korea and Hong Kong have adopted laws that make their jurisdiction more attractive for online startups.

Pawnhub's expedition into the cryptocurrency loans space can be a big deal. The cryptocurrency industry has become one of the fastest and most profitable sub-sectors of the overall investment climate for crypto assets over the past 2 years.

The company was able to obtain a government license in Hong Kong and also announced that it would work with a leading US cryptographic asset storage company to offer insurance of up to $ 100 million, anywhere in the world, to cover its clients' Bitcoins.

Pawnhub is just one of the virtual currency lending companies that appeared in the headlines of newspapers. This industry has recently become the center of attention, as one of the few successful sectors that developed during the crypto-winter.

Technical Market Overview:

The ETH/USD pair has broken through the technical resistance located at the level of $229.81 and made a new high at the level of $247.20. The uptrend is still active despite extremely overbought market conditions and the next target for bulls is seen at the round level of $250. Only a sustained breakout below the level of $229.81 might result in a larger counter-trend corrective cycle.

Weekly Pivot Points:

WR3 - $294.29

WR2 - $261.49

WR1 - $246.98

Weekly Pivot - $213.30

WS1 - $200.82

WS2 - $167.15

WS3 - $155.55

Trading Recommendations:

The wave 2 corrective cycles are completed at the level of $115.05, 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 $146.94 is not violated. This might be a wave 3 in developing in the overall long-term Elliott wave scenario.

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Elliott wave analysis of EUR/JPY for February 12, 2020

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We still see the possibility for a minor pop to 120.17 before renewed downside pressure towards the target-zone between 118.85 - 119.24 to complete wave 2 and setting the stage for the next impulsive rally higher.

The decline in wave 2 has already fulfilled all requirements for the ongoing wave 2, so it is only a question of time now before the low of wave 2 is in place and a new impulsive rally in wave 3 starts to develop.

R3: 120.38

R2: 120.17

R1: 119.98

Pivot: 119.79

S1: 119.65

S2: 119.50

S3: 119.24

Trading recommendation:

We are short EUR from 120.40 and we will keep our stop+revers at 120.65 and take profit+revers at 119.35.

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Elliott wave analysis of GBP/JPY for February 12, 2020

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The correction in GBP/JPY from 141.21 has extended further than expected and is hovering just below the key resistance at 142.50. We still expect this resistance will cap the upside for renewed downside pressure through minor support at 142.02 indicating another push lower towards 141.21 and 140.80 on the way towards 139.24.

An unexpected break above key resistance at 142.50 will be of concern and indicate that a premature low for wave iv already has been found at 140.80.

R3: 142.79

R2: 142.61

R1: 142.50

Pivot: 142.28

S1: 142.02

S2: 141.86

S3: 141.55

Trading recommendation:

We are short GBP from 142.80 with our stop placed at 142.50

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Technical analysis of BTC/USD for 12/02/2019:

Crypto Industry News:

The Ukrainian Ministry and the Committee for Digital Transformation of Ukraine have just published the most reasonable and reliable crypto-regulatory policy for public Blockchain and Proof of Work (PoW) mining on the ground.

Regulatory ministries came to the conclusion that the Bitcoin protocol and enforced consensus rules are sufficient to regulate onchain activities because network rules are enforced by the protocol itself, node operators and the social consensus of the users themselves. Therefore, it does not need government supervision or intervention.

Ukrainian officials understand that Blockchain technology is self-regulating due to the use of open-source protocols and open network access, which allows privacy and free flow of resources, secured by a decentralized network, cryptography, PoW system and social consensus.

Instead of micro-management and blatant regulatory requirements, Ukrainian officials focus on developing state policy in the fields of digitization, digital economy, digital innovation, e-administration and e-democracy, and the development of the information society.

The regulatory policy of Ukraine is trying to revive participation in the creation of virtual assets, blockchain and tokenization, artificial intelligence and other technological innovations.

It is a breath of fresh air that shows that Ukrainian officials actually understand the no-impediment and open public Blockchain chains.

Technical Market Overview:

The trend on Bitcoin is still up despite the extremely overbought market conditions on H4 and Daily timeframes. The recent high was made at the level of $10,320, so now the level of $10,137 is the nearest technical support for the price. The next target for bulls is seen at the level of $10,893 in the case of an extension. On the other hand, The bears might try to test the nearest important short-term technical support at the level of $9,508 soon. Only if this level is clearly violated the deeper correction can be made towards the levels of $9,123 and $9,013.

Weekly Pivot Points:

WR3 - $11,600

WR2 - $10,823

WR1 - $10,568

Weekly Pivot - $9,731

WS1 - $9,416

WS2 - $8,639

WS3 - $8,335

Trading Recommendations:

The market might have made the first impulsive wave up of a higher degree. 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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Technical analysis of GBP/USD for 12/02/2019:

Technical Market Overview:

The GBP/USD pair has made a new low at the level of 1.2871 as anticipated, but this low was made on the Pin Bar candlestick pattern and the range breakout occurred in oversold market conditions. The breakout from the recent range might be the beginning of a larger correction to the downside and the next target for bears is seen at the level of 1.2823. In the meantime, the next technical resistance for the bouncing price is seen at the level of 1.2962 and it being tested currently.

Weekly Pivot Points:

WR3 - 1.3353

WR2 - 1.3269

WR1 - 1.3041

Weekly Pivot - 1.2956

WS1 - 1.2722

WS2 - 1.2624

WS3 - 1.2379

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 1.3512.

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Technical analysis of EUR/USD for 12/02/2019:

Technical Market Overview:

The EUR/USD pair has made another lower low at the level of 1.0891 and it is still moving inside of the descending channel. All the bounces after the sell-offs had been shallow, so the bearish pressure is still high despite the oversold market conditions. The momentum is still weak and negative and there is no indication of any trend reversal yet. The next target for bears is seen at the level of 1.0885 and the immediate technical resistance is seen at the levels of 1.0940 and 1.0981. Beware of short-squeeze.

Weekly Pivot Points:

WR3 - 1.1168

WR2 - 1.1131

WR1 - 1.1018

Weekly Pivot - 1.0976

WS1 - 1.0860

WS2 - 1.0819

WS3 - 1.0703

Trading Recommendations:

The best strategy for current market conditions is the same as it was for recent months: 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 larger timeframes like weekly, which indicates 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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GBP/USD: plan for the European session on February 12. The pound is being bought amid optimism about the economic recovery

To open long positions on GBPUSD, you need:

The British pound continued to recover in the second half of the day, taking advantage of good data on the growth of the UK economy at the end of last year, which will keep the probability of a rise at the beginning of this year. Currently, the bulls are focused on the resistance of 1.2976, the breakthrough of which will provide them with a new wave of growth of the pair in the area of the highs of 1.3011 and 1.3049, where I recommend taking the profits. However, bears won't just let the pound go, so in the case of a downward correction, one can look at long positions from the support of 1.2934, provided that there is a false breakdown up to the level of 1.2924, where the new lower boundary of the ascending channel was formed yesterday. The lack of demand in this range will collapse GBP/USD to the support of 1.2895, where you can open long positions immediately on the rebound, counting on correction of 20-30 points.

To open short positions on GBPUSD, you need:

The absence of important fundamental statistics can negatively affect sellers of the British pound, so I do not recommend rushing to short positions. Only the formation of a false breakdown in the first half of the day in the resistance area of 1.2976 will be a sell signal, which will lead to a downward correction to the support area of 1.2934-24, where the lower border of the new ascending channel passes. A break in this range will quickly push the pound to a minimum of 1.2895, where I recommend taking the profits. If the bears do not cope with the task of holding the resistance at 1.2976, it is best to return to short positions to rebound from the highs of 1.3011 and 1.3049.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which keeps the probability of upward momentum in the pair.

Bollinger Bands

A break of the upper border of the indicator in the area of 1.2976 will lead to a new wave of pound growth. A break of the lower border of the indicator at 1.2925 will push the pound down.

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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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Control zones of USDCAD 02/12/20

Today the pair is trading below a two-day low. This indicates the presence of a proposal above current levels. The opening of US trading below the WCZ 1/4 1.3290-1.3286 will enter a short position. The first target of the fall will be the WCZ 1/2 1.3250-1.3243. Medium-term sales potential may grow to a weekly control zone 1.3171-1.3155. This will make it possible to hold part of the position.

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Work in the downward direction may become the main one in the second half of the current week and the beginning of the next, so you need to determine the exit points from at different levels.

An alternative model will be developed if the closing of today's trading occurs above the WCZ 1/4. This will indicate continued upward movement. The probability of updating the monthly high will increase to 75%.

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

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

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

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Overview of the GBP/USD pair. February 12. Scotland's First Minister Nicola Sturgeon is starting a war with Boris Johnson

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 18.9795

The GBP/USD currency pair continues to adjust on February 12, as evidenced by the Heiken Ashi indicator. At the moment, the pair's quotes have worked out the moving average line and could not gain a foothold above it. Thus, in the event of a rebound from the moving average, the downward movement can resume, which is quite logical from a fundamental point of view. Yesterday's macroeconomic reports from the UK were interpreted by many traders as positive. Approximately the same reaction of market participants was to the results of the Bank of England meeting at the end of January when nothing changed for the better, but the pound began to rise in price amid the absence of a new negative. The same situation was observed yesterday when the preliminary GDP values for the fourth quarter did not fall but remained at the levels of the previous quarter. It was this fact that provoked the continued strengthening of the pound, and the report on industrial production was ignored, which not only showed another reduction but also turned out to be worse than forecasts. There will be no more macroeconomic information coming out of the UK this week, so traders can only look closely at the US reports. Today, the US Congress will host the second consecutive speech by the head of the Fed, Jerome Powell, but it is unlikely to be more interesting than yesterday.

Meanwhile, Scotland's First Minister Nicola Sturgeon has sent an official letter to London criticizing Boris Johnson's refusal to allow Edinburgh to hold a second independence referendum. Recall that the Prime Minister of Great Britain motivated his refusal by the fact that such an event as a referendum can happen once in a hundred years, and it was already held in 2014 in Scotland. Then, in 2014, the majority of Scots were in favor of maintaining the Union with London. However, in 2016, a general referendum on leaving the EU was held and the majority of Scots voted "against" it. This is what motivates Nicola Sturgeon's desire for a second referendum, whose party won unconditionally in the last parliamentary elections. "The tories are terrified that Scotland has the right to choose its future. They know that if we are given the chance, we will choose independence. In addition, the UK's position is unreasonable, it is completely destructive," the letter says. Ms. Sturgeon also said that the longer London resists the referendum, the more the equality of members of the "Westminster Commonwealth" is called into question. Already this month, the head of the Scottish National Party intends to raise the issue of a referendum in the British Parliament again. It should also be noted that the desire to remain in the EU is not just the desire of the Scottish government. The Scottish people do support this decision, holding rallies against leaving the European Union in major cities. Nicola Sturgeon herself has promised to return to the European Union as an independent state.

Thus, in February, a new epic associated with the UK called the "referendum in Scotland" may begin, and in March, Britain will face negotiations with the European Union on a trade deal, which begins very badly.

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The average volatility of the pound/dollar pair has decreased to 85 points over the past 5 days, and the volatility illustration clearly shows that the indicator continues to fall. According to the current volatility level, the working channel on February 12 will be limited to the levels of 1.2863-1.3033. Given the fundamental background, a resumption of the downward movement would be very logical on Tuesday.

Nearest support levels:

S1 - 1.2939

S2 - 1.2878

S3 - 1.2817

Nearest resistance levels:

R1 - 1.3000

R2 - 1.3062

R3 - 1.3123

Trading recommendations:

The GBP/USD pair continues its upward correction. Thus, traders are now advised to wait for its completion (a rebound from the moving average) and resume selling the pound with targets of 1.2878 and 1.2817. It is recommended to consider buying the British currency after fixing the price above the moving average line with the first targets of 1.3000 and 1.3062.

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

Explanation of the illustrations:

The highest linear regression channel is the blue unidirectional lines.

The lowest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

Moving average (20; smoothed) - 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 variants of the price movement:

Red and green arrows.

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Overview of the EUR/USD pair. February 12. Christine Lagarde calls on EU countries to stimulate economy and ignores coronavirus

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - down.

Lower linear regression channel: downward direction.

Moving average (20; smoothed) - down.

CCI: -85.0948

The upward correction for the EUR/USD pair has begun. At least this is now evidenced by the Heiken Ashi indicator, which turned up. The correction at the moment is characterized as very weak, but there are chances for its development. Over the past day, no important macroeconomic report has been published in the eurozone or the United States. But the speeches of Christine Lagarde and Jerome Powell took place. If we spoke about the speech of the Fed chief before the US Congress in the previous article on EUR/USD, then the speech of the ECB chairman was not affected. Namely, her speech was potentially more interesting, since everything is fine with the US economy at the moment, which is confirmed by recent reports, but the European Union continues to stall. The indicators of the state of the US economy remain much higher than the European ones, so Lagarde's speech should have been more dovish. However, the ECB president, in a speech to the European Parliament, managed to avoid a frankly dovish rhetoric. Lagarde said on Tuesday that an overly soft monetary policy negatively affects savings income and increases the cost of various assets. Once again, the ECH head called on European governments to stimulate economic growth. This primarily concerns, of course, the largest states, where the signs of economic slowdown are least visible. However, for such states (Spain, the Netherlands, Germany, France), the situation is such that they must drag the whole EU along, which, of course, is not pleasant to the governments of these countries and so far no one has heeded the calls first of Mario Draghi, and now Lagarde. The head of the ECB also said that "the longer the stakes are at" ultra-low "values, the greater the likelihood that negative effects will manifest themselves more." Also, Lagarde noted that central bank economists are now focused on finding the answer to the question "is it necessary to lower the inflation target?" At the moment, it remains at the level of "slightly below 2%" and the consumer price index cannot reach this target for the past eight years. This refers not to a one-time exit at 2%, but a long-term inflation rate at this level. Furthermore, Lagarde, unlike Powell, did not touch on the topic of the coronavirus in China.

It would probably be worth it to touch on this topic. According to the latest experts, the epidemic has begun to slow down. The infection growth rate is falling, a certain number of infected people have recovered. Firstly, this means that the virus is not fatal in all cases. Secondly, with existing drugs in some cases, the patient can recover. Thirdly, it is possible that the spread of the epidemic was localized. Of course, it is too early to open champagne, but the news is certainly good. On this occasion, Donald Trump himself spoke out, who predicted the death of the virus in April. According to Trump, the coronavirus is afraid of the heat and, accordingly, in April, when the warm season begins in China, the virus will not be able to cope with the changing climatic conditions. I'd like to believe in it.

To date, another Powell statement in Congress is planned, which, in our opinion, is unlikely to be too different from yesterday. Thus, the Fed chief, most likely, will again focus on positive theses that have long been known to everyone. Also on Wednesday, February 12, industrial production in the European Union for December is set to be published. And although this indicator is not the most important in itself, we have repeatedly noted its high significance at the present time.

analytics5e4375b69019c.png

As can be seen from the graph above, industrial production has been in a deep negative in the last 13 months. And tomorrow, most likely, we will see a decline in the indication for the 14th consecutive month. Judging by experts' forecasts, December may not only end with another reduction in industrial production, but also outperform the rate of decline of the past 11 months, amounting to -2.8% y/y. In monthly terms, a reduction from -1.6% to -2.0% is expected. However, in any case, it is precisely about reduction. It is difficult to say whether weak production in the EU will cause the euro to fall. It is likely that it is not, since the euro currency has been falling non-stop in the last few days and there should still be a correction. However, we still recommend paying attention to the fast indicator Heiken Ashi, which may indicate the completion of the correction. We remind you that the common fundamental and macroeconomic backgrounds remain on the side of the US currency.

analytics5e4375f699814.png

The average volatility of the euro/dollar currency pair is still 46 points per day. The correction has finally begun, but so far it is very weak. Thus, on Wednesday we expect movement between the boundaries of the volatility band of 1.0869 - 1.0961. We expect continued correctional movement.

Nearest support levels:

S1 - 1,0864

S2 - 1,0803

S3 - 1.0742

The nearest resistance levels:

R1 - 1,0925

R2 - 1.1047

R3 - 1,1108

Trading recommendations:

The euro/dollar began to adjust. Thus, selling the euro is currently relevant while aiming for 1.0869, but after the reversal of the Heiken Ashi indicator back down. It is recommended to buy the pair no earlier than when the bulls overcome the moving average line, which will change the current trend to an upward one, with the first target of 1.1047.

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

Forecast for AUD/USD on February 12, 2020

AUD/USD

On Monday and Tuesday, the Australian dollar worked out our previously assumed correction range of 0.6713/37 and then it stopped waiting for further market signals. These signals will come from foreign markets, since the aussie did not react to the consumer confidence index for February, the index showed an increase of 2.3% against -1.8% in January. The next event, minutes from the last meeting of the RBA, will be published on the 18th.

Foreign markets also have a three-day lull - commodities are in a small and short range, the dollar index fluctuates in Monday's range. Today's RBNZ meeting was also calm, no changes have occurred.

analytics5e436f7464faa.png

The Australian dollar retains the potential for continued correctional growth to the level of 0.6780, to the area of convergence of the downward price channel line and the Fibonacci level of 138.2%. The level also corresponds to the peak of January 29th. The convergence on the Marlin oscillator is not great, but can still continue to operate.

analytics5e436f8a7e7e4.png

A price reversal from the achieved level of 161.8% is also possible. The signal for the development of such a scenario will be to consolidate price under the MACD line on a four-hour chart, below 0.6700. Continued growth is possible if the price is consolidated above yesterday's high.

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

Forecast for EUR/USD on February 12, 2020

EUR/USD

After a continuous six-day fall in the euro, yesterday I decided to take a break in the indicated consolidation range of 1.0880-1.0925. Today, the decline may continue since data on the industrial production of the euro area for December is published, the forecast is -1.8%. After the collapse of the Italian industrial production, which was shown on Monday (-2.7% m/m against the forecast of -0.5%), we are waiting for today's worse than expected European index. The purpose of pulling down the euro to 1.0880 is the October 1 low. The second target is the Fibonacci level of 161.8% at the price of 1.0840. This is the main scenario.

analytics5e4370633b7ba.png

The scenario with the continuation of the correction has a probability of 35%. Here, when prices are consolidated above yesterday's high, it is possible to grow to the Fibonacci level of 110.0% at the price of 1.0970.

analytics5e4370793ffe6.png

On a four-hour chart, the price is staying in the 1.0880-1.0925 range, making it possible for the Marlin oscillator to discharge before a new wave of decline. A short-term price exit above the upper limit of this range is possible.

At this price scale, the alternative scenario looks more distinct with growth - the MACD line and a correction of 38.2% of the decline branch from January 31 converge at this level.

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

Forecast for GBP/USD on February 12, 2020

GBP/USD

Yesterday, quite good economic indicators came out in Great Britain and the pound sterling grew by 36 points. GDP for the quarter showed the expected 0.0%, but there was an increase of 0.3% in December. On an annualized basis, GDP was 1.1% against expectations of 0.8%. The trade balance increased from -4.9 billion pounds to 0.85 billion against a pessimistic forecast of -10.0 billion pounds. The trade balance is noteworthy in that it is the first case of a surplus in 35 years. Industrial production turned out worse than expected, which is not surprising in the general European recession: total Industrial Production in December added 0.1% against the expected 0.3%, year-on-year decline of -1.8% against the expected -0.8%. Until the end of the week, the main role will now be played by the US CPI statistics on Thursday (forecast for January 0.2%) and Friday's data on industrial production and retail sales.

analytics5e437018248db.png

On the daily chart, the price is testing the resistance of the Fibonacci level of 161.8%. The general trend in the indicators is downward. The target is the Fibonacci level of 138.2% at the price of 1.2820.

analytics5e43702df2e4d.png

On a four-hour chart, the price may still be noted on the resistance of the MACD line (1.2982). The signal line of the Marlin oscillator slows down in growth. A trend reversal is likely.

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

Fractal analysis of the main currency pairs for February 12

Forecast for February 12:

Analytical review of currency pairs on the scale of H1:

analytics5e4366bbc6498.png

For the euro / dollar pair, the key levels on the H1 scale are: 1.0969, 1.0938, 1.0922, 1.0902, 1.0888 and 1.0864. Here, we are following the development of the descending structure of January 31. Short-term downward movement is expected in the range 1.0903 - 1.0888. The breakdown of the last value will lead to a movement to a potential level of 1.0864. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range 1.0922 - 1.0938. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.0969. This level is a key support for the downward structure.

The main trend is the descending structure of January 31

Trading recommendations:

Buy: 1.0922 Take profit: 1.0936

Buy: 1.0940 Take profit: 1.0967

Sell: 1.0902 Take profit: 1.0889

Sell: 1.0886 Take profit: 1.0866

analytics5e4366de4b644.png

For the pound / dollar pair, the key levels on the H1 scale are: 1.3070, 1.3013, 1.2970, 1.2932, 1.2889, 1.2847 and 1.2754. Here, we are following the development of the descending structure of January 31. Short-term downward movement is expected in the range of 1.2889 - 1.2847. The breakdown of the last value should be accompanied by a pronounced movement to the bottom. In this case, the potential target is 1.2754. We expect consolidation, as well as a pullback to the top near this level.

Short-term upward movement is possibly in the range of 1.2970 - 1.3013. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3070. This level is a key support for the downward structure.

The main trend is the descending structure of January 31

Trading recommendations:

Buy: 1.2970 Take profit: 1.3011

Buy: 1.3015 Take profit: 1.3070

Sell: 1.2889 Take profit: 1.2848

Sell: 1.2845 Take profit: 1.2756

analytics5e436707a0132.png

For the dollar / franc pair, the key levels on the H1 scale are: 0.9858, 0.9826, 0.9810, 0.9781, 0.9759, 0.9744 and 0.9719. Here, we are following the development of the ascending structure of January 31. The continuation of the movement to the top is expected after the breakdown of the level of 0.9781. In this case, the target is 0.9810. Price consolidation is in the range of 0.9810 - 0.9826. For the potential value for the top, we consider the level of 0.9858. We expect a pullback to the bottom upon reaching this level.

Short-term downward movement is possibly in the range of 0.9759 - 0.9744. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9719. This level is a key support for the upward structure.

The main trend is the upward cycle of January 31

Trading recommendations:

Buy : 0.9782 Take profit: 0.9810

Buy : 0.9826 Take profit: 0.9858

Sell: 0.9759 Take profit: 0.9745

Sell: 0.9742 Take profit: 0.9720

analytics5e4367276d2fd.png

For the dollar / yen pair, the key levels on the scale are : 110.80, 110.47, 109.99, 109.62, 109.41 and 109.07. Here, we are following the development of the ascending structure of January 31. The continuation of the movement to the top is expected after the breakdown of the level of 110.00. In this case, the target is 110.47. Price consolidation is near this level. For the potential value for the top, we consider the level 110.80. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 109.62 - 109.41. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 109.07. This level is a key support for the top.

Main trend: upward structure of January 31

Trading recommendations:

Buy: 110.00 Take profit: 110.45

Buy : 110.49 Take profit: 110.80

Sell: 109.60 Take profit: 109.42

Sell: 109.38 Take profit: 109.10

analytics5e436746da0bd.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

analytics5e4367612af63.png

For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6731, 0.6707, 0.6688, 0.6654, 0.6618, 0.6574, 0.6545 and 0.6505. Here, we are following the formation of the descending structure of February 5. The continuation of movement to the bottom is expected after the breakdown of the level of 0.6654. In this case, the target is 0.6618. Price consolidation is near this level. The breakdown of the level of 0.6618 will lead to the development of pronounced movement. Here, the target is 0.6574. Short-term downward movement, as well as consolidation is in the range of 0.6574 - 0.6545. For the potential value for the bottom, we consider the level of 0.6505. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 0.6688 - 0.6707. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.6731. This level is a key support for the downward structure.

The main trend is the descending structure of February 5

Trading recommendations:

Buy: 0.6708 Take profit: 0.6730

Buy: 0.6733 Take profit: 0.6772

Sell : 0.6654 Take profit : 0.6620

Sell: 0.6616 Take profit: 0.6576

analytics5e43677f06bb4.png

For the euro / yen pair, the key levels on the H1 scale are: 120.72, 120.45, 120.21, 119.91, 119.75, 119.38 and 119.12. Here, we are following the formation of the descending structure of February 5. The continuation of movement to the bottom is expected after the price passes the noise range 119.91 - 119.75. In this case, the target is 119.38. For the potential value for the bottom, we consider the level of 119.12. Upon reaching this value, we expect consolidation, as well as a rollback to the top.

Short-term downward movement is possibly in the range of 120.21 - 120.45. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 120.72. This level is a key support for the downward structure.

The main trend is the descending structure of February 5

Trading recommendations:

Buy: 120.21 Take profit: 120.43

Buy: 120.47 Take profit: 120.70

Sell: 119.75 Take profit: 119.40

Sell: 119.36 Take profit: 119.12

analytics5e43679d7766d.png

For the pound / yen pair, the key levels on the H1 scale are : 142.42, 141.87, 140.97, 140.62, 140.10 and 139.81. Here, we are following the development of the descending structure of February 5. Short-term downward movement is expected in the range of 140.97 - 140.62. The breakdown of the last value should be accompanied by a pronounced downward movement. Here, the target is 140.10. For the potential value for the bottom, we consider the level of 139.81. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 141.87 - 142.42. The breakdown of the latter value will lead to the formation of initial conditions for the upward cycle. In this case, the potential target is 143.26.

The main trend is the descending structure of February 5, the correction stage

Trading recommendations:

Buy: 141.90 Take profit: 142.40

Buy: 142.45 Take profit: 143.20

Sell: 140.95 Take profit: 140.65

Sell: 140.58 Take profit: 140.10

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

Comprehensive analysis of movement options of #USDX vs AUD/USD vs USD/CAD vs NZD/USD (H4) on February 12

Minuette (H4)

Let's consider what will happen to commodity currency instruments from February 12, 2020. So, here's a comprehensive analysis of the development options for the movement #USDX vs AUD / USD vs USD / CAD vs NZD / USD.

____________________

US dollar index

The movement of the #USDX dollar index from February 12, 2020 will be determined by developing and the direction of breakdown of the boundaries of the equilibrium zone (98.63 - 98.83 - 99.05) of the Minuette operational scale forks. We look at the movement markings inside this zone on the animated chart.

In case of breakdown of the lower boundary of ISL61.8 (support level of 98.63) of the equilibrium zone of the Minuette operational scale forks, it will lead to the development of the downward movement of the dollar index and be directed to the boundaries of the equilibrium zone (98.20 - 97.92 - 97.64) of the Minuette operational scale forks.

On the contrary, If the upper boundary of ISL61.8 (resistance level of 98.40) of the equilibrium zone of the Minuette operational scale forks and the final line FSL (resistance level of 99.12) of the Minuette operational scale forks are broken down, the upward movement #USDX can continue to the warning line UWL38.2 (99.60) of the Minuette operational scale forks and FSL Minuette end line (99.75).

The markup of #USDX movement options from February 12, 2020 is shown on the animated chart.

analytics5e42dccb7f677.jpg

____________________

Australian dollar vs US dollar

The development and direction of the breakdown of the boundaries of 1/2 Median Line channel (0.6699 - 0.6715 - 0.6731) of the Minuette operational scale forks will determine the development of the movement of the Australian dollar AUD / USD from February 12, 2020. The marking the development of the above levels are shown on the animated chart.

The breakdown of the upper boundary of the 1/2 Median Line Minuette channel - resistance level of 0.6731 will lead to the Australian dollar reaching the equilibrium zone (0.6739 - 0.6764 - 0.6787) of the Minuette operational scale forks with the prospect of further development of the AUD / USD movement in the 1/2 Median Line channel (0.6780 - 0.6830 - 0.9875) of the Minuette operational scale forks.

A sequential breakdown of the lower boundary of the 1/2 Median Line channel of the Minuette operational scale forks - support level of 0.6699 and the 1/2 Median Line Minuette 0.6690 will determine the continuation of the development of the downward movement of the Australian dollar towards the goals:

- the initial SSL Minuette line (0.6655);

- control line LTL Minuette (0.6644);

- lower boundary ISL61.8 (0.6625) equilibrium zone of the Minuette operational scale forks;

with the prospect of reaching warning lines - LWL38.2 (0.6615) and LWL61.8 (0.6590) of the Minuette operational scale forks.

We look at the layout of the AUD / USD movement options from February 12, 2020 on the animated chart.

analytics5e42dcb181953.jpg

____________________

US dollar vs Canadian dollar

The development of the movement of the Canadian dollar USD / CAD from February 12, 2020 will continue to be determined by developing the boundaries of the equilibrium zone (1.3225 - 1.3276 -1.3333) of the Minuette operational scale forks. We look at the movement markings inside this zone on the animated chart.

The breakdown of the lower boundary of ISL38.2 (support level of 1.3225) of the equilibrium zone of the Minuette operational scale forks will continue the development of the downward movement of the Canadian dollar towards the goals:

- lower boundary of ISL61.8 (1.3200) equilibrium zones of the Minuette operational scale forks;

- final Schiff Line Minuette (1.3185);

with the prospect of reaching the final line of the FSL Minuette (1.3115).

On the other hand, a combined breakdown of the upper boundary of the ISL61.8 (resistance level of 1.3333) equilibrium zone of the Minuette operational scale forks and the control line UTL Minuette (1.3345) will make the achievement of USD / CAD warning lines - UWL23.6 (1.3365) - UWL38.2 (1.3390) - UWL61.8 (1.3410) and UWL100.0 (1.3455) of the Minuette operational scale forks, relevant.

We look at the markup of USD / CAD movement options from February 12, 2020 on the animated chart.

analytics5e42dc91826a0.jpg

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New Zealand dollar vs US dollar

The development of the movement of the New Zealand dollar NZD / USD from February 12, 2020 will depend on the development and direction of the breakdown of the range :

  • resistance level of 0.6390 (the lower boundary of the 1/2 Median Line channel of the Minuette operational scale forks);
  • support level of 0.6370 (control line LTL of the Minuette operational scale forks).

In case of breakdown of the resistance level of 0.6390, the NZD / USD movement will continue in the 1/2 Median Line Minuette channel (0.6390 - 0.6460 - 0.6525), and if the upper boundary (0.6525) of this channel is broken, the price of the instrument will continue to move in the equilibrium zone (0.6525 - 0.6575 - 0.6622) of the Minuette operational scale forks.

Alternatively, in case that the breakdown of the support level of 0.6420 takes place on the control line of the LTL of the Minuette operational scale forks, then it will be relevant to reach the New Zealand dollar reaching the boundaries of the equilibrium zone (0.6350 - 0.6255 - 0.6155) of the Minuette operational scale forks.

We look at the layout of the NZD / USD movement options from February 12, 2020 on the animated chart.

analytics5e42dc726ab22.jpg

The review is made without taking into account the news background. Thus, the opening of trading sessions of major financial centers does not serve as a guide to action (placing orders "sell" or "buy").

The formula for calculating the dollar index:

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

where the power coefficients correspond to the weights of the currencies in the basket:

Euro - 57.6%;

Yen - 13.6%;

Pound Sterling - 11.9%;

Canadian dollar - 9.1%;

Swedish krona - 4.2%;

Swiss franc - 3.6%.

The first coefficient in the formula leads the index to 100 at the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

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

GBP/USD. February 11. Results of the day. Great Britain's GDP was very surprising, but not industrial production

4-hour timeframe

analytics5e4348fd676af.png

Amplitude of the last 5 days (high-low): 106p - 114p - 79p - 80p - 74p.

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

Tuesday, February 11, was supposed to be crucial for the British pound. Firstly, several important macroeconomic reports from the UK were planned for this day, and secondly, no data from the UK of an economic nature will be received by the end of the week. It should be noted that the pound has not resumed falling today, as many expected, but it has not risen too much either. By and large, the upward correction just continued and the price currently worked out the Kijun-sen line, from which it can rebound and resume moving down. Thus, in fact, no particularly strong reaction of traders to extremely important macroeconomic information has been followed today. Now the pound/dollar pair will try to overcome the critical line, and only in the event of a successful attempt to overcome the bulls can we expect the British currency to continue strengthening.

The most significant publication of today, of course, was the publication of the Gross Domestic Product. Moreover, four variations of this indicator were published immediately. For example, the first indicator of GDP (monthly change) was +0.3% in December with a forecast of +0.2%. The NIESR growth rate estimate has not yet been published at the moment, and the other two indicators, in quarterly and annual terms, bearing preliminary values for the fourth quarter, can be called more optimistic than expected. In annual terms, GDP growth amounted to +1.1% against the forecast of +0.8%. It is small, but better than it could be. In quarterly terms, the increase was 0% with a similar forecast. Thus, in general, we can say that the values were higher than the forecasts of experts, but, in fact, they do not really change the picture of things. Firstly, the GDP indicator has not changed compared to the previous period, an increase of +1.1% was also recorded in the third quarter. Secondly, the absence of another fall is not a positive factor. Thus, today's strengthening of the pound can really be considered just a continuation of the correction. But the second indicator, no less significant than the first, industrial production for December showed a decrease of 1.8% y/y with forecasts of -0.8% y/y, and in monthly terms - an increase of +0.1% in the forecast + 0.3%. Thus, this figure was much worse than expectations of traders, but did not cause new sales of the British currency. You can also note a more secondary indicator such as production in the manufacturing industry, which fell in December by 2.5% instead of the expected fall of 1%. In general, despite a more or less positive GDP, we believe that the next package of macroeconomic information from Britain turned out to be weak. Thus, we expect the pound/dollar pair to resume falling, especially if today quotes rebound from the critical line Kijun-sen.

It is also worth noting that perhaps a slight strengthening of the pound was provoked by Jerome Powell's speech. However, as we mentioned in the EUR/USD review, Powell did not disclose anything to the markets. His rhetoric was fully predictable and expected by traders. Today, a statement by the Chairman of the Bank of England Mark Carney in the Parliament of Great Britain is still planned. This statement could potentially be even more interesting than the statements made by Powell and Lagarde together, since the huge amount of speculation that went around the last meeting of the regulator ended with the BA leaving the key rate unchanged, and the number of members of the monetary committee who voted "for" it to decline not changed. Today, Mark Carney, who mentioned the recovery of Great Britain's economy last month, may make more resonant statements with respect to those that we heard at the end of January. Any hints of the need to soften monetary policy, the growing risks for the economy may result in new sales of the British currency. Although without such hints, it is clear that all the prospects for the British economy are now reduced to new reductions and decelerations.

From a technical point of view, corrective movement continues, and the further direction of movement will depend on overcoming or not overcoming the Kijun-sen line. Thus, traders are now advised to carefully monitor the behavior of prices near this line, remembering that the "dead cross" remains relevant.

Trading recommendations:

GBP/USD continues to adjust against the dead cross. Thus, selling the British pound with the target support level of 1.2772 is still relevant, but after the completion of the current correction, which can be determined by the rebound from the Kijun-sen line or by turning the MACD indicator down. Purchases of a pair by small lots can be considered if the price overcomes the Kijun-sen line with the first goal of the 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. February 11. Results of the day. No surprises in Jerome Powell's speech. Euro may start correction

4-hour timeframe

analytics5e433ff6248af.png

Amplitude of the last 5 days (high-low): 54p - 50p - 43p - 43p - 49p.

Average volatility over the past 5 days: 46p (average).

The EUR/USD currency pair perfectly worked out the support level of 1.0893 on Tuesday, February 11 and rebounded from it, failing to gain a foothold below. Thus, the long-awaited correction could begin today, which we were waiting for on Friday and Monday. This is not to say that today the correction was expected, and the fundamental background contributed to its beginning, since the only important events that are planned at the moment are speeches of the ECB President Christine Lagarde in the European Parliament and Jerome Powell in Congress . Moreover, Lagarde's speech has not even begun. Not a single significant macroeconomic publication has been planned for today in either the United States or the European Union.

Recently, we regularly focus traders on weak industrial production. This applies to the European Union and the United States. We also noted that Fed Chairman Jerome Powell stubbornly does not want to address in his speeches the subject of a drop in GDP growth rates and a reduction in industrial production. However, speaking to Congress, Powell could not ignore these topics. True, he illuminated them quite superficially. According to Powell, who spoke today to the House Financial Committee, the US economy is in excellent condition. The expansion has been going on for 11 years, which is a record for the country. Powell noted that in 2019, the economy staunchly confronted all global risks. Thus, according to the Fed chief, lowering the key rate in the near future is not required. The Fed chairman notes the stabilized global economic growth, as well as lowering trade uncertainties. However, Powell notes the seriousness of the spread of the "coronavirus." As we said in previous reviews, the coronavirus can cause a slowdown in the Chinese economy, which is closely linked with the US economy and many other economies. This is precisely the opinion held by Powell himself, believing that a pandemic is a dangerous factor for the global economy. In addition, the Fed chairman noted the good condition of the labor market, higher rates of the number of created jobs than expected. However, according to Powell, some problems in the labor market are still present, such as inequality between different racial and ethnic groups. But regarding productivity, Powell said that "it remained at a low level." Thus, according to Powell, the search for options to increase productivity should remain a national priority. In the second half of 2019, weak exports and investments, as well as industrial production, were noted due to uncertainty with trading partners. Powell also notes that inflation is not high enough in 2019 and hopes that it will approach the target of 2.0% in the coming months (we are talking about the consumer spending index for personal consumption).

What conclusions can be drawn from Powell? Firstly, he did not surprise traders by delivering exactly the speech that they expected to hear from him. Secondly, tomorrow during the second speech to Congress, most likely, the rhetoric and content of Powell's speech will not change, respectively, and on February 12 you should not expect any market reaction to this event. Thirdly, Powell believes that the spread of the pneumonia virus in China can have a serious negative impact on the global economy, and the Fed itself is not going to interfere in monetary policy. From this we can also conclude that the Fed is satisfied with the current levels of GDP and industrial production, at least the regulator does not see anything dangerous for them in the economy. Powell also noted that the Fed will not go to change the key rate, only if key macroeconomic indicators begin to decline. Thus, in the near future you should not expect any action from the Fed.

Now it remains only to wait for Lagarde's speech and ensure that her rhetoric will not differ from the expectations of the markets. The main thing is that there are no new ones among Lagarde's theses that reflect more serious concerns about the prospects for the EU economy. Any new tension may again lead to selling the euro.

From a technical point of view, one cannot even say that the correction has begun. The pair rebounded from 1.0893, but a strong departure of quotations to the top has not yet occurred. The MACD indicator, however, has already turned up, reacting to a banal price drop. That is, the indicator has now begun to discharge.

Trading recommendations:

EUR/USD continues to move down. Thus, it is now recommended that you keep selling the euro while aiming for a support level of 1.0893. A price rebound from this level allows you to close sell positions. You can hold shorts with the target of 1.0864. It will be possible to consider purchases of the euro/dollar pair in small lots with the goal of the Senkou Span B line, if traders manage to gain a foothold above the Kijun-sen line, which is not expected in the near future.

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