Dynamics of the currency market is fully dependent on the mood of investors (we expect EUR/USD and GBP/USD pairs to continue

The American dollar was trading in different directions in the main currency pairs, which was due to several reasons according to the results of Wednesday in the currency exchange market.

The dollar decline against commodity and commodity currencies on Wednesday following a wave of damping fears about the worldwide spread of the Chinese coronavirus, which has been conducting financial markets for the second month, scaring investors that if it spreads significantly on the planet, it will have the power to exert a widespread negative impact on global economic growth.

At the same time, New Zealand and Australian dollars rose due to higher value of commodity assets, as well as clear signals from local central banks about the prospects for easing monetary policies. In fact, they made it clear in the person of their leaders that although the rates will remain low, they should not be expected to decrease in the near foreseeable future. This state of affairs will support the exchange rates of these currencies, but only in the case again of general positive sentiment in the markets and growth in demand for commodity assets.

A similar situation is observed in pairs of the US dollar with the Canadian, and Norwegian kroner. The increase in demand for risky assets, paired with an increase in crude oil prices, pushes up the quotes of these currencies against the dollar. And again, such a situation will be observed only if the demand for oil and general positive sentiment in the markets remain.

On the other hand, euro and pound "live" according to slightly different rules. The consequences of Brexit's weaknesses in the economies of Britain and the eurozone, as well as rising expectations not only to maintain the current "soft" monetary rates of the Bank of England and the ECB, but the high probability of their further prospective weakening, especially with respect to the euro, have a significant negative impact on them. Assessing their immediate prospects, we believe that the EURUSD and GBPUSD pairs will decline. And here, as indicated earlier in previous articles, the main reason is not the unusual strength of the American dollar, but the "chronic weakness" of these currencies.

Regarding the dynamics of the Japanese yen against the dollar, it can be noted that it will remain captive to market sentiment associated with the demand for risky assets or not. Its increase puts pressure on the yen, and, conversely, the decline supports it.

In general, we should expect the continuation of the above trends if the general positive mood in the markets continues. But today, if data on consumer inflation in the United States shows growth, this could be an incentive for local strengthening of the US dollar.

Forecast of the day:

EUR/USD is trading above the level of 1.0865. The lack of inflation in Germany and, conversely, its increase in the United States may put pressure on the pair. In this case, it will rush to the level of 1.0840, and then to 1.0800, after declining below the level of 1.0865.

GBP/USD is trading above the level of 1.2935. Strong data on consumer inflation in the United States will put a couple of pressure. Thus, we consider it possible to sell it after breaking down the level of 1.2935 with the target of 1.2865.

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Hot forecast for EUR/USD on 02/13/2020 and a trading recommendation

The single European currency continues its steady decline, but still behaves rather strangely, which causes more and more concern ...

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The fact is that the single European currency essentially ignored data on industrial production, which turned out to be significantly worse than forecasts. So they expected a deepening of the recession, but not from -1.7% to -4.1%, but only from -1.5% to -2.8%. So not only did the pace of recession turned out to be much larger, but also the previous results were reviewed for the worse. And do not forget that the decline has been going on for fourteen consecutive months. Nevertheless, despite such terrible results, the euro remained stable. This happened for the simple reason that they were ready for such a development of events from the industrial production data on Germany and France were published. That is, investors have already put all this into the value of the euro.

Industrial Production (Europe):

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Nevertheless, as soon as the US session opened, the single European currency again began to lose its position. And one gets the feeling that this is just such a belated reaction, since American traders control the market, due to the huge capital that they have. This is partly true, but it is not a matter of industrial production, but of government debt. The fact is that about an hour after the publication of data on industrial production, 10-year bonds were placed in Germany, the yield of which decreased from -0.25% to -0.38%. As soon as US traders saw these results, they immediately began to reduce their European positions. They just start working a little later than Europe.

Yield on 10-year government bonds (Germany):

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The main event today will be the US inflation data, which is seen to grow from 2.3% to 2.4%. This in itself is not bad, but a few more pieces of the puzzle must be added to this. The fact is that in addition to a steady increase in inflation above the target level of 2.0%, Jerome Powell recently made a statement that the coronavirus does not pose a threat to economic growth. Moreover, this same economic growth looks very, very good, even slightly better than the Federal Reserve predicted. And here it is necessary to recall that at the very end of last week, a number of media actively spread the rumor that, because of the coronavirus, the largest central banks could lower their interest rates just in case. So, Powell's words, combined with rising inflation, may be a signal that the Fed does not exclude the possibility of raising the refinancing rate.

Inflation (United States):

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From the point of view of technical analysis, we see price consolidation below the previous year's low of 1.0879, where there is a significant downward movement behind, and ranges of psychological significance are located under the quote. In fact, we have an attempt to resume the initial trend, where the quote is already at the level of 2017 and perhaps this is not the limit.

In terms of a general review of the trading chart, we see that the current downward move has a value of six weeks, where there was only one correction along the route. At the same time, the breakdown of the 1.0879 value became the starting point of new measures, but it is worth considering that pressure from record lows remain.

It is likely to assume that the current consolidation of 1.0865/1.0877 will be broken in the coming hours, having a local increase, possibly in the partial recovery phase. In turn, the overall downward trend is maintained, where the descent towards the level of 1.0850 is not ruled out, where it is worthwhile to carefully analyze the price consolidation points relative to this coordinate.

Concretizing all of the above into trading signals:

- Long positions, we consider in case of price consolidation higher than 1.0880, local transactions.

- Short positions, we consider in case of price consolidation lower than 1.0850, the main transaction.

From the point of view of a comprehensive indicator analysis, we see that technical instruments are focused on the downward movement, having a sell signal. It should be noted that due to consolidation, indicators at minute intervals can be variables.

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Trading plan 02/13/2020 EURUSD. Euro hit 2019 lows

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EURUSD broke below the October 2019 low at 1.0880 and consolidated below

Technically, the picture is unambiguous: a downward trend. Consolidating below the weekly level and the boundary of the long range.

Possible target: There is no support nearby. There is only a global upward trend line on the monthly chart - drawn through the lows of 2000 and 2017 - this is currently around 1.0700.

There is still a chance that the break down is false. Then we should see the euro sharply growing to 1.0990 in the near future.

Arguments against growth: The remaining major currencies - the pound, the yen and the franc - have not yet shown a strong movement in favor of the dollar.

Reason for the euro's fall on Wednesday: Very weak data on the eurozone economy.

Today at 12:30 London time - an important report on US inflation (CPI). This may affect the euro.

Possible rebound: According to the daily chart, the target of the rebound is 1.0980.

EURUSD: We keep sales from 1.0990.

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Elliott wave analysis of GBP/JPY for February 13, 2020

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GBP/JPY broke above the key resistance at 142.50 and continued higher to test the resistance line near 142.70 and peaked at 142.75 before turning lower again. So now we are in a dilemma because we can make a case that this rally was part of a wave iv/ triangle and a final dip below 140.80 still will be seen in wave v/ towards 139.24.

However, the break above the key resistance at 142.50 could indicate a premature low being in place at 140.80 and a new impulsive wave already developing. However, to confirm this being the case, we still need a break above the minor peak at 142.75 and more importantly a break above 143.38.

For now we will let time show which scenario is correct.

R3: 143.38

R2: 142.75

R1: 142.48

Pivot: 142.29

S1: 142.06

S2: 141.73

S3: 141.50

Trading recommendation:

Our stop at 142.50 was hit for a small profit of 30 pips. We will buy a break above 142.75 or wait for a test of our long-term target near 139.24.

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Elliott wave analysis of EUR/JPY for February 13, 2020

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EUR/JPY spiked to a high of 120.30 before tuning lower again towards our ideal target-zone between 118.85 - 119.24 (The low has been 119.35), so we are just 11 pips away from touching the target zone. The possibilities of a bottom being in place soon are overwhelming. A break above minor resistance at 119.74 will be the first indication of a bottom being in place, while a break above resistance at 120.30 will confirm the low being in place and the beginning of a new impulsive rally, that ultimately should bring us back above the 122.88 peak.

R3: 119.91

R2: 119.74

R1: 119.58

Pivot: 119.46

S1: 119.24

S2: 119.00

S3: 118.85

Trading recommendation:

We took profit (105 nice pips was booked)+revers on our short position to a long EUR position at 119.35. We will start by placing our stop at 118.35.

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Fiber could enter trading range between 1.0820 -1.0777. Technical analysis for Feb 13, 2020

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If we look at the weekly chart of EUR/USD, we spot there is a zone called a BIVI (Buy Side Imbalance Sell Side Inefficiency) at 1.0820-1.0777 which acts as a magnet area for this pair. Now the Fiber will try to reach this zone as long as the pair does not break out and closes above 1.1240. So, the Fiber is likely to fill that zone area.

(Disclaimer)

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GBP/USD: plan for the European session on February 13. Bulls need to regain the level of 1.2967, otherwise pressure on the

To open long positions on GBP/USD you need:

The British pound made another attempt to break through and consolidate above 1.2976 yesterday, but nothing good came of it. As a result, the day closed below 1.2967, which is now the first target of the bulls. Only a breakthrough of this range will provide the pound with a new growth wave to the area of a high of 1.3005, and possibly lead to a test of a larger level of 1.3049, where I recommend taking profits. However, the bears won't just let the pound go, so in case of a downward correction, you can look at long positions from the support of 1.2928, provided that there is a false breakout, a little above which the lower boundary of the new rising channel, which was formed from the lows of February 10, passes. If there is no demand for the British pound in the region of 1.2928, I recommend that you postpone purchases until the low of 1.2895 is updated, but with the expectation of a correction of no more than 20-30 points.

To open short positions on GBP/USD you need:

The formation of a false breakout in the morning in the resistance area of 1.2967 will be another signal to sell, which will lead to a downward correction to the support area of 1.2928, slightly above which the lower boundary of the new ascending channel passes. The breakout of this range will quickly push the pound to a low of 1.2895 and 1.2870, where I recommend taking profits. If the bears do not cope with the task of holding the resistance at 1.2967, then it is best to return to short positions to rebound from the highs of 1.3005 and 1.3049, however, they can only be updated if a very weak inflation report is released in the US, which is scheduled for publication in the afternoon.

Signals of indicators:

Moving averages

Trade is carried out in the region of 30 and 50 moving average, which indicates the problems of buyers with the pound's growth.

Bollinger bands

A break of the upper boundary of the indicator in the area of 1.2980 will lead to a new wave of growth. A break of the lower boundary of the indicator at 1.2945 will pull down the pound.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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EUR/USD: plan for the European session on February 13. Those who wish to buy above 1.0922 were not found. Bears aim for a

To open long positions on EURUSD you need:

Yesterday's news on the industrial production of the eurozone was another evidence of serious problems in the economy, which did not allow buyers to go above the resistance of 1.0922, and if there is no one willing to buy, then there are those willing to sell. At the moment, the bulls are trying to keep the pair above 1.0867, but this level is quite thin and can be broken in case of weak inflation data in Germany. In this scenario, you can count on long positions only after a false breakout in the region of 1.0867, or buy EUR/USD after a test of the lows of 1.0840 and 1.0804. However, much will depend on inflation data in the United States, the release of which is scheduled for the afternoon. With the euro growing in the morning, an important task for the bulls will be to break through and consolidate above the level of 1.0894, which will allow us to expect a return to a high of 1.0922, where I recommend taking profits.

To open short positions on EURUSD you need:

Bears waited for their sell signals yesterday, and a false breakout of the level of 1.0922 and weak data on the eurozone returned the downward momentum. At the moment, bears will have to work on the breakout of support of 1.0867, which stopped the euro's fall yesterday. A breakthrough of this level can occur after the release of weak data on inflation in Germany, which will open a direct path to new annual lows in the areas of 1.0840 and 1.0804, where I recommend taking profits. If actions from the bears are not visible in the morning, then you can consider new short positions after a correction and the formation of a false breakout at the level of 1.0894, but I recommend selling EUR/USD immediately for a rebound after a test of a high of 1.0922.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving average, which indicates a continuation of the bearish trend.

Bollinger bands

In case the euro declines further, support will be provided by the lower boundary of the indicator at 1.0850. Growth will be limited by the upper level of the indicator in the area of 1.0920.

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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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Technical analysis of ETH/USD for 13/02/2019:

Crypto Industry News:

President Donald Trump's suggestion is hoping to re-consolidate the Secret Service with the Treasury Department to streamline investigations into cybercrime and financial crime.

Established in 1865, the Secret Service was created as a department at the Ministry of the Treasury to protect the US currency against counterfeiting. In 2002, the Secret Service was moved to the Department of Homeland Security - a move that Trump now wants to undo.

The administration says it will "bring new improvements" in the investigation of financial crimes that have evolved and are becoming increasingly difficult to combat:

The $ 4.8 billion budget request also mentions cryptocurrencies in the discussion on the role of the Treasury Office for Terrorism and Financial Intelligence (TFI), which, he notes, over the past two years:

"It cut off the flow of billions of dollars to Iran, disrupted networks that ensured access to oil and funding for the violent Syrian regime, and extended sanctions to punish Russian aggression and corrupt oligarchs affiliated with the Kremlin."

The document notes that the administration intends to continue investing in economic tools that can support US foreign policy interests and help combat new threats such as the use of cryptocurrencies in money laundering and terrorist financing.

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 $275.45. The uptrend is still active despite extremely overbought market conditions and the next target for bulls is seen at the round level of $320. 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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Technical analysis of BTC/USD for 13/02/2019:

Crypto Industry News:

There are several indicators that can be used to measure market sentiment and general interest. Google searches are one of them.

During the darkness of crypto-winter, market sentiment and general interest weaken, and Bitcoins and cryptographic assets are put aside for ordinary traders and the general public. Only when Bitcoin starts to grow rapidly again, and especially when it exceeds $ 10,000, will people start paying attention to it again.

A look at Google search trends can give us an indication of how much public interest is and whether this could result in another FOMO round. The number of Bitcoin searches on Google has increased by 33% over the past week, rising from its lowest level in six months.

Search peaks coincide with two Bitcoin price peaks, the first in December 2017 and the second in June 2019. Since the beginning of this year, searches have increased by around 37% worldwide.

However, it seems that people will not be interested in Bitcoin until it reaches the summit, although few can reliably predict where this peak is. What's even more interesting is that the search for "Bitcoin halving" shows even more rapid growth as the event approaches.

Technical Market Overview:

The trend on Bitcoin is still up despite the extremely overbought market conditions on H4 and Daily timeframes. The last swing high was made at the level of $10,430, 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, during the correction, the bears might try to test the nearest important short-term technical support at the level of $9,508. 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 13/02/2019:

Technical Market Overview:

The GBP/USD pair has retraced around 50% of the last wave down, but the corrective bounce was capped at the level of 1.2988 and the Bearish Engulfing pattern had been made. Since then the price returned to the down move, but the local trendline has not been broken yet. 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 1.2988 and the local support is seen at the level of 1.2939.

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 13/02/2019:

Technical Market Overview:

The EUR/USD pair is still moving inside of the descending channel and made another lower low at the level of 1.0865 as anticipated. All the bounces after the sell-offs had been shallow, so the bearish pressure is still high despite the extremely 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 1.0832 and the immediate technical resistance is seen at the levels of 1.0905 and 1.0940. 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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Overview of the EUR/USD pair. February 13. Releases of German and American inflation will set the tone for trading on Thursday

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - down.

CCI: -136.8143

Well, the upward correction for the EUR/USD pair was purely symbolic. Several purple bars of the Heiken Ashi indicator gave hope for a move to the moving average line, however, the pair resumed its downward movement at yesterday's US session and worked out a two-year low of 1.0879. Thus, this level will not stand and the bears are simply tired of losing positions as soon as the price approaches the minimum values for two years. After all, the bulls have not managed to form anything similar to an upward trend over the past 15 months. This situation could not go on forever. Therefore, at the moment, a recoilless downward movement continues for the seventh day in a row. If yesterday there were no important and significant publications either in the European Union or in the United States, today there will be important releases form both. Thus, on Thursday, the euro will again have some chances to start correcting. However, we recommend that traders do not try to catch or anticipate a correction but stay in sell positions until there are eloquent signals about the turn of the corrective movement.

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The consumer price index in Germany will be published first. According to experts' forecasts, inflation in January will remain unchanged - 1.7% y/y. This is not such a low value, given that the consumer price index threatened to fall below the 1% mark a few days ago. However, we do not see why the indicator will continue to accelerate if all the key indicators of the state of the German economy and the entire European Union continue to have a tendency to fall. By the way, a value of -0.6% is expected in monthly terms, which clearly will not be able to please traders. Thus, the annual indicator may turn out to be lower than the forecasted values. However, we will not bury this report ahead of time.

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The second and more significant release of the day will be inflation for January in the United States. In 2019, the US consumer price index was mostly below the 2.0% y/y mark. However, in late 2019 to early 2020, it began to accelerate and now stands at 2.3% y/y, which can not but please the Fed, as well as investors in the US currency. Today, it is expected that the official release will record an even greater acceleration in inflation, up to 2.4% y/y. In monthly terms, an increase of 0.2% is expected.

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Also today in the United States, inflation excluding food and energy will be published, which is considered even more important and significant. It is believed that food and energy prices are too volatile (a classic example is oil, which can become cheaper and more expensive due to changes in market conditions or due to various geopolitical conflicts). Thus, excluding these two categories, we get a more accurate indicator of inflation, which shows that in the last 5 months, the level of 2.3% y/y has been consistently reached. And over the past two years, this rate of inflation has only fallen below the level of 2.0% once. Thus, it is food and energy that are the reasons why the main inflation indicator (the one for which the Fed is aiming for a stable 2%) cannot show a stable "2% or higher" for a long time.

There will be no other macroeconomic data today. As for possible movements in the euro/dollar pair on February 13, given the seven-day drop in euro quotes, it is possible that traders will ignore both inflation reports and continue selling. Therefore, as before, we recommend paying close attention to the Heiken Ashi indicator or any other "fast" indicators that can react to a reversal in time. If the US inflation report turns out to be weak, this may trigger a round of upward correction. German inflation does not have such an impact on the foreign exchange market, so it is interesting only in the context of forecasting the future rate of inflation throughout the European Union.

Well, from a technical point of view, everything is bad for the euro currency now. The last hope is that a rebound will occur from the area of two-year lows, and the notorious "paradoxical situation" will play. However, it seems that this time the pair will confidently update the lows and continue moving towards price parity in the long term.

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The average volatility of the euro/dollar currency pair increased to 48 points per day. The correction ended very quickly. Thus, on Thursday, we expect movement between the borders of the volatility range of 1.0824-1.0920. It is pointless to expect a correction before the new turn of the Heiken Ashi indicator up.

Nearest support levels:

S1 - 1.0864

S2 - 1.0803

S3 - 1.0742

Nearest resistance levels:

R1 - 1.0925

R2 - 1.1047

R3 - 1.1108

Trading recommendations:

The euro/dollar pair resumed its downward movement. Thus, sales of the euro currency with the targets of 1.0864 and 1.0824 remain relevant now, which can be kept open until the Heiken Ashi indicator turns up. It is recommended to buy the EUR/USD pair not before the bulls cross the moving average line, which will change the current trend to an upward one, with the first target of 1.0986.

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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Forecast for EUR/USD on February 13, 2020

EUR/USD

Yesterday's publication of data on industrial production in the eurozone was worse than expected - the December decline was-2.1% versus the expected -1.8%. In Europe, they talked about a potentially even greater economic failure due to the epidemic in China. But China itself predicts that the epidemic will decline in April. The euro lost 40 points on Wednesday. The 1.0880 target was fulfilled, there was a consolidation under the lower TF. The following goals are determined by Fibonacci levels: 161.8% - 1.0840, 200.0% - 1.0745.

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A convergence is outlined on the four-hour chart on the Marlin Oscillator, this is a sign of a slight correction before a further decline. Consolidation will likely take place before the level of 1.0905.

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Forecast for GBP/USD on February 13, 2020

GBP/USD

On Wednesday, the British pound tested the Fibonacci level of 161.8% at the last forces, and today it opened below this level. The Marlin oscillator is weakening, and we are waiting for the indicator and the price to reverse. The goal of the decline is the Fibonacci level of 138.2% at the price of 1.2820.

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A significant correction is possible from this level (in depth or time), since the signal line of the Marlin oscillator can turn from its own line of the descending channel (marked by a dashed line). If this preventive reversal does not happen, the price will continue to decline to lower targets, the closest of which will be the 1.2728/58 range.

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The MACD line stopped the price on the four-hour chart. The signal line of marlin decreases, but still remains in the positive trend zone. For the generated signal to sell, it is necessary to wait for it to go into the zone of negative values. This will happen when the price drops to 1.2910.

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Forecast for USD/JPY on February 13, 2020

USD/JPY

With notable effort, the dollar against the yen breaks through the resistance of the MACD line and the trend line of the red price channel on the daily chart. The US stock market provided help, having grown by 0.65% (S&P 500) on traditional expectations that the outbreak of coronavirus will soon end. A recession is expected in China at the end of March. Today, the Japanese Nikkei 225 index added 0.08% to the Asian session, while the Chinese China A50 -0.07%.

analytics5e44c121b9a6b.png

Now the price faces a new challenge - overcoming the resistance of the green price channel at 110.25. Success will make it possible for the price to rise to the target range of 110.83/98.

analytics5e44c1370b192.png

On the H4 chart, the price is developing above the red indicator line of balance, which indicates the preservation of a growing trend. The Marlin oscillator briefly entered the territory of the bears, but already shows its intention to return back to the growth zone.

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

Fractal analysis of the main currency pairs for February 13

Forecast for February 13:

Analytical review of currency pairs on the scale of H1:

analytics5e44af710ba83.png

For the euro / dollar pair, the key levels on the H1 scale are: 1.0938, 1.0910, 1.0888, 1.0864 and 1.0827. Here, the price is near the limit values for the downward cycle, and therefore, we expect a correction. Short-term upward movement is expected in the range of 1.0888 - 1.0910. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.0938. This level is a key support for the downward structure.

The breakdown of the level of 1.0864 will be accompanied by an unstable movement to the bottom. Here, the potential target is 1.0827, when this level is reached, we expect to go to the top.

The main trend is a downward structure from January 31, we expect a correction

Trading recommendations:

Buy: 1.0888 Take profit: 1.0910

Buy: 1.0912 Take profit: 1.0936

Sell: 1.0862 Take profit: 1.0845

Sell: Take profit:

analytics5e44af8dca0b9.png

For the pound / dollar pair, the key levels on the H1 scale are: 1.3070, 1.3013, 1.2970, 1.2889, 1.2847 and 1.2754. Here, we are following the development of the downward structure of January 31. At the moment, the price is in correction. 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

analytics5e44afa76b035.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, and the price has formed a local potential for the top of February 12. 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, upon reaching this value, we expect a pullback to the bottom.

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, the local potential of February 12

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

analytics5e44afc09a465.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

analytics5e44afdd3ff92.png

For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3303, 1.3281, 1.3267, 1.3228, 1.3201 and 1.3165. Here, the descending structure of February 10 is considered as a medium-term. The continuation of movement to the bottom is expected after the breakdown of the level of 1.3228. In this case, the target is 1.3201. Price consolidation is near this level. The breakdown of the level of 1.3200 will lead to the development of pronounced movement to the bottom. Here, the potential target is 1.3165. We expect a pullback to the top from this level.

Short-term upward movement is possibly in the range of 1.3267 - 1.3281. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3303. This level is a key support for the downward structure.

The main trend is the formation of medium-term initial conditions for the downward movement of February 10

Trading recommendations:

Buy: 1.3267 Take profit: 1.3281

Buy : 1.3283 Take profit: 1.3303

Sell: 1.3226 Take profit: 1.3203

Sell: 1.3199 Take profit: 1.3167

analytics5e44aff978958.png

For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6810, 0.6776, 0.6761, 0.6739, 0.6703, 0.6684 and 0.6660. Here, we are following the development of the ascending structure of February 7. The continuation of the movement to the top is expected after the breakdown of the level of 0.6740. In this case, the target is 0.6761. Short-term upward movement, as well as consolidation is in the range of 0.6761 - 0.6776. For the potential value for the top, we consider the level of 0.6810. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 0.6707 - 0.6731. Hence, there is a high probability of a reversal to the top. The breakdown of the level of 0.6684 will lead to the formation of a downward structure. Here, the potential target is 0.6660.

The main trend is the upward structure of February 7

Trading recommendations:

Buy: 0.6740 Take profit: 0.6761

Buy: 0.6762 Take profit: 0.6775

Sell : 0.6703 Take profit : 0.6687

Sell: 0.6682 Take profit: 0.6660

analytics5e44b0177a3d7.png

For the euro / yen pair, the key levels on the H1 scale are: 120.21, 119.91, 119.75, 119.38, 119.12, 118.75 and 118.54. Here, we are following the descending structure of February 5. Short-term downward movement is expected in the range of 119.38 - 119.12. The breakdown of the latter value will lead to the development of a pronounced downward movement. Here, the goal is 118.75. For the potential value for the bottom, we consider the level of 118.54. Upon reaching which, we expect consolidation in the range of 118.75 - 118.54, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 119.75 - 119.91. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 120.21. This level is a key support for the downward structure.

The main trend is the descending structure of February 5

Trading recommendations:

Buy: 119.75 Take profit: 119.90

Buy: 119.93 Take profit: 120.21

Sell: 119.36 Take profit: 119.14

Sell: 119.10 Take profit: 118.75

analytics5e44b03643228.png

For the pound / yen pair, the key levels on the H1 scale are : 144.41, 143.70, 143.37, 142.91, 142.12, 141.77 and 141.19. Here, we are following the development of the ascending structure of February 10. The continuation of the movement to the top is expected after the breakdown of the level of 142.91. In this case, the target is 143.37. Short-term upward movement, as well as consolidation is in the range of 143.37 - 143.70. The breakdown of the level of 143.70 will allow you to count on movement to a potential target - 144.41, upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 142.12 - 141.77. Hence, the probability of a turn to the top is high. The breakdown of the level of 141.70 will lead to the formation of initial conditions for the downward cycle. Here, the potential target is 141.20.

The main trend is the rising structure of February 10

Trading recommendations:

Buy: 142.91 Take profit: 143.35

Buy: 143.38 Take profit: 143.70

Sell: 142.10 Take profit: 141.82

Sell: 141.74 Take profit: 141.35

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

Is the dollar a risk catalyst for the US economy?

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According to some experts, the current situation around the greenback strengthening provokes the risk of a slowdown or even weakening of the US economy. A significant strengthening of the dollar's position to its highest value over the past four months has become another possible barrier to the growth of the national economy, experts said.

Many experts are convinced that the attractiveness of greenbacks as a safe haven significantly increases the risks for the US economy. Fuel to the fire is adding concern about the virus epidemic, which accumulate tension and thicken clouds over the US economy.

According to analysts, the status of a reserve currency, like a safe haven asset, is both a blessing and a curse. The positive side of the coin is that the country issuing the main international reserve currency will still take its toll in the face of a budget deficit. The negative side is the fact that a constant trade deficit can weaken the US industrial base. In addition, experts and representatives of the Federal Reserve fear the negative consequences of the coronavirus epidemic. Experts say that this creates additional risks for the global economy. At the same time, the regulator is not configured to change either the interest rate or the monetary policy in 2020.

Analyzing the situation with the strengthening of the greenback, experts pay attention to the fact that the position of the issuer of the global currency has both significant advantages and side effects. The pluses of this situation are analysts to receive goods from abroad without the need to produce the same volumes of exported products. At the same time, other countries are deprived of such a privilege and must export their goods in order to pay for the import received. The US issuing global currency occupy an exclusive position in the global financial market. This situation is extremely favorable for the greenback, and it always seeks to take advantage of it, squeezing the euro.

Experts expect a strong correction regarding the European currency. At present, there are no signs of acceleration of the European economy, so a dark streak has come for the euro. According to experts, the ECB needs to either monitor the current situation or intervene again, using incentive measures to revive monetary policy. The current state of affairs makes the EUR/USD pair experience the strongest volatility, which was recorded on Tuesday, February 11. Yesterday, the pair dropped to 1.0911, trying to move to new heights. It partly did.

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On Wednesday, February 12, the EUR/USD pair, rapidly gaining momentum, soared to 1.0922. Currently, the pair runs in this range, trying to climb higher.

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According to analysts, the dollar has nothing to fear at the moment, because the US economy is showing signs of acceleration, which cannot be said about the euro. However, things can change in the long run, experts warn. They record a growing discrepancy between the position of the US economy in the world and the role of greenbacks in the global economy. Such a bias can upset the fragile balance between them, experts said. In the event of a reduction in US economic power, privileges for the greenback will remain less and less, experts conclude.

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

Comprehensive analysis of movement options of #USDX vs USD/JPY vs EUR/JPY vs GBP/JPY on February 13

Let us consider how the development of the movement of the dollar index #USDX, the currency of the "country of the rising sun" USD / JPY and its cross instruments - EUR / JPY and GBP / JPY will begin to flow from February 13, 2020.

Minuette (H4 time frame)

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US dollar index

The development of the movement of the dollar index #USDX from February 13, 2020 will continue to be determined by development and the direction of breakdown of the boundaries of the equilibrium zone (98.70 - 98.90 - 99.12) of the Minuette operational scale forks. We look at the traffic markings inside this zone on the animated chart.

In case of breakdown of the lower boundary of the equilibrium zone ISL61.8 (support level of 98.70) of the Minuette operational scale forks, the development of the downward movement of the dollar index will be directed to the boundaries of the equilibrium zone (98.20 - 97.93 - 97.64) of the Minuette operational scale forks.

On the other hand, if the upper boundary of ISL61.8 (resistance level of 98.40) is broken, the equilibrium zone of the Minuette operational scale forks, the upward movement #USDX can be continued to the warning line UWL38.2 (99.60) of the Minuette operational scale forks and the final line FSL Minuette (99.80).

The marking options for the movement of #USDX from February 13, 2020 is shown on the animated chart.

analytics5e4431e0a1a64.jpg

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US dollar vs Japanese yen

The development of the USD / JPY currency movement of the "country of the rising sun" from February 13, 2020, just like before, will also be due to the development and direction of the breakdown range :

  • resistance level of 110.05 (upper boundary of the 1/2 Median Line Minuette channel);
  • support level of 109.85 (upper boundary of the 1/2 Median Line Minuette channel).

The breakdown of the support level of 109.85 and 1/2 of the Median Line Minuette (109.80) will determine the development of the USD / JPY movement in the 1/2 Median Line Minuette channel (109.85 - 109.60 - 109.30) with the prospect of reaching the LTL control line (108.65) of the Minuette operational scale forks and the upper boundaries of ISL38.2 (108.40) of the Minuette operational scale forks.

Alternatively, in case of breakdown of the upper boundary of the 1/2 Median Line Minuette channel (110.05), the upward movement of the currency of the "country of the rising sun" can be continued to the local maximum 110.30 and when updating, it will be possible to reach the warning line UWL61.8 (110.45) of the Minuette operational scale fork and the lower boundary ISL38.2 (110.70) of the Minuette operational scale forks.

We look at the details of the USD / JPY movement from February 13, 2020 on the animated chart.

analytics5e443230a359e.jpg

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Euro vs Japanese yen

The development of the EUR / JPY cross-instrument movement from February 13, 2020 will be determined by the development and direction of the breakdown of the boundaries of the equilibrium zone (119.51 - 120.00 - 120.42) of the Minuette operational scale forks taking into account the development of the 1/2 Median Line channel (120.10 - 120.25 - 120.42) of the Minuette operational scale forks. The details of the development of the above levels are shown on the animated chart.

The breakdown of the upper boundary of the ISL38.2 (resistance level of 120.42) equilibrium zone of the Minuette operational scale forks will allow us to reach the boundaries of this cross-instrument of the equilibrium zone (120.50 - 120.75 - 121.00) of the Minuette operational scale forks, and in case of breakdown of ISL61.8 Minuette (121.00), the EUR / JPY movement can be continued to the local maximum 121.11 and the final line FSL Minuette (121.85).

On the contrary, if the support level of 119.51 is broken down at the lower boundary of the ISL61.8 equilibrium zone of the Minuette operational scale forks, the update of the local minimum 119.22 will become relevant.

The details of the movement of EUR / JPY, depending on the development of this range, are presented on the animated chart.

analytics5e44326ddd00e.jpg

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Great Britain pound vs Japanese yen

The development of the movement of GBP / JPY cross-instrument from February 13, 2020, as before, will continue to be determined by developing the boundaries of the 1/2 Median Line (142.40 - 142.65 - 142.95) of the Minuette operational scale forks. The details of the development mentioned levels are shown on the animated chart.

A sequential breakdown of the upper boundary of the 1/2 Median Line Minuette channel - resistance level of 143.20 and 1/2 Median Line Minuette (143.05) will determine the continuation of the upward movement of GBP / USD to the upper boundary of the 1/2 Median Line channel (143.35) of the Minuette operational scale forks and the final Shiff Line Minuette (145.95).

On the other hand, the breakdown of the lower boundary (support level of 142.40) of the 1/2 Median Line Minuette channel will lead to the continuation of the downward movement of GBP / JPY to the initial SSL line (141.55) of the Minuette operational scale forks with the prospect of updating local minimums (141.22 - 140.90 - 140.93).

The details of the GBP / JPY movement, depending on the breakdown direction of the above 1/2 Median Line Minuette channel, are shown in the animated chart.

analytics5e4432d64d0a4.jpg

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The review was compiled without taking into account the news background. Thus, the opening 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 12. Results of the day. Great Britain will be cut off from EU financial markets after Brexit

4-hour timeframe

analytics5e44a0100ab4c.png

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

Average volatility over the past 5 days: 85p (average).

The British currency ends Wednesday, February 12, by continuing upward correction. The pound =dollar pair managed to overcome the critical line, or rather, it did without any problems. And although now the further downward movement has been called into question, it is still impossible to say that an upward trend has begun to form. We continue to believe that the UK macroeconomic statistics and the country's prospects for at least 2020 and 2021 remain so vague that considering the long-term growth of the pound is absolutely groundless. Nevertheless, it should be recognized that the market is not always and not everything is determined by fundamental factors. A banal example: a large player enters the market with a deal to buy a large amount of pounds. He does not pursue the goal of earning exchange differences or making money on this transaction. He needs pounds sterling, for example, to buy British securities or invest in a British company. Thus, the pound may begin to rise in price, as demand for it will sharply increase, and other smaller investors can pick up this movement, which will provoke an upward trend. True, even in this case it is unlikely to be long.

Today it became known that after its final "divorce" with the European Union, the UK will lose access to the financial markets of the bloc. In principle, this is very logical, and Michel Barnier has repeatedly stated that London will not be able to enjoy all the privileges of membership in the EU, while not in the EU. It's clear that Boris Johnson wants to keep as many of Britain's contacts with the EU as possible beneficial to Britain, but at the same time not obey Brussels in any sphere. On the contrary, Brussels wants to tie London to itself as much as possible, and only in this case will it be ready to offer it a really good deal. Not a single important macroeconomic report was published in either the United Kingdom or the United States during the third trading day of the week. However, traders still seem to be impressed by the fourth quarter GDP in the UK. We have already said that this report did not show any increase or improvement. The GDP indicator simply did not change compared to the previous period. The growth rate completely decreased in quarterly terms. However, most traders considered the non-fall in GDP to be great news, as forecasts predicted a decline in growth rates to 0.8% y/y. We still believe that the macroeconomic statistics in the UK continue to deteriorate, and the economy slows down, and this process will continue throughout 2020. Thus, we still consider it appropriate to work out all the sell signals that Ichimoku or any other trading system will generate, since the fundamental background remains in favor of the US currency.

At the moment, the upward movement is already a priority, as the Kijun-sen line is left behind. However, before overcoming the important and technically strong line of Senkou Span B, it is not recommended to seriously consider buying the British currency. We believe that, despite the new "golden cross", the pound/dollar pair may turn down at any moment and resume the downward trend.

Trading recommendations:

GBP/USD continues to adjust against a downward trend. Thus, selling the British pound with targets at levels 1.2863 and 1.2772 can now only be possible after the price has consolidated below the critical line. Purchasing the pair in small lots can now be considered with the first goal of the Senkou Span B line, but it should be understood that the fundamental factors do not remain on the side of the British currency.

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 12. Results of the day. Weak European macroeconomic statistics

4-hour timeframe

analytics5e449d3753719.png

Amplitude of the last 5 days (high-low): 50p - 43p - 43p - 49p - 34p.

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

The EUR/USD currency pair resumed the downward movement on Wednesday, February 12, even without a minimal correction (!!!). There was simply no correction after a six-day continuous fall. The pair stood at the same place most of the night and day trading, and at the US trading session it resumed its downward movement, updated the previous local low, once again worked out the support level of 1.0893. These are the results of the third trading day of the week. We can immediately note that there was no reaction from market participants - neither to yesterday's speech by Jerome Powell, nor to Christine Lagarde's from today. In fact, the heads of central banks did not inform the traders of anything new. Thus, in fact, there was nothing to react to. Thus, no changes in the monetary policies of the ECB and the Fed in the near future are still not expected, and traders are still encouraged to pay increased attention to macroeconomic reports from the eurozone and the United States.

Only one macroeconomic report has been published today. We are talking about industrial production in the European Union. Its value decreased from -1.5% in November to -4.1% yoy in December 2019. In monthly terms, industrial production decreased by 2.1%, while a month earlier an increase of 0.2% was recorded. Forecasts on these indicators were naturally higher, but they were not destined to come true. Thus, we got 14 consecutive months, when industrial production in the EU fell, and also the decline in December was a record for all these 14 months. In monthly terms, we have the largest volume decline in the last 23 months. Despite the fact that this indicator still does not have such a serious impact on the euro exchange rate, such as inflation or GDP, with values that will clearly negatively affect the same GDP, a more serious fall in the European currency could be expected. However, while traders are near two-year lows, the probability of a rebound from the level of 1.0879 and the beginning of an upward trend remains. Just because the bears may again stop selling the euro, for fear of too low price values for the EUR/USD pair. Thus, since the signal for correction was, but was offset (a rebound from the level of 1.0893 yesterday), you can still sell the pair, however, remember that an unexpected upward movement of the pair may occur around the level of 1.0879, even if it will not be substantiated from a macroeconomic point of view.

Meanwhile, US presidential elections are approaching, and various research institutes continue to calculate the likelihood of Trump being re-elected to them. According to another study by the University of Monmouth, 66% of US voters believe that Donald Trump will win the upcoming elections. However, only 42% believe that he should be re-elected for a second term. In other words, Trump's support is now at 42-45%, but most Americans believe that the president will stay for a second term. U.S. elections are becoming more like the British prime minister's election last summer or the MP elections this winter. By and large, here and there there is one odious charismatic applicant, who is criticized a lot, but who is constantly in sight, constantly flashes in the media, in social networks, constantly differs in resonant actions and statements. What do you, dear traders, remember, for example, Joe Biden? In addition, it was precisely because of him that the process of impeachment of Trump began, which, in fact, the incumbent president won. In general, it is difficult to say who will win the US election, but if we were asked who would win, then we would also bet on Donald Trump.

From a technical point of view, the downward movement continues, and the signs of correction all evaporated. A new rebound from the level of 1.0893 may again provoke a rise in the price of the euro, however, given the current macroeconomic statistics from the eurozone, it will be difficult for traders to find reasons for buying the euro.

Trading recommendations:

EUR/USD continues to move down. Thus, it is now recommended that you keep selling the euro while aiming for 1,0893, 1,0869 and 1,0842. An increase from any of these levels will allow you to close sell positions. 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

EUR/USD: coronavirus factor, Biden failure and eurozone industrial production slowdown

The EUR/USD bears again storm the eighth figure, returning to the lows of last year. Judging by the dynamics of decline, sellers will nevertheless overcome the low of 1.0879 and head towards the lower line of the Bollinger Bands indicator on the monthly chart (mark 1.0810). This state of affairs reflects the strength of the US economy - the greenback is in demand both in periods of a surge in anti-risk sentiment and in calmer periods. On the other hand, further revaluation of the dollar will soon turn against the US economy, slowing inflationary growth and negatively affecting the export sector. At the end of 2016 and at the beginning of 2017, the EUR/USD pair sank to the third figure, and the probability of parity was seriously discussed in the market. But then the expensive dollar "hit on" the Federal Reserve with a slowdown in inflation and other related side effects.

analytics5e4494f8f2168.jpg

Now it's too early to talk about parity, but at the same time, the dollar is actively demolishing many of the barriers that previously held back the sellers of the pair. For example, since the fall of last year, the bears have made countless attempts to gain a foothold below the 10th figure. Even if they plunged under the 1.1000 mark, the pair attracted buyers at these levels, after which the price continued to be suspended between 10 and 12 figures.

To date, the situation is somewhat different. It is quite difficult for the pair's bulls to return lost points even during periods of rare corrections, while the dollar receives support both from macroeconomic statistics and from the Fed, which continues to hold a wait-and-see position. In turn, the European currency is under large-scale pressure from all sides: inflation in the eurozone has slowed, Christine Lagarde voices pessimistic forecasts, and Brexit did not bring the long-awaited relief.

All this suggests that the dollar will continue to dominate in the near future, if only January inflation does not alarm dollar bulls (the release is scheduled for tomorrow, February 13). It is noteworthy that the US currency calmly reacted to the Fed report, where regulator members expressed concern about the spread of the Chinese coronavirus. Speaking in Congress, Jerome Powell, on the one hand, focused his attention on this issue. But at the same time, he noted that it is too early to talk about any negative impact on the US economy. In addition, today it became known that the deadly virus has slowed the pace of "planet conquest." Despite the fact that the number of dead and sick has increased, the pace of infection has slowed. But the number of recovered has increased - up to 4740 people (that is, 745 people per day). China also reported the lowest daily number of new cases of coronavirus since late January. Although such news cannot be called encouraging, the foreign exchange market reacted positively to them.

The dollar was not afraid of the political factor either. Although all the preconditions for the greenback reduction were: yesterday, former US Vice President Joe Biden, who was considered the favorite of the presidential race from the Democratic Party, lost the second primaries. But Senator Bernie Sanders, who calls himself a "democratic socialist," unexpectedly took the lead in the election race among the Democrats. Young people voted for him, as well as representatives of the African American and Spanish communities in the United States. According to experts, he currently wins with a score of 48% versus 42% in the competition with Trump.

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Sanders has a reputation for being almost a "communist," as he offers US society to introduce the principles of free medicine, free college education, a program of guaranteed jobs and write-offs of student debts. He also advocates for narrowing the wage gap between top managers and employees. According to some experts, if Sanders wins (and this option can no longer be ruled out), the budget deficit will increase in many ways, and "the printing press will work without stopping." Naturally, such prospects, albeit still hypothetical in nature, could exert background pressure on the US currency.

But the market has so far calmly reacted to such trends. Apparently, traders do not yet believe that a "democratic socialist" will be able to remove the Republican president (although Trump's victory also seemed extremely unlikely at the time). And Trump's rating significantly increased after his impeachment in the Senate failed miserably. According to a survey by the University of Monmouth, most US citizens are confident that the president will achieve re-election. According to the study, 66% of U.S. voters predict Trump's victory in the November elections, and only 28% believe he will lose. Therefore, dollar bulls so far ignore Sanders' breakthrough, although, in my opinion, this is a time bomb.

It is also worth noting that the European currency is too weak to compete for leadership in tandem with the dollar. Today it became known that the volume of industrial production in the eurozone countries fell to -2.1% on a monthly basis and to -4.1% on an annualized basis. Both indicators came out in the red zone, not significantly reaching the forecast values. Such dynamics put additional pressure on the euro, which is still knocked down after the slowdown in inflation growth and soft comments of ECB members.

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Thus, the EUR/USD bears have every chance to update the low of the current and previous year. Sellers of the pair may come to the middle of the eighth figure tomorrow, especially if US inflation will surprise investors with significant growth.

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

GBP/USD: although the pound is rapidly growing, it might be short-lived

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The British currency has taken a hit in recent days, falling from $1.3220 to $1.2900 against the US dollar since the beginning of February and experiencing its worst week since the December MP elections.

However, the GBP/USD pair did not trade for long at 1.2900. After a short drawdown, it reversed, rebounding from 2.5-month lows, and rushed to local highs near 1.30.

The data released on the eve showed that the British economy managed to avoid a recession in the fourth quarter, and production activity in the country recovered in December after the November recession.

Signs of a recovery in the economy after the Conservative Party confidently won early elections allowed the Bank of England not to cut interest rates last month.

BoE Chief Mark Carney said yesterday that the central bank could refrain from lowering rates at the next meeting on March 26, as the British government is preparing projects to stimulate the national economy through fiscal policy. Public spending, according to Carney, will contribute to inflation, which allows the regulator to take a break to assess the prospects for economic growth in the United Kingdom.

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Based on the fact that the prospects for Great Britain's economy are quite positive, the pound's decline in February is only a fairly strong correction and a return to a powerful support zone at the level of 1.2850–1.29. When you repel from this zone, a reversal pattern begins to take shape upward, which is still not very clearly formed. The cautious positive of recent statistics supports this movement. With its development, the nearest targets may be the levels of 1.3050–1.31.

However, in the first quarter of 2020, the rate of economic growth in the UK may slow down due to investor concern over the course of trade negotiations between London and Brussels. This will inhibit the investment activity of British companies. Uncertainty surrounding Brexit could increase when there is doubt about the ability of the UK and the EU to close the deal before the end of the year, when the transition period should end.

In this regard, despite the current recovery of the pound, its upward trend may turn out to be short-lived.

An alternative scenario, also possible with increasing pressure from the dollar, is to overcome the GBP/USD down the area of 1.2830-1.2850. In this case, we should expect the pair to fall to the support of 1.2750.

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