Trading plan on EUR/USD for February 19, 2020. Poor German data pushed the euro below 1.0800

analytics5e4cd15a8c5a6.jpg

Update on the coronavirus epidemic in China:

The number of infected people increased to 74 thousand (+2 thousand per day), while the number of deaths is now 2 000 (+10% per day).

The epidemic is now confined in Hubei, a province of China, and the number of infected people is decreasing outside the province. There is a good chance that the growth of the epidemic will stop soon, as the growth of newly infected has decreased significantly.

EUR/USD: Bad data on the German economy released on Tuesday dropped the euro below 1.0800. The currency remains in a downward trend. The yen and the franc are also falling against the dollar, but these currencies still have ranges, and there is no trend.

Today, the US inflation report will be released at 14:30 London time.

Keep selling from 1.0990.

Sales, with rebounds to the top, are possible from 1.0860 and above.

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

Hot forecast for GBP/USD 02/19/2020 and trading recommendation

Yesterday's development of events clearly demonstrated that the pound does not have the strength to independently change the trend for the strengthening of the dollar. On the whole, good data on the labor market made it possible for the pound to slightly improve its position. But only for a while, as it already returned to where it started when the US session opened. And today, it can repeat yesterday's scenario.

analytics5e4cd8085dee9.png

The first thing that catches your eye is the unemployment rate, which has remained unchanged, which means it continues to be at the lowest level of 3.8% since the first half of the 70s. Moreover, it has been at this level for four consecutive months. The growth rate of the average wage, and even taking into account overtime, slowed down from 3.2% to 2.9%, which is significantly worse than even the most pessimistic forecasts of 3.0%. This means that consumer activity will inevitably decline. Another thing is that the negative salary was more than offset by applications for unemployment benefits, of which there were only 5.5 thousand, instead of 15.0 thousand. Moreover, the previous data was reviewed for the better, from 14.9 thousand to 2.6 thousand. Employment did not grow by 120 thousand, but by 180 thousand. That is, the slowdown in wage growth is offset by a good increase in employment. In other words, salaries may not grow, but there are more of those who are employed. So aggregate demand should only grow.

Unemployment Rate (UK):

analytics5e4cd82a8fed1.png

But this was only enough for the pound to temporarily strengthen its position. Since everything has returned to normal when the US session opened. And apparently, today we are waiting for a repetition of yesterday's scenario. The pound will begin with inflation in the UK, which should grow from 1.3% to 1.4%. To some extent, this will confirm that employment growth fully compensates for the slowdown in wage growth and that nothing threatens aggregate demand.

Inflation (UK):

analytics5e4cd84be5893.png

But the pound will be forced to return when the US session opens. This time, for a completely objective reason, in the form of an acceleration in producer prices in the United States, from 1.3% to 1.7%. After all, this means that nothing is threatening inflation, which is above the target level of 2.0%, which means that the Federal Reserve has more reason to think about raising the refinancing rate. What can be reflected in the content of the minutes of the meeting of the Federal Open Market Committee. The text of which is set to be released today.

Manufacturer Prices (United States):

analytics5e4cd86008782.png

In terms of technical analysis, an attempt was made to work out the psychological level of 1.3000, both in the downward and in the upward direction, but in the end the quotation continued a peaceful fluctuation along the control level. In fact, we have been concentrating within the range of 1.3000 for 2.5 days, without having any fundamental changes.

Considering the trading chart in general terms, we see a fluctuation that remains within the top of the medium-term upward trend, where the clock component is already in the process of changing the mood.

It is likely to assume that the quotation will continue to concentrate within 1.2980/1.3050, where the current consolidation of 1.2992/1.3005, may play the role of local acceleration. The tactics of work are considered in terms of the initial move in the direction of 1.2950, at the time of the breakdown of consolidation, with the subsequent return of the price to the area of 1.2980/1.3000.

From the point of view of a comprehensive indicator analysis, we see a stable downward interest that occurs in a single burst when the price is concentrated within the psychological mark of 1.3000. In case of continued amplitude fluctuations, indicators for shorter periods will be unstable.

analytics5e4cd88f4f4cf.png

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

GBP/USD: plan for the European session on February 19. COT reports indicate an increase in long positions on the pound. Pound

To open long positions on GBP/USD you need:

Yesterday, the UK labor market data helped the pound get to the upper boundary of the side channel of 1.3052, however, it was not possible to go beyond its limits, as a result, the bulls even managed to miss the 1.3010 area, below which trade is now conducted. Of the COT reports (Commitment of Traders) for February 11, there was an increase in long non-profit positions from 59,650 to 65,000, while short non-profit positions continued to decline and amounted to 43,922 against the level of 46,672 a week earlier. As a result of this, the non-profit net position almost doubled to the level of 21,084 from 12,000, which indicates bullish market sentiment in the medium term. Today's release of an important inflation report can determine the direction of the pound. A return and consolidation at the level of 1.3010 will be the first signal to open long positions in GBP/USD, which will lead to larger growth in the area of a high of 1.3052, on which the pair's further direction depends. Consolidating above this level will open a direct road to the area of 1.3093 and 1.3133, where I recommend taking profits. In the scenario of maintaining pressure on the pound, it is best to return to long positions only after the formation of a false breakout in the support area of 1.2967, but I recommend buying GBP/USD immediately for a rebound after updating a low of 1.2928.

To open short positions on GBP/USD you need:

Bears today will closely monitor the report on the consumer price index in the UK, since weak inflation will allow the Bank of England to lower interest rates without hesitation if necessary. The formation of a false breakout in the resistance area of 1.3010 will be a direct signal to open short positions, which will lead to a test of the lows 1.2967 and 1.2928, where I recommend taking profits. If the inflation rate is not as weak as economists expect, then the bulls will regain the 1.3010 area. In this case, it is best to consider new short positions only after updating the high at 1.3052, or sell GBP/USD immediately for a rebound from the 1.3092 area with the aim of a downward correction of 20-30 points.

Signals of indicators:

Moving averages

Trading is carried out below 30 and 50 moving average, which saves the likelihood of continued decline in the pound.

Bollinger bands

A break of the lower boundary of the indicator in the region of 1.2975 will increase the pressure on the pair. A break through the upper level at 1.3040 will lead to an increase in GBP/USD.

analytics5e4cccfcb2270.png

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between short and long positions of non-profit traders.
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD: plan for the European session on February 19. Sharp rise in euro short positions continues to push the market down.

To open long positions on EURUSD you need:

Yesterday's reports on Germany and the eurozone kept the bearish sentiment in the market, and a small attempt to restore the euro at the beginning of the US session was only associated with the closing of short positions by speculative players. There are no signs of a reversal of the pair. From February 11 COT reports (Commitment of Traders) there was a sharp increase in short non-profit positions from 242 005 to 255 144, while long non-profit positions remained almost unchanged and increased from 166 925 to 169 475. As a result, non-profit the net position became even more negative from -75,000 to -85,669. All this indicates the prevalence of bearish sentiment in the market. Currently, buyers are fighting for an intermediate level of 1.0795, but I do not recommend opening long positions from it. Only after a decline and the formation of a false breakout in the area of 1.0770, with the confirmation of divergence on the MACD indicator, will it be possible to count on the first major buyers of the euro. Otherwise, long positions are best considered for a rebound from the low of 1.0740, but there is no special faith in it either. A breakthrough and consolidation above the resistance of 1.0825 will be an equally important task for the bulls, since only after that will it be possible to reflect on the topic of building an upward correction in the European currency to the areas of 1.0860 and 1.0886, where I recommend taking profit.

To open short positions on EURUSD you need:

Sellers continue to update annual lows every day, and today the emphasis will be shifted to support 1.0770, a breakthrough of which will only increase pressure on the euro, which will lead to a test of the 1.0740 area and an update of the 1.0711 range, where I recommend taking profits. The bears need to be in time to do this before the minutes are published from the January meeting of the Federal Reserve, although we are unlikely to see anything new in them either. The first signal to sell the euro in the morning will be a return to the level of 1.0795. In case of an upward correction, a good area for opening short positions will be the highs of 1.0825, but it is best to wait until the formation of a false breakout, but I recommend selling EUR/USD immediately for a rebound from the level of 1.0860.

Signals of indicators:

Moving averages

Trade is conducted below 30 and 50 moving averages, indicating that the euro could decline further.

Bollinger bands

Testing the lower boundary of the indicator at 1.0780 may limit the euro's fall. A break of the upper level of 1.0825 will lead to a sharp increase in EUR/USD.

analytics5e4ccc498ec4b.png

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between short and long positions of non-profit traders.
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of ETH/USD for 19/02/2020:

Crypto Industry News:

A successful tokenization attempt may lead to major changes in Russia's cryptocurrency legislation.

The Central Bank of Russia (CBR) today announced the end of pilot Blockchain tokenization using a platform developed by Nornickel as part of its regulatory sandbox. The bank then proposed to change Russian law on digital assets to bring it into tokenization platforms.

The platform is open to all organizations and allows them to issue hybrid tokens supported by a resource basket. It is said that this technology expands financing opportunities for enterprises, while also providing new investment opportunities for users.

The head of the CBR fintech department, Ivan Zimin, noted that it was one of the largest projects supported by the sandpit. He was particularly excited about the possibility of issuing hybrid tokens, believing that they could "quickly adapt to the requirements of companies and users."

Zimin also revealed that the bank proposed a regulatory change based on the results of the pilot project:

"Following the results of the pilot program, the Central Bank of Russia proposed amendments to the draft federal law" On digital financial assets "that are required to integrate and develop these solutions in the growing market of digital assets," he said.

The platform was developed by Nornickel, one of the largest mining companies in the world. The corporation previously developed a palladium tokenization platform and began testing the digital asset trading platform in December 2019.

Technical Market Overview:

The ETH/USD pair has broken through the short-term trendline resistance located at the level of $266 and shoots up towards the recent swing high. Nevertheless, the high has not been hit yet as the rally was capped around the level of $285.55. The local counter-trend corrective cycle might start any time soon and the first target for bears is seen at the level of $275.41 - $272.02 zone.

Weekly Pivot Points:

WR3 - $358.03

WR2 - $324.90

WR1 - $285.60

Weekly Pivot - $248.62

WS1 - $213.91

WS2 - $176.19

WS3 - $141.12

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. The current move up might be a wave 3 in developing in the overall long-term Elliott wave scenario and so far the top at the level of $288.01 might be the wave 1 of the overall wave 3.

analytics5e4cc9751a0d7.jpg

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

Technical analysis of BTC/USD for 19/02/2020:

Crypto Industry News:

Lawmakers in Brazil received support to regulate the cryptocurrency market following allegations of fraud at Atlas Quantum, Zero10 and Trader Group last year. In February, the fruit of these activities appeared. The media reported that two large cryptocurrency exchanges based in Brazil have closed their operations due to the threat of high fines and direct effects of the regulations.

Acesso Bitcoin was one of the exchanges that voluntarily closed down. Its co-founder Pedro Nunes was quoted by a cryptographic portal said:

"After the introduction of these regulations by the Federal Tax Office, we noticed a significant decrease in trading volume. We also believe that the market has cooled down for smaller exchanges," he says.

Latoex, another cryptographic exchange from Brazil, has similar problems. Above the company hangs a fine of 100,000 Brazilian realities if it fails to comply with the suspension order issued by the Brazilian Securities and Exchange Commission.

Because Brazil does not currently have a dedicated right to deal with cryptocurrencies, all exchanges fall under the scope of normative instruction No. 1888 issued by the Federal Revenue Department. All companies carrying out cryptographic transactions in Brazil must report them or be fined between $ 120 and $ 360.

Both chambers of the Brazilian National Congress are examining proposals to regulate the national cryptographic industry. Meanwhile, the Senate is reviewing two other laws, PL 3825/2019 and PL 3949/2019. Since February 2020, no specific legislation has been introduced to establish rules for the cryptocurrency market in Brazil.

Technical Market Overview:

The BTC/USD pair has rallied to the level of $10,000 again and made a new local high at the level of $10,227. It means that the 61% Fibonacci retracement has been clearly violated and currently the market is consolidating the recent gains around the level of $10,000, which is the nearest technical support for the price. If, however, the bulls will decide to continue the rally, then the next target is seen at the very top at the level of $10,452.

Weekly Pivot Points:

WR3 - $11,039

WR2 - $10,715

WR1 - $10,112

Weekly Pivot - $9,845

WS1 - $9,424

WS2 - $8,941

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 $10,433 is clearly broken.

analytics5e4cc7cd84f2a.jpg

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

Technical analysis of GBP/USD for 19/02/2020:

The GBP/USD pair has been hovering around the level of 1.3000 after a failure to get back to the channel. The Bearish Engulfing pattern has been made around the lower channel line at 1.3035 and since then the bears have took control of the market. Nevertheless, the move upwards looks corrective so far, and 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 bulls is seen at the level of 1.3047 and the local support is seen at the level of 1.2988.

Weekly Pivot Points:

WR3 - 1.3333

WR2 - 1.3194

WR1 - 1.

Weekly Pivot - 1.3006

WS1 - 1.2943

WS2 - 1.2804

WS3 - 1.2739

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.

analytics5e4cc60963b19.jpg

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

Technical analysis of EUR/USD for 19/02/2020:

Technical Market Overview:

The EUR/USD pair is back in the descending channel and another lower low at the level of 1.0785 was made. 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 1.0772 and the immediate technical resistance is seen at the levels of 1.0832 and 1.0823. Beware of short-squeeze.

Weekly Pivot Points:

WR3 - 1.1027

WR2 - 1.0991

WR1 - 1.0896

Weekly Pivot - 1.0858

WS1 - 1.0763

WS2 - 1.0726

WS3 - 1.0633

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.

analytics5e4cc4f62d438.jpg

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

Forecast for EUR/USD on February 19, 2020

EUR/USD

Yesterday, the ZEW Institute's data on business sentiment in the eurozone for February showed a real collapse of the indices: the German ZEW Economic Sentiment fell from 26.7 to 8.7 while expecting a less painful decline to 20.0, the European index dropped from 25.6 to 10.4 against forecast 21.3. According to the results of the day, the euro lost 43 points, and there was a struggle in the range of 40 points during the US session, which may indicate a partial consolidation of investors' profits before today's data on the construction and release of FOMC Fed minutes from the last meeting.

analytics5e4cc01fc5a9e.png

On the daily chart, the Marlin oscillator shows the intention of a reversal up. It probably needs a discharge from the oversold zone.

analytics5e4cc03538423.png

A double convergence according to Marlin was almost formed on the four-hour chart. Unless a reverse movement forms under the generatrix of the azure line, which on the price chart will correspond to price taking below yesterday's low, then we expect a correctional growth of the euro to the resistance of the Fibonacci level of 161.8% at 1.0840 (daily). The correction potential is about 70 points to the MACD line (1.0875). If the price consolidates below yesterday's low of 1.0786, the price can work out the lower Fibonacci level of 200.0% at 1.0745. But in this case, the oversold spring will contract even more and corrective growth could be more significant.

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

Forecast for GBP/USD on February 19, 2020

GBP/USD

The British pound traded in the range of around 80 points on Tuesday, the upper limit of which was the Fibonacci level of 76.4% on the daily chart. Price development took place under the line of balance (red indicator), which indicates the predominance of sellers, but the signal line of the Marlin oscillator lies on the boundary dividing the potential growth and decline zones. The main scenario for further development is still the pound's fall to the Fibonacci level of 110.0% at the price of 1.2845.

analytics5e4cbfd53a89a.png

The lower boundary of yesterday's range was the MACD line on the H4 chart. Overcoming this support, below 1.2967, will include the main scenario in action. The departure of the Marlin signal line to the negative zone enhances the likelihood of this scenario.

analytics5e4cbfeb59b63.png

But the price of four sessions can not overcome the support of the MACD line. Delaying this important step can lead to even greater activity from the bulls, who felt the weakness of the bears. Data on construction in the US for January will be released today, the forecast for new housing starts is 1.40 million compared to 1.61 million in December, and this may serve as an incentive for another attack on the Fibonacci level of 76.4%. We are waiting for the development of events.

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

Forecast for USD/JPY on February 19, 2020

USD/JPY

The Japanese yen has been consolidating under the MACD line on the daily chart for nine trading sessions. Currently, the price is already breaking this line (110.02), opening the nearest target at 110.27 - the line of the growing green price channel. If growth takes place, then there is a very high probability to break through the green channel line and then growth will continue to the target range of 110.83/98.

analytics5e4cbf3521e6d.png

The Marlin oscillator remained in the rising trend zone on all the days of the observed consolidation. The Japanese stock market is also optimistic - the Nikkei 225 grew by 0.55% today against the US S&P 500 which fell by 0.29% yesterday.

analytics5e4cbf4a4ab79.png

On the four-hour chart, the price received support from the MACD line, while Marlin moved to the growth zone. All conditions are ready for a breakthrough.

The critical level that cancels the ongoing growth is 109.70 - support for the MACD line on H4. Consolidating below the level when the Marlin signal line goes into the zone of negative values on the daily may cause the price to fall to the support of the embedded line of the green price channel, to the 107.93 area. The formation of such a signal will take at least two days.

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

Overview of the GBP/USD pair. February 19. The key event of the day: inflation in the UK

4-hour timeframe

analytics5e4c82c16a4ca.png

Technical details:

Higher linear regression channel: direction - sideways.

Lower linear regression channel: direction - downward

Moving average (20; smoothed) - sideways.

CCI: -10.5743

The GBP/USD currency pair remains above the moving average line with great difficulty on February 19 and is now thinking about which way to move next. On the one hand, there is still an upward trend. On the other hand, there are no forces for the bulls to move up and there are no fundamental reasons for buying the British currency. In the first two trading days of the week, macroeconomic statistics from Britain provided little support for the British currency, however, the most important indicators again showed a negative trend. This is why the UK economy continues to slow down and key indicators of its condition continue to decline. Moreover, almost every day traders receive information that negotiations on a trade deal between Britain and the European Union are becoming more complicated, even before they have even begun. Both sides put forward completely opposite conditions and declare that they will not make a deal without the other party fulfilling them. Thus, two weeks before the official start of the negotiations, we can only say that there is no understanding between Brussels and London. Thus, the negotiations will be extremely difficult. Well, for the pound, the failure of negotiations only means a potential new fall against the US currency. In this case, the UK economy will be subjected to another strong blow and will continue to slow down with a 95% probability.

analytics5e4c82da407ac.png

On Wednesday, February 19, one important macroeconomic report is scheduled in the UK. We are talking about inflation in January. According to experts' forecasts, the consumer price index will grow to 1.6% in annual terms and will lose 0.4% in monthly terms. Given the fact that since August 2018, inflation in Britain has been slowing almost non-stop. In January, it turns out that the first serious acceleration in a year and a half may follow. However, only the consensus forecast indicates the value of +1.6% y/y. Many other experts say that the figure does not exceed 1.4% y/y. Thus, given that the indicator should decrease on a monthly basis, we believe that the forecast of 1.6% will not be fulfilled. Recall that the British currency will receive support only if the forecast is confirmed by the real value or even exceeded. Otherwise, most likely, traders will be disappointed again, which may cause new sales of the British currency. The pound in recent weeks can not determine the direction of movement and it is constantly thrown from side to side. Thus, it is impossible to be sure of logical processing of macroeconomic information for traders.

analytics5e4c82f0a73df.png

It is also worth noting a more secondary indicator of core inflation, which does not take into account changes in the cost of seasonal goods, food, and energy, which are volatile or unpredictable. Thus, it is the basic CPI that is the more accurate measure of inflation. However, even in this case, nothing good is observed for the UK, since the base indicator is also slowing down, as well as the main one. In recent months, it has fallen to 1.4% y/y, and experts' forecasts suggest that it may accelerate to 1.5% y/y in January. In the same way with the main indicator, it is necessary to exceed the forecast value in order for the pound to be in demand at today's trading. A very minor retail price index that reflects changes in prices only for a certain group of products, which is formed based on the subsistence minimum, is unlikely to interest market participants seriously.

There won't be a single important publication in the United States today or tomorrow. There will only be a secondary producer price index, which is also likely to be ignored. From a technical point of view, the upward movement may resume, but much will depend on the nature of macroeconomic statistics from Albion.

analytics5e4c830a1385f.png

The average volatility of the pound/dollar pair has decreased to 73 points over the past 5 days and continues to decline overall. According to the current volatility level, the working channel on February 19 will be limited to the levels of 1.2927-1.3071. Today will depend on the only report on inflation in Britain.

Nearest support levels:

S1 - 1.3000

S2 - 1.2970

S3 - 1.2939

Nearest resistance levels:

R1 - 1.3031

R2 - 1.3062

R3 - 1.3092

Trading recommendations:

The GBP/USD pair held above the moving average line. Thus, purchases of the pound with a target of 1.3062 remain relevant as long as the pair remains above the moving average. The macroeconomic background may support the British currency today. It is recommended to return to more reasonable sales of the pound after fixing the price below the moving average line with the first targets of 1.2970 and 1.2939.

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.

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

Overview of the EUR/USD pair. February 19. The Democrats' war against Donald Trump continues. China waives the duty on oil

4-hour timeframe

analytics5e4c825aacb5b.png

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - down.

CCI: -129.5954

For the EUR/USD pair, the third trading day of the week starts from the same point as the previous 16 days, with a downward movement that does not stop. Over the past day, the pair's quotes managed to work out the Murray level of "1/8"-1.0803, however, there was no hint of a rebound from this level. The Heiken Ashi indicator remains directed downward, which also indicates that there is no correction. Several minor publications on Tuesday failed to change the mood of market participants, so a fairly strong downward trend remains, and the downward movement may continue for a long time. The longer the euro falls, the more we get the feeling that the market is looking for a certain level at which large deferred purchases are located. It is from this level that a rebound can follow with the beginning of a correction, which will later be picked up by the bulls. We would like to assume that some fundamental event may trigger a correction, however, the chances are too small, given the fact that macroeconomic statistics from the European Union continue to fail from time to time, while in the United States, on the contrary, continues to strengthen.

The case for the impeachment of Donald Trump is closed, however, the Democrats continue to exert all sorts of pressure on the US President. For example, the Speaker of the House of Representatives, Nancy Pelosi, who is remembered for tearing up the text of Donald Trump's speech right behind his back and generally showed all sorts of hostility to the odious leader, said that she could not imagine a situation in which Trump would be re-elected for a second term. According to Pelosi, the impeachment of Donald Trump has been announced and the president will not be able to wash away this stigma. Formally, Trump is acquitted. However, Pelosi said it was only because the Senate refused to call new witnesses in the process of considering the case, who could and would have provided new documents and evidence of the US President's guilt. "You can't justify anyone if there is no trial. And you can't have a trial if you don't have witnesses and documents. He (Donald Trump) can say that he was acquitted and the headlines in the press can say "acquitted", however, he was impeached and this mark will remain on him forever," the Speaker of the Lower House said. Nancy Pelosi also called on party members to show "unity" and make every effort to prevent Trump from being re-elected for a second term. "I can't imagine a situation where he was re-elected. We (Democrats) have our own vision of the future. We must be united in order to prevent him from being elected for a second term," Pelosi concluded.

Thus, the point in the confrontation between the Democrats and the Republicans, which, under the presidency of Donald Trump, reached its zenith and clearly no longer fits into the term "fair competition," is still early. Recall that in November 2020, the US presidential election will be held, in which Trump expects to win. His political ratings continue to grow according to various sociological studies, however, he still loses to almost any candidate from the Democratic Party. By the way, have you noticed how abruptly Trump stopped making loud statements via Twitter, how the topic of trade negotiations with China came to naught? After all, negotiations on the "second phase" of the trade agreement should already begin right now. However, there is no information about this, although both Steven Mnuchin and Donald Trump regularly made statements during the entire period of the "first phase" negotiations. We believe that the US President decided in the last months of the election race to put himself in the most attractive light before the Americans. To this end, he no longer wants to make high-profile statements that may be negatively perceived by some segments of the US population. Especially if these layers are still in doubt about who to support in the upcoming elections.

Meanwhile, the Chinese Ministry of Finance has published a list of nearly 700 American products that will be exempt from the duties imposed earlier. This list includes agricultural products and energy resources. According to the agreement, which the parties signed on January 15, China should increase the purchase of agricultural products in the United States to $200 billion over the next two years, as well as increase the purchase of raw materials to $95 billion. Thus, it is logical that these goods, which China will now have to buy without fail, should be excluded from the list of sanctions.

From a technical point of view, the downward movement continues. All trend indicators continue to be directed downward. Today, neither the European Union nor the United States has any significant publications planned, so the impact of fundamental factors on the mood of market participants will be minimal.

analytics5e4c8273c59d7.png

The average volatility of the euro/dollar currency pair has increased slightly and is now 45 points. However, on average, the pair continues to pass 40-50 points a day, and this indicator does not change. On Wednesday, we expect movement between the borders of the volatility corridor of 1.0745-1.0835. The fundamental background will be extremely weak again, and the Heiken Ashi indicator will announce the possible start of correction by turning up.

Nearest support levels:

S1 - 1.0803

S2 - 1.0742

S3 - 1.0681

Nearest resistance levels:

R1 - 1.0864

R2 - 1.0925

R3 - 1.1047

Trading recommendations:

The euro/dollar pair continues to move downwards calmly. Thus, sales of the euro with the targets of 1.0745 and 1.0681 remain relevant now, which can be kept open until the Heiken Ashi indicator turns up. It is recommended to buy the EUR/USD pair no earlier than the bulls cross the moving average line with the first target of 1.0925.

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.

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

Trade Of The Day - GBP/NZD Video Analysis

Our trade of the day today is GBP/NZD! We use Fibonacci retracements, extensions, support/resistance, momentum and trend lines to identify trading opportunities in this exciting pair today!

Feel free to ask me questions on the analysis here: https://forum.mt5.com/showthread.php?226855-Dean-s-Daily-Video-Analysis-Instaforex-Chief-Strategist&p=14079976&

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

What are the major institutions trading? | Weekly Commitment of Traders (COT) report (17/2 to 21/2)

analytics5e4c96d188698.jpg

analytics5e4c96877db6e.jpg

Our strongest currency is the US Dollar with a bullish strength factor of 1.73 and with institutions adding more long contracts.

Our weakest currency is the New Zealand Dollar with a bearish strength factor 1.43 and with a net bearish positions of 2,287 meaning that there are a lot of institutions adding on to their short positions (2,983) while at the same time, reducing their long positions (-696).

With a weak NZD and a strong USD, it would be good to look for short NZD/USD positions for this week.

Also worth noting are the weak Japanese Yen, Australian Dollar and the strong Euro, Pound and Canadian dollar.

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

Fractal analysis of the main currency pairs for February 19

Forecast for February 19 :

Analytical review of currency pairs on the scale of H1:

analytics5e4c839832f5b.png

For the euro / dollar pair, the key levels on the H1 scale are: 1.0891, 1.0861, 1.0832, 1.0807 and 1.0751. Here, mainly, we expect a movement in correction from a downward trend. Short-term upward movement is expected after the breakdown of the level of 1.0807. Here, the target is 1.0832. The breakdown of which will lead to in-depth movement. In this case, the target is 1.0861. This level is a key resistance for the subsequent development of the ascending structure. For the potential value for the top, we consider the level of 1.0891. We await the design of expressed initial conditions before this value.

A potential value for the downward movement is the level of 1.0751, however, we consider the movement to this level as unstable.

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

Trading recommendations:

Buy: 1.0807 Take profit: 1.0830

Buy: 1.0834 Take profit: 1.0860

Sell: Take profit:

Sell: Take profit:

analytics5e4c83f813c36.png

For the pound / dollar pair, the key levels on the H1 scale are: 1.3182, 1.3157, 1.3114, 1.3082, 1.3045, 1.2990, 1.2961 and 1.2928. 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 1.3045. In this case, the target is 1.3082. Short-term upward movement, as well as consolidation is in the range of 1.3082 - 1.3114. The breakdown of the level of 1.3114 will lead to a pronounced movement. In this case, the potential target is 1.3157. Upon reaching which, we expect a consolidated movement in the range 1.3157 - 1.3182, as well as a correction.

Short-term downward movement is possibly in the range of 1.2990 - 1.2961. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.2928. This level is a key support for the upward structure.

The main trend is the ascending structure of February 10.

Trading recommendations:

Buy: 1.3045 Take profit: 1.3080

Buy: 1.3083 Take profit: 1.3112

Sell: 1.2990 Take profit: 1.2962

Sell: 1.2959 Take profit: 1.2930

analytics5e4c83cc69690.png

For the dollar / franc pair, the key levels on the H1 scale are: 0.9899, 0.9883, 0.9858, 0.9819, 0.9804 and 0.9783. Here, we are following the local ascendant structure of February 12. The continuation of movement to the top is expected after the breakdown of the level of 0.9858. In this case, the target is 0.9883. We consider the level of 0.9899 to be a potential value for the ascending structure. Upon reaching which, we expect consolidation, as well as a pullback to the bottom.

Short-term downward movement is possibly in the range of 0.9787 - 0.9771. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9783. This level is a key support for the top.

The main trend is the local potential for the top of February 12

Trading recommendations:

Buy : 0.9858 Take profit: 0.9880

Buy : 0.9883 Take profit: 0.9899

Sell: 0.9819 Take profit: 0.9805

Sell: 0.9803 Take profit: 0.9784

analytics5e4c8411ad764.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 latter 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

analytics5e4c842cdfed6.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 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

analytics5e4c844a67e71.png

For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6733, 0.6718, 0.6701, 0.6668, 0.6645, 0.6614 and 0.6594. Here, we determined the subsequent targets on the H1 scale from the descending structure on February 12. The continuation of the movement to the bottom is expected after the breakdown of the level of 0.6668. In this case, the target is 0.6645. Price consolidation is near this level. The breakdown of the level of 0.6645 should be accompanied by a pronounced movement to the level of 0.6614. For the potential value for the bottom, we consider the level of 0.6594. Upon reaching which, we expect consolidation, as well as a rollback to the top.

A correction is expected after the breakdown of the level of 0.6701. In this case, the target is 0.6718. There is a short-term upward movement in the range 0.6718-0.6733. The breakdown of the level of 0.6733 will lead to the formation of initial conditions for the top. Here, the target is 0.6761.

The main trend is the descending structure of February 12

Trading recommendations:

Buy: 0.6701 Take profit: 0.6716

Buy: 0.6718 Take profit: 0.6732

Sell : 0.6668 Take profit : 0.6647

Sell: 0.6643 Take profit: 0.6616

analytics5e4c8467cea3f.png

For the euro / yen pair, the key levels on the H1 scale are: 119.46, 119.09, 118.85, 118.36, 118.13 and 117.64. Here, we are following the descending structure of February 5. Short-term downward movement is expected in the range of 118.36 - 118.13. The breakdown of the last value will lead to the movement to the potential target - 117.64, when this level is reached, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 118.85 - 119.09. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 119.46. This level is a key support for the downward structure.

The main trend is the descending structure of February 5

Trading recommendations:

Buy: 118.85 Take profit: 119.07

Buy: 119.12 Take profit: 119.44

Sell: 118.36 Take profit: 118.14

Sell: 118.11 Take profit: 117.66

analytics5e4c8484bb613.png

For the pound / yen pair, the key levels on the H1 scale are : 145.19, 144.57, 144.12, 143.50, 142.75, 142.47 and 142.08. Here, we are following the ascending structure of February 10. The continuation of movement to the top is expected after the breakdown of the level of 143.50. In this case, the goal is 144.12. The breakdown of this value will lead to short-term upward movement in the range 144.12 - 144.57. Hence, there is also a high probability of a reversal to correction. For the potential value for the top, we consider the level of 145.19. Upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement, as well as consolidation, are possible in the range of 142.75 - 142.47; hence, the likelihood of a reversal to the top. The breakdown of the level of 142.47 will lead to an in-depth correction. Here, the goal is 142.08. This level is a key support for the top.

The main trend is the rising structure of February 10

Trading recommendations:

Buy: 143.50 Take profit: 144.12

Buy: 144.15 Take profit: 144.50

Sell: 142.75 Take profit: 142.50

Sell: 142.44 Take profit: 142.10

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

GBP/USD. February 18. Results of the day. Pound completely lost in the wilds of the foreign exchange market

4-hour timeframe

analytics5e4c851e649d8.png

Amplitude of the last 5 days (high-low): 74p - 43p - 126p - 62p - 56p.

Average volatility over the past 5 days: 73p (average).

Tuesday, February 18, was held in completely illogical and versatile bidding for the British pound. One gets the impression that traders are completely unaware of which direction they need to trade in now. The GBP/USD currency pair continues to be traded inside the Ichimoku cloud, today it once again worked out its upper border, the Senkou Span B line, bounced off it again and now again tries to resume its downward movement. At the same time, a weak buy signal from Ichimoku Golden Cross remains. Bollinger Bands began to narrow, indicating the completion of the upward movement. In the current situation, it is not recommended to trade for increase or decrease in usual volumes.

We have repeatedly said that the British pound has no reason to strengthen. That is, the absolutely reasonable movement would now be a downward movement. However, for some reason the bears do not want to start selling, so the current situation is very similar to the euro's situation, which we deemed paradoxical. Recall that this is a situation in which the bears have all the necessary fundamental factors for selling, but do not want to carry them out, and the bulls do not have any macroeconomic basis for purchases, therefore they are content to open only short-term positions that a priori cannot help form an upward trend. If you look at the 24-hour timeframe, the whole picture of the currency pair now looks like a classic "swing". Trend movement is completely absent, but the downward trend still persists.

A new portion of fundamental information has arrived from the UK today, February 18. It is easy to guess that most of it was again disappointing. In the morning article, we listed all the macroeconomic reports that are worth paying attention to. Now we analyze them. The least interesting unemployment rate was 3.8% at the end of December, as analysts expected. More interesting data on the number of applications for unemployment benefits during January showed 5,500 instead of the expected 22,600. Thus, this report can be regarded as positive for the British currency. However, the positive news ends here. The average salary including bonuses in December showed an increase of only 2.9% against the previous value of +3.2% and the forecast of +3.0%. The average salary, excluding bonuses, showed an increase of 3.2% against the forecast of +3.3% and the previous value of +3.4%. Thus, the most important indicator, from our point of view, turned out to be worse than the expectations of traders. Thus, the whole news package from the UK can not be called uniquely disastrous, but it could not support the British pound. The British currency particularly increased in the afternoon, when the data was published, but it was short-lived and the next 4-hour candle turned out to be bearish.

Meanwhile, the representative of the UK in negotiations with the EU, David Frost, said that "if the EU wants to build strong and long-term relations with the British, then the only possible way out is to build them on the basis of mutual equality." Frost also notes that London will not accept the terms of cooperation with the EU on the terms proposed by Brussels. In other words, London refuses the EU conditions on fair competition between European and British companies, on conditions related to state subsidies. "How would you feel if Britain demanded that the EU begin to quickly adapt its laws to those established in Westminster to protect its interests?", asks David Frost. Thus, as we said earlier, negotiations between the parties have not even begun, and there are already so many disagreements that it may take 11 years instead of 11 months to resolve them. This whole situation significantly reduces the likelihood of reaching an agreement, but increases the likelihood that Britain will leave the EU at the end of 2020 without any deals. Boris Johnson cannot understand the situation, nor can he understand the consequences for the British economy from the lack of a deal, however, in this situation, he will have to sacrifice something. Either drive the UK economy into an open recession, or agree to the tough influence of the European Union on many areas.

From a technical point of view, the pound can move from any current position in almost any direction. The fact that the British currency failed with three attempts to cross the Senkou Span B line leaves a good chance of resuming a downward movement.

Trading recommendations:

GBP/USD continues to adjust. Thus, it will be possible to sell the British pound with the target of 1.2929 only after the price consolidates below the critical line and only in small lots, since the price is still inside the cloud. We recommend considering the pair's purchases with the objectives of 1.3075 and 1.3118, if the Ichimoku cloud is nevertheless overcome, 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 18. Results of the day. Euro continues to fall for the 16th consecutive day, ignores all correction factors

4-hour timeframe

analytics5e4c81df6345c.png

Amplitude of the last 5 days (high-low): 34p - 60p - 55p - 33p - 22p.

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

The EUR/USD currency pair continued its downward movement on Tuesday, February 18, and by the end of the day it worked both the first support level for this week at 1.0786 as well as the lower boundary of the volatility channel, and it once again updated three-year lows at the same time. In fact, each new decline down to the level of 1.0339 will be accompanied by an update of three-year lows. The essence is different, the euro is now extremely weak, the EU economy, although it is keeping afloat, does not show any signs of recovery, therefore the most important thing is the absence of factors due to which one could hope for a recovery and growth of the European currency. It should also be noted that over the past 16 days no correction or even a hint of it has happened. As often happens, similar in strength trend movements begin on a flat ground. After all, nothing preceded such a confident fall in the euro. Neither the ECB meeting, nor the Fed meeting, nor the statement by the heads of central banks, nothing. The downward movement simply started against the backdrop of weak macroeconomic statistics from the EU and strong from the US (which, incidentally, was observed long before the start of the movement) and has been going on for the 16th consecutive day. Moreover, it persists even in those days when there are no macroeconomic factors to continue it. For example, yesterday or today. Not a single significant report was published at all yesterday, February 17 - the euro/dollar stayed near its lows all day, fearing it would "detach" from them. Several minor reports were published today - the euro has resumed its decline. What does this fall can not even be called strong. The average volatility of the pair is still 40-50 points per day, no more, and it has also decreased in recent days.

As for macroeconomic statistics that were published today, the first three came from the ZEW Institute and reflected economic sentiment indices in Germany and the European Union, as well as an assessment of current economic conditions. In today's morning article, we were surprised at the fact that the economic sentiment indices in the last five months showed not a slight increase and literally resurrected. We wondered why investors are optimistic if the economy of Germany and the EU continues to slow down? It turned out that we were asking similar questions not in vain, because today's data showed a sharp decline in all three indices. The mood index in the business environment of Germany fell from 26.7 points to 8.7, a similar index in the EU - from 25.6 to 10.4, despite the fact that forecasts predicted growth to 30.0 points. And the index for assessing current economic conditions in Germany fell from -9.5 to -15.7. It is unlikely that these indices caused the next fall of the European currency, however, one cannot but admit that these data could further strengthen the negative attitude of traders towards the euro.

A much more objective reason for the fall is the deceleration of the German economy (the locomotive country of the European Union), as well as the entire EU. Recall that, according to the latest data, German GDP slowed down to 0.4% in annual terms, and European GDP - to 0.9% yoy. Moreover, many world experts note that the Chinese coronavirus will affect not only the economy of China, but also all its trading partners, including the US, the EU, and Germany. The German economy is an export-oriented economy. If demand for its products decreases, problems begin that threaten to go into recession. However, it should be recognized that the situation with the coronavirus in China is still far from critical. According to the latest data, the number of deaths from the virus has reached about 2000, and the number of infected people does not exceed 70,000. It is clear that the real numbers are likely to be much higher, however, scientists also note that in fact the Covid-2019 virus is not so dangerous to humans, as previously thought. For example, other coronaviruses, SARS and Merce, are far more deadly. From the Chinese virus, no more than 20% of patients die as a result of complications, the rest are completely cured. Moreover, the virus causes pneumonia, that is, it spreads much better in the cold season than in the warm season. Doctors are already predicting that by the end of February, the growth rate of the incidence rate will decline.

From a technical point of view, nothing new can be noted. The euro/dollar pair has another chance to start a correctional movement, since there was a rebound from the level of 1.0786, but traders did not use such an enormous amount.

Trading recommendations:

The EUR/USD pair keeps the downward movement. Thus, it is now recommended that you stay in euro-currency sales with targets at support levels of 1.0786 and 1.0742. The MACD indicator may begin to discharge again. It will be possible to consider buying the euro/dollar pair in small lots with the goal of a first resistance level of 1.0916, if traders manage to gain a foothold above the Kijun-sen 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: dollar feels like a king, but plays with fire

analytics5e4c8a7f3e866.jpg

Contrary to the expectations of many experts, the US currency was marked as the best start since 2015.

Since the end of December, the USD index has grown by more than 2%, reaching three-year highs in the region of 99 points.

After touching these levels in September – October last year, the greenback reversed several times to decline. However, this time we can see further strengthening of the dollar in the region of 100-103. This will mean a return to the peak levels of 2016-2017. Then the USD index spent a little more than a quarter near thirteen-year highs before turning around to decline.

A similar story happens with the main currency pair. Sifting below 1.0880 last week, it returned to April 2017 levels. From current levels, the next important milestones on the path to pull down EUR/USD are 1.0730, 1.0500, 1.0340.

The first mark will close the gap in the pair that formed in connection with the presidential election in France, when the risks of coming to power of the leader of the right-wing National Front Marine Le Pen disappeared. The second mark represents the last round psychological level before the parity of the euro against the US dollar. The third is the lowest value of EUR/USD in January 2017, when the single European currency dropped at low trading volumes in the first days of the year.

The fall of EUR/USD below 1.0340 will return it to the levels of 2002. These were the times when the ECB supported the euro in the early years of its existence. Then the level of confidence in the single European currency was extremely low.

On the part of fundamental indicators, there are no special obstacles to pulling down EUR/USD. In the fourth quarter, the eurozone economy slowed down to 0.9% year on year against a healthy 2.3% in the United States.

A wide range of statistical data indicates that the ECB needs to scale the monetary rate on a large scale in order to comply with the Fed's monetary policy. All these are arguments in favor of further strengthening of the dollar. However, there are arguments against it. This is the head of the White House, Donald Trump.

The US president has repeatedly spoken out in favor of easing the monetary policy of the Federal Reserve, thereby intending to weaken the greenback's position and support exports. The issue related to the exchange rates of national currencies was actively discussed at the trade talks of Washington and Beijing. Now it can become one of the cornerstones in similar negotiations between the US and the EU, which Trump outlined for this year.

There have already been precedents in the history of the United States when they forced the whole world to support, or at least not interfere, the weakening of the USD. This is the rejection of the gold standard in the early 1970s, the Plaza Accord agreement in the 1980s, and the intervention of central European banks at the dawn of the 2000s.

It is believed that the weakening of the greenback is beneficial to the global economy, whose growth rate is increasing in response to the desire of the markets to put dollars in business, rather than deposit them into US Treasury securities. This could be a good argument for Washington to convince Europe and the rest of the world of the need to stop the strengthening of the USD when it seems that it has become excessive.

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

EUR/USD. Reconnaissance or price low? Bears entered the seventh figure for the first time since 2017

The euro-dollar pair continues its downward track: for the first time since March 2017, the price tested the seventh figure, demonstrating the dominance of the bearish mood. Both yesterday and today, EUR/USD buyers made timid attempts at corrective growth - but as soon as the pair rises by several dozen points, it immediately attracts sellers who are pulling the euro to the bottom with even greater force. Actually, at what level is the bottom of the price for the pair - the question is open. According to many experts, the seventh figure will be "too tough" for bears, because it is one thing to test the area of long-term lows, and it is another thing to gain a foothold. That is why some currency strategists recommend that their clients refrain from short positions, despite the obvious dominance of the downward trend.

analytics5e4c7b765e0de.jpg

In my opinion, the EUR/USD bears have not tested the seventh figure for the last time - if European statistics continue to disappoint, the pair will be under constant pressure, limiting the scale of correction rebounds. But you also need to understand that the lower the pair, the higher the probability of catching the bottom of the price. Even today's price dynamics of EUR/USD signals the existence of such risks. Momentum hitting a low of 1.0786, the pair reversed and returned to the eighth figure just as quickly. This suggests that many traders in this price area are in a hurry to take profits, thereby slowing downward movement. In addition, the pair is already attracting buyers who are also in a hurry to buy EUR/USD at a bargain price on such lows.

Such a precarious position of the bears will remain at least until the end of this week. Macroeconomic statistics that are negative for the euro will push the pair down to local support levels, but the risk of a price rebound will be high in each case.

Today, the euro was pressured by numbers from the ZEW Institute. In particular, the mood index in the business environment of Germany fell almost three times: if it reached 26.7 points in January, it then fell to 8.7 points in February. And although the indicator remained above the zero mark, the dynamics itself disappointed investors. Experts expected a negative trend, but according to their forecasts, the indicator should have decreased by only 20 points. In Europe as a whole, this indicator also came out much worse than forecasted values - after January growth to 25 points, it fell to 10 (with a forecast of decline to 21 points).

After a recent surge of optimism, when for the first time in many months the indicators in Germany and the EU as a whole turned out to be above zero, this dynamics looks depressing, and this fact had a corresponding effect on the single currency. On the other hand, a certain pessimism was predictable, however, experts could not accurately determine its scope. The factor of coronavirus, dovish Lagarde's rhetoric, slowdown in inflation, weak German data - all these circumstances a priori could not but affect the mood of entrepreneurs. Therefore, the pair's bears used the ZEW numbers as a reason for the downward momentum today. At the same time, any definite conclusions (for example, regarding the prospects for the monetary policy of the ECB) cannot be drawn from such data.

The growth of the US currency today was fueled by good statistics from the United States, however, of a secondary nature. Empire Manufacturing's manufacturing index, which is based on a survey of manufacturers in the New York Federal Reserve Region, more than doubled its forecast, reaching 12.9 points - this is the strongest result since May last year (experts expected to see it at 5.1 points) . It is worth recalling that the ISM manufacturing index was stronger than forecasts in January and reached the highest level since July last year - 50.9 points. That is why today's seemingly minor release provided significant support to the dollar index, which jumped to the level of 99.33.

analytics5e4c7b8a1d09f.jpg

The prevailing fundamental picture made it possible for the EUR/USD bears to temporarily cross the line: breaking the support level of 1.0810 (the lower line of the Bollinger Bands indicator on the monthly chart), the price tested the seventh figure. But due to the activation of buyers, the pair could not stay in the area of multi-year lows. In addition, the fact that the profitability of 10-year-old Treasuries declined and was negatively reflected on the dollar (the yield fell to 1.505% during the US session).

All this suggests that sellers will still try to enter the area of the 7th figure in the short term. But if we talk about the medium and even more long-term period, then the situation here does not look so clear. Most likely, EUR/USD will form a price low in the 1.0750 area (with possible testing of lower values), after which the pair will begin to be in demand, due to its oversold condition, provided there are no significant news drivers for further large-scale decline.

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

EURUSD and GBPUSD: Investors starting to look narrowly at undervalued euro. UK labor market helps the pound regain its position

Despite the fact that wage growth in the UK slowed at the end of 2019, the British pound strengthened its position against the US dollar after the publication of data on the number of applications for unemployment benefits. However, these statistics are unlikely to affect the Bank of England decision with interest rates, as serious problems with economic growth persist and productivity continues to stagnate.

The report of the National Bureau of Statistics of the United Kingdom indicates that the average earnings increased by 3.2% from October to December 2019 compared to the same period of the previous year, which is lower than the last three-month period of 2018, when there was an increase of 3.4%. Compared with the previous three-month period from July to August 2019, growth also slowed down to 2.9% versus 3.2%. Economists had expected average wage increases of 3.1%.

analytics5e4c77addf5b9.png

As for the unemployment rate, it remained unchanged at 3.8% in December 2019, while unemployment decreased to 3.8% over the period from October to December. Labor productivity remained unchanged. Let me remind you that last month, the Bank of England reiterated its statements made at the end of 2019 on the topic of interest rates, citing the low level of investment and the weak productivity growth that the UK expects in the coming years. The English regulator has repeatedly paid attention that it will reduce rates if growth prospects do not improve. Additional pressure on the economy and the British pound has uncertainty in relations between the UK and the EU.

analytics5e4c77c159fca.png

From a technical point of view, growth has been outlined, which should be supported by new fundamental data on inflation in the UK, as its growth may discourage the BoE from lowering interest rates in the near future. A breakthrough of resistance of 1.3065 will open good prospects for the restoration of a trading instrument in the area of highs 1.3170 and 1.3240.

analytics5e4c77dce9aac.png

EURUSD

The European currency continued to decline against the US dollar after data indicating that the indicator of economic expectations in Germany sharply fell in February 2020. According to a report from the ZEW Research Institute, the German economic expectations index fell to 8.7 points from 26.7 points in January, while economists had expected it to drp to only 21.0 points. The current situation index continued to slide further down the negative side, reaching -15.7 points in February, against -9.5 points in January. ZEW noted that the index was significantly affected by concerns about the impact on the economy of the coronavirus epidemic, which will drastically slow down world trade. The most severe blow may affect the external sector of trade, namely the automotive industry.

analytics5e4c77f21f6e0.png

As for the same indicator in the eurozone, the index of business sentiment from the ZEW Institute dropped to 10.4 points in February against 25.6 points in January this year. Economists had expected a decline to 21.3 points.

As I noted above, the euro continued to decline against the US dollar, however, there are more and more investors who consider risky assets as undervalued. According to Bank of America, among key fund managers between February 6 and 13, 33% of respondents named underestimated euros against 31% of respondents in a January survey.

analytics5e4c782fb350e.png

As for the technical picture of the EURUSD pair, the bears are approaching a rather important level of support in the region of 1.0800, which is also a psychological mark in 2017. A breakthrough of this range will open a direct road to the area of lows 1.0740 and 1.0680. However, be careful with selling risky assets at current lows, if only for the reason that there has been no correction in the euro since the beginning of this month. The bulls returning the resistance of 1.0820 to themselves can lead to the demolition of a number of stop orders of the bears and a larger upward correction in the trading instrument to the area of the highs of 1.0860 and 1.0890.

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

Weak ZEW index accelerated the euro sale, pound still hopes for a new stimulus package

European stock exchanges, following Asian ones, are trading in the red zone, as published macroeconomic statistics turned out to be noticeably worse than forecasts. German 10-year bonds lost 6.3% at one point, demand for securities in the UK and Switzerland has sharply increased. Oil is losing almost 2% amid growing concerns about demand for raw materials, and there is no reason to believe that the growth in demand for risky assets may resume in the short term.

But until recently, it seemed that the peak of panic was over. The OECD composite indicator, which usually reacts ahead of schedule, shows that as of early February, the business cycle has formed a turning point, that is, a half-wave of growth has begun, which means that demand for risky assets will be outstripped.

analytics5e4c759124471.jpg

At the same time, the OECD in the comments emphasizes that the indicator does not yet reflect the potential negative effect of coronovirus. Of course, China will suffer the most, its real GDP growth will slow down significantly, however, data for the first quarter will be available only in April.

China is also trying to be proactive, and therefore reports of new incentive measures are taken with understanding, the announced steps (lowering taxes, easing monetary policy, increasing government spending) will also ultimately contribute to increased demand. But the latest news from Japan threatens to reverse OECD calculations. After a failed Q4 report on GDP in 2019, which marks the beginning of a technical recession, an expert group led by Prime Minister Shinzo Abe said that control over the spread of coronavirus has been lost. Mizuho Bank notes that Japan is one step away from the fact that the rest of the world will see it as a cluster of coronavirus, and this is not only a problem for tourism or falling domestic demand, but a threat to the Olympic Games.

The slowdown in sales was due to the expectation that the spread of coronavirus will slow down and mortality from it will decrease. Apparently, there are not many reasons for such conclusions. Judging by the latest data showing a strong slowdown in Japan and the eurozone, we are waiting for a reassessment of the economic situation downward, which entails the sale of risky assets and an increase in the demand for defensive assets.

EURUSD

The ZEW economic sentiment indicator for Germany fell sharply in February, falling to 8.7p from 26.7p a month earlier, the assessment of the economic situation also worsened, and, as emphasized in the press release, "in late 2019 and early 2020, the German economy turned out to be worse than expected. " We add here the reaction to the outbreak of coronavirus, which threatens, if not blocking, then drastically slowing down world trade in order to conclude that the hopes for a quick recovery after the failure in 2018/19 are unlikely to be realized.

analytics5e4c75a40d2e2.jpg

The situation is similar in the eurozone, the ZEW index fell from 25.6p to 10.4p, and now, until Friday, when the PMI Markit indices and consumer inflation data for January are published, the euro has no reason to reverse.

Attempts to grow due to local overselling will be blocked near 1.0878, the fall will not hold back anything, and therefore the euro will tend to a long-term low of 1.0338. Short-term support can be found near 1.0725, but it will not hold back for a long time.

GBPUSD

The UK employment report for October - December was mixed. Employment rose to a record 76.5%, unemployment remained unchanged at 3.8%, but wage growth slowed from 3.2% to 2.9%, which is a negative sign from the point of view of inflationary prospects.

analytics5e4c75bd02c9a.jpg

However, the pound reacted with growth, and the reason here can only be that a decrease in inflation will serve as the basis for new stimulus measures both from the government and the Bank of England. The draft budget will be presented on March 11, and market participants expect that by this date the new government's position "spend, spend and spend" will be indicated.

An attempt to grow is unlikely to lead to a breakdown of resistance of 1.3068, the impulse has no internal strength, and therefore it is logical to sell near the local peak with the target at 1.2969, stop slightly above 1.3068.

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

Gold at $5,000 will not become a reality?

analytics5e4c70a0f03ea.jpg

At the end of the past year, forecasts repeatedly appeared regarding the possible high price of precious metals in 2020. Assumptions ranged from a modest $2,000 to $4,000 or more per ounce. However, these golden dreams are not destined to come true, analysts said.

According to experts, the yellow metal market is at seven-year highs at the moment, reaching a certain price limit and stalled. Negative factors for gold are the situation around the coronavirus and weak global macroeconomic indicators. Experts recorded clear signals indicating the completion of the growth cycle gold quotes, which started in 2016.

After analyzing the technical picture of the dynamics of precious metals, experts came to the conclusion that the four-year gold growth cycle is coming to an end. Its price reached the upper boundary of the ascending fractal channel and the key Fibonacci level of 0.62. At the moment, the yellow metal is trading at around $1,591 per ounce, and its further movement is difficult.

analytics5e4c70b3d7e5b.png

According to Wolfgang Seybold, director of AXINO Investment GmbH and an expert in the precious metals market, the price of gold traded in major world currencies has now reached a record peak. Many central banks are actively buying precious metals for their reserves in order to reduce their dependence on the US currency. According to Seybold, it is not the yellow metal that has increased in price, but the traditional currencies have depreciated in relation to it. The expert is certain that with such depreciation, gold should cost much more, about $5000 per ounce. However, this is impossible, because it is contrary to the modern banking system.

The rapid rise in gold prices is hindered by a number of factors, including overbought precious metal quotes and a fall in the shares of gold mining companies. At the same time, experts record a noticeable imbalance between the lack of growth in securities of gold mining companies and the active rise in the price of gold over the past four years. Note that since 2016, the gold quotes twice updated the current highs.

In the second half of February, the precious metals market begins to become seasonally cheaper, that is, from next week, a massive decline in gold is not ruled out. Experts predict a drop in yellow metal to $1,540 per ounce, although they do not exclude the possibility of a rise. If the bar reaches $1620, gold will open the way to $1,700 per ounce or higher, analysts said.

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