Indicator analysis. Daily review of EUR/USD on February 20, 2020

Trend analysis (Fig. 1).

The market may continue to move down today with the target at 1.0783, the lower fractal (red dashed line). Breaking down the lower fractal is unlikely but work up is possible from the level of 1.0783.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

A continued downward movement is expected today with the target of 1.0783, the lower fractal (red dashed line).

An unlikely but possible scenario is from the lower fractal 1.0783 (red dashed line), a continued work down with the goal of 1.0664, the retracement level of 85.4% (yellow dashed line).

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Markets are clearly tired of the negative, dollar dominates in every area, EUR and GBP remain bearish

The dollar is growing across the entire spectrum of the currency exchange market on positive statistics and encouraging news about COVID-19. At the same time, production prices in January showed growth significantly above forecasts, while the construction market significantly increased its growth, building permits were issued in January by 9.2% more than a month earlier, easing the monetary policy of the Fed is recouped almost without a delay in time.

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As for the coronavirus, the number of people recovered exceeded the number of cases for the first time since the start of the epidemic, according to reports from China. Market participants regarded this news as a signal that the spread of the virus was taken under control, a sharp reduction in danger led to large-scale sales of the Japanese yen and an increase in demand for commodity assets.

Asian exchanges on Thursday morning in a steady positive following the American ones, the positive was strengthened by the decision of the People's Bank of China to lower rates for first-class borrowers, markets expect stimulus measures to stop there. According to some reports, China is considering the possibility of direct cash injections to support the aviation industry, since the impact of the virus blocks companies' cash flows, many companies cut salaries and delay employee payments.

In addition, the probability of a rate cut at the September meeting is currently less than 30% after the publication of the minutes of the FOMC meeting; however, a certain advantage of dovish sentiment remains, but overall the assessment of the economic situation in the USA has become more positive. The risks of a trade war and harsh brexit were reduced, and geopolitical risks in the Middle East and coronavirus replaced them.

Particular attention was paid to the position of the Fed on repo operations, but the markets did not learn anything new. They will remain in effect at least until April, then their gradual reduction will begin, T-bills purchases will also begin to decline starting from the 2nd quarter. Apparently, the US presidential election will be approached in a stable development trend, but with minimal stimulating measures on the part of the Fed. If this scenario is implemented and does not lead to a deep correction in the markets, then the chances of Trump's victory will increase, and "what's good for Trump is good for the dollar."

In any case, the development of events is aimed at maintaining the trend for the dominance of the dollar. The correction time has not come yet.

EUR/USD

The euro is trying to start consolidation after a long decline, the lack of significant news forces players to take a break until Friday, when the PMI Markit for February will be published in the eurozone, Germany and France to assess the impact of coronavirus against the backdrop of the expected recovery after a tumultuous fourth quarter.

Moreover, the euro is in a state of free fall after the loss of support 1.0878, which is restrained except by the lack of correction and oversold. However, these are just technical factors, and fundamentally, the dollar looks much stronger and there are no reasons for a turn up.

Perhaps, the correction will be blocked near 1.0878, which is a good level for sales with the target of 1.0725, long-term target of 1.0338.

GBP/USD

Consumer inflation in the UK surprised at 1.8% growth in January against the forecast of 1.6% and 1.3% a month earlier.

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However, the pound did not respond to the publication, which could reduce the chances of adopting a stimulus package in March or at least the composition of this package. The reason probably lies in the fact that the increase in inflation is largely due to rising electricity prices, that is, it is a temporary factor.

At the moment, the pound is oriented not so much on macro statistics, but on expectations about future negotiations with the EU on a trade agreement. The UK is trying to reserve the right not to obey the common EU standards, while the European Union is determined to exert strong pressure on the pound.

These fears have already offset the positive effect of the appointment of Rishi Sunak to the post of Minister of Finance. The pound is aimed at testing support 1.2869, and if successful, the downward movement will increase. But since verbal interventions on the topic of future negotiations are likely at any time, caution must be exercised, since from a technical point of view, the pound has currently no direction. The resistance is at 1.3025 and further 1.3071, if you try to increase to the first of them, you can sell with an intermediate target of 1.2869.

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Trading plan on EUR/USD for February 20, 2020

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Update on the coronavirus epidemic: the total number of cases is 74.5 thousand, while the total death count is 2,118.

The number of cases increased by 400, the lowest since January 25, which is a good signal, as it indicates that the epidemic is obviously stopping.

EUR/USD: Strong US data supported the dollar. Earlier this week, the data on net capital inflows/outflows was released - it amounted to $ 85 billion.

On Wednesday, the report on inflation in the wholesale link (producer prices) was released. The PPI showed an unexpected strong growth of + 0.5%, despite its initial forecast of +0.1%. This indicates an increase of 2% per annum, which closes the idea that the Fed will reduce the rates in the future. Instead, it opens the possibility of the Fed raising the rate after some time.

EUR/USD: the pair is in a downward trend. Attempts for a correction are being made.

Keep selling from 1.0990.

Sales, with a rebound from 1.0860 or higher, are possible

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EUR/USD. Fed minutes turned out to be in passing, but there is one "but"

The minutes of the January meeting of the US Federal Reserve turned out to be "passing": almost all theses were already voiced by Jerome Powell, including last week, when he delivered a half-year report to the US Congress. The market expectedly ignored the publication of this document - it did not help the bears of the euro-dollar pair gain a foothold in the seventh figure. Moreover, some remarks of the minutes brought up the concern of traders, so yesterday's battle ended in a victory for the bulls - unless, of course, the daily closing within the eighth figure can be called a victory.

Despite the general dullness and predictability of the Fed minutes, some points deserve special attention. During the January meeting, some regulator members expressed concern that low interest rates could contribute to "the vulnerability of the financial system." A number of their colleagues took the opposite position - in their opinion, "under certain circumstances, low interest rates can help maintain financial stability." Furthermore, the text of the minutes contains the phrase that "many participants noted the absence of a correlation between the influence of monetary policy and the vulnerability of the financial system, as a result of which the regulator decided to rely on inflation and employment indicators to determine future interest rates."

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It should be noted here that, unfortunately, the minutes does not indicate many circumstances that would make it possible to understand the alignment of forces in the Fed. For example, we do not know exactly how many members of the Committee supported this or that opinion, or the initiative. Therefore, market participants have to draw independent conclusions based on the designations that the Fed operates with. In this case, "some" Fed members and "a number of their colleagues" expressed diametrically opposite positions regarding the efficiency (feasibility) of low interest rates. Nevertheless, "many participants" agreed in the end that it is impossible to speak with confidence about the relationship between the current monetary policy and the vulnerability of the financial system. It can be assumed that such a conclusion was reached by most of the participants in the meeting.

The very fact of such a discussion suggests that representatives of the dove wing of the Fed continue to advocate for easing the parameters of monetary policy. Although it is obvious that they are now in the minority, especially against the backdrop of recent macroeconomic data. Fed economists raised forecasts for US GDP growth in 2020 and 2021 (against the background of the first phase of a trade agreement with China), and also positively assessed the growth prospects of the US labor market. Coronavirus was recognized as a new risk for the prospects for the global economy, but Jerome Powell subsequently smoothed corners, saying that it was too early to draw certain conclusions in this context. He added that the epidemic will obviously affect the Chinese economy (especially in the first quarter of this year), however, it's premature to discuss the consequences for the world economy today.

In other words, the Fed minutes published yesterday made it clear that the regulator is ready to continue to maintain monetary policy in its original form. This conclusion was absolutely expected by the market, so traders ignored yesterday's release. Nevertheless, judging by the above dialogue between the regulator's members, we can conclude that some Fed members are still in favor of lowering the rate - and if inflation and the labor market indicators slow down, this issue will again be on the agenda. Such prospects do not bother dollar bulls yet. Recent Nonfarm and inflation indicators have supported the US currency. Other macroeconomic reports also allow the dollar to feel confident in almost all pairs.

For example, the US producer price index significantly exceeded forecast expectations yesterday. In annual terms, this indicator reached 2.1% - the strongest result since April last year. In monthly terms, it also reached many-month highs, rising to 0.6%. Excluding food and energy prices, the index also increased significantly: in annual terms, the indicator consistently decreased over the course of four months, but yesterday it jumped to 5-month highs. It should be noted that this index is an early signal of changes in inflationary trends; therefore, its growth helped strengthen dollar bulls throughout the market.

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Today, the EUR/USD bears are still recording in the range of 1.0780-1.0810. The seventh figure is a serious test for the sellers of the pair, therefore, for the final consolidation in this price area, an appropriate news occasion is needed. For example, the minutes of the last ECB meeting will be published today - we will find out the details of the regulator's report from the meeting on monetary policy, which took place almost four weeks ago. But this document is unlikely to have a strong impact on the pair. Christine Lagarde made it clear enough that the regulator does not intend to change its monetary policy in the near future, while she expressed concern about the slowdown in inflation and industrial production. I believe that the minutes will reflect her opinion, only in a more expanded form.

The Fed-Philadelphia manufacturing index will be published today during the US session. This is a very minor indicator, however, against the background of an increase in the ISM manufacturing index, as well as the Empire Manufacturing manufacturing index, it can still affect the pair. Especially if it comes out better than forecasted values (according to forecasts, the indicator is expected to decline from 17 to 10 points).

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CAD/JPY Intraday Price Movement For Feb 20, 2020

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On the 4-hour chart, we see clearly that CAD/JPY has been already developing a steady rally. In other words, this pair is now moving under buying pressure. Under such market conditions, the CAD/JPY pair will try to reach its primary target at 84.44 as long as the price is not going down and closes below 83.65. The level of 84.44 is still viewed as the primary target.

(Disclaimer)

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Technical analysis of ETH/USD for 20/02/2020:

Crypto Industry News:

The South Korean technology giant Samsung recently unveiled its latest smartphone series, the Galaxy S20, at the Unpacked 2020 event in San Francisco.

Although the main function is undoubtedly the new camera, according to official marketing materials the phone will also improve in the integrated Blockchain security features introduced a year ago in the Galaxy S10.

After extensive details about the new camera and a brief mention of 5G, battery life and capacity, Samsung highlights the safety features of new phones. They are based on the Knox platform, a security solution that stores private keys in a secure, isolated area.

"We've created a secure processor designed to protect your Blockchain PIN, password, pattern and private key. When combined with the Knox platform, security is introduced into every part of the phone, from hardware to software. So private data remains private," says Samsung.

After presenting the Knox platform on the Galaxy S10 last February, Samsung developed its mobile Blockchain offer with the release of the programming kit in July 2019. It included the Samsung Blockchain Keystore toolkit that stores users' private keys.

In the same month, PundiX announced that it had integrated its XWallet application with Samsung's Blockchain ecosystem, enabling users to connect the application with the Samsung Blockchain wallet. Then Samsung added Bitcoin support to its Blockchain Keystore, as well as several other improvements. Previously, he officially supported only Ethereum.

Technical Market Overview:

The ETH/USD pair has tested the short-term trendline support from the upside after the sudden reversal from the level of $285. Moreover, the swing high has not been hit yet as the last rally was capped around the level of $285.55. The local counter-trend corrective cycle might continue any time soon and the first target for bears is seen at the level of $238.68 - $235.62 zone. The weak and negative momentum supports the short-term bearish outlook.

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 wave 1 of the overall wave 3.

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Technical analysis of BTC/USD for 20/02/2020:

Crypto Industry News:

According to the published announcement, Coinbase became the main member of Visa. This will allow you to issue debit cards without relying on third parties.

Membership is an evolution of Coinbase's current relationship with Visa, under which the cryptocurrency exchange offers a Visa based debit card. The card called Coinbase enables customers living in the European Union or the European Community to spend a wide range of cryptocurrencies on purchases.

Although the card itself can operate globally, it cannot be ordered by a person living outside the served areas. Coinbase reports that the card is most commonly used in the UK, followed by Italy, Spain and France.

Through direct integration with Visa, Coinbase promises to be able to provide additional services and support more markets. The company ensures that it is the first "cryptocurrency company" that has become the main member.

The current version of the card was issued in 2019 in the United Kingdom, however, Coinbase previously supported the Shift cryptographic card, which drew funds from the user's balance. The service was launched in 2015.

Like many other cryptographic cards, Shift suffered greatly from the withdrawal of the WaveCrest Visa license at the beginning of 2018. The company was an effective publisher of almost all debit cards serving cryptocurrency users. Shift finally closed at the beginning of 2019.

The new version is supported by Paysafe Financial Services Ltd., a consumer product company such as Skrill and PaysafeCard. It is not clear when and how the transition to Coinbase cards will take place.

Technical Market Overview:

The BTC/USD pair has made a big shakeout candle to the downside and the price has hit the level of $9,248 before any bounce has occurred. Currently, the market is trading in a narrow zone between the levels of $9,448 - $9,622, but it does not look like the bears are done. The momentum is weak and negative and there is no indication of any bullish reversal coming. The next target for bears is seen at the level of $9,123 and the immediate resistance is located at the level of $9,645.

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.

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Hot forecast for GBP/USD on 02/20/2020 and trading recommendation

As expected, the pound continued to lose ground yesterday. However, this was somewhat strange, since it completely ignored the British statistics, and everything happened solely against the background of US statistics. Although the overall result fits into the logic of the existing market dynamics.

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Nevertheless, the absence of market reaction to inflation in the United Kingdom from 1.3% to 1.8% is surprising. Moreover, they predicted growth to 1.4%. In such a reaction of the market, or rather its absence, the general mood of market participants to further strengthen the dollar can be clearly seen. After all, only US data are taken into account. Although, a noticeable increase in inflation removes all sorts of questions regarding the further actions of the Bank of England, which, most likely, will not lower the refinancing rate until the middle of the year.

Inflation (UK):

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US data seriously inspired investors, and they continued to buy dollars with renewed vigor. The main news was data on producer prices, whose growth rates accelerated from 1.3% to 2.1%. But they were waiting for acceleration to only 1.7%. This indicator is inflationary, which means inflation will continue to grow. Consequently, the Federal Reserve has more and more reasons to think about the possibility of increasing its refinancing rate. So the optimism of market participants is quite justified.

Manufacturer Prices (United States):

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But not only data on producer prices turned out to be better than forecasts. The same fate befell the data on the construction. In particular, the number of new construction projects decreased by 3.6%, but the fact is that they expected a reduction of as much as 17.7%. In addition, the number of issued building permits increased by 9.2%, instead of 2.2%, which means that in the near future, the volume of construction will increase.

Number of New Construction Projects (United States):

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UK data on retail sales will be released today, the growth rate of which should slow down from 0.9% to 0.5%. But fortunately for the pound, the market has recently ignored any data other than the US one, so the decline in retail sales will not affect the pound.

Retail Sales (UK):

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But US data, which are only of interest to market participants, are likely to lead to a weakening dollar. Which has long been obvious. A temporary rebound is needed. The total increase in the number of applications for unemployment benefits, by 17 thousand, may be the reason for a local correction. Moreover, an increase in the number of both primary and repeated applications for unemployment benefits is expected. In particular, the number of initial applications should increase by 10 thousand, and the number of repeated ones by another 7 thousand.

Number of Initial Jobless Claims (United States):

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In terms of technical analysis, we see the acceleration of quotes in a downward direction, after several days of being suspended within the psychological level of 1.3000. In fact, such an outcome could be expected, since we have a fracture of the clock component, where the level of 1.3000 is no longer a stumbling block.

Considering the trading chart in general terms, we see that the quote went down to the support area on February 10, which means that the recent correction has been worked out.

It is likely to assume that if the pattern coincides, the 1.2880/1.2900 area may again play the role of a support, slowing down the quote and forming a technical pullback. In the form of an alternative scenario, it is worth considering the preservation of a downward mood, but in this case we should see the price being consolidated below 1.2880.

From the point of view of a comprehensive indicator analysis, we see a sell signal with respect to all the main technical tools. The signal was created based on a recent impulse move.

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Technical analysis of GBP/USD for 20/02/2020:

Technical Market Overview:

The GBP/USD pair is moving lower after the ascending channel did not hold the bearish pressure. All the moves up looked corrective anyway and the breakout from the recent range might be the beginning of a larger correction to the downside. 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 1.2929 and the local support is seen at the level of 1.2971.

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.

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Technical analysis of EUR/USD for 20/02/2020:

Technical Market Overview:

The EUR/USD pair continues to move lower, but recently the chart has flatten out and the market is now trading just a little out of the channel, between the levels of 1.0782 - 1.0815. 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.

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GBP/USD: plan for the European session on February 20. Pound may continue to fall after triangle breaks. Bulls will rely

To open long positions on GBP/USD you need:

Buyers of the pound today will rely on fundamental data on the volume of retail trade in the UK, judging by the schedule, they have nothing more to hope for. Only a good report will return GBP/USD to the resistance level of 1.2928, which will be a signal to open long positions in the expectation of an increase and update of the resistance of 1.2967, where the moving averages also go. However, I recommend taking profit only after a test of a high of 1.3010. The formation of a false breakout in the support area of 1.2895 after the report will also be a signal to open long positions. In another scenario, just in case the pound falls further, you can count on a rebound from the support of 1.2870, however, larger long positions are best seen after a test of a low of 1.2830.

To open short positions on GBP/USD you need:

Bears yesterday achieved a breakthrough of the lower boundary of the triangle, which I repeatedly paid attention to and quickly returned the pound to a support of 1.2967, which led to the demolition of stop orders of buyers and a quick collapse of the pair. Currently, an important task for sellers is the formation of a false breakout in the resistance area of 1.2928, which will be the first signal to open short positions, and a break of support of 1.2895, which can occur after weak retail sales data in the UK, will push the pound to a low of 1.2870 and 1.2830, where I recommend taking profits. If the bulls manage to pick up resistance at 1.2928 in the morning, then opening new short positions is best after a test of a high of 1.2967, where the moving averages are.

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

The pound will be supported by the lower boundary of the indicator at 1.2880, while growth will be limited by the upper level at 1.2980.

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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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GBP/USD Intraday Price Movement For Feb 20th, 2020

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After Cable made a Clean High at 1.3069 and continued with a Re-Distribution at the 60 Minute Chart/1 Hour Chart, it made an Underlying Price Weakness form. In the other words, there is an Institutionally Sponsored Decline at the 1 Hour Chart. Amid this conditions, the GBP/USD pair can try again to reach the target at 1.2893, if it does not go up and close above 1.2950. Cable is still trying to reach the target at 1.2893.

(Disclaimer)

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

EUR/USD: plan for the European session on February 20. Fed minutes refer to coronavirus and good state of US economy. Bears

To open long positions on EURUSD you need:

The euro slightly recovered after the publication of the Federal Reserve minutes, in which traders did not see anything new, except for the risk of coronavirus affecting the global economy, and forecasts of stable US economic growth. There was no talk about interest rates. At the moment, the bulls are focused on support in the 1.0788 area, the update of which yesterday led to the formation of divergence on the MACD indicator, which allowed buyers to maintain their positions. However, no one is willing to open long new positions, which is supported by selling the euro at the Asian session. In the scenario of breaking the 1.0788 range, it is best to open long positions in euros after updating the lows of 1.0765 and 1.0740, however, with the current bear market,one must be careful with searching for the low. A more correct decision for buyers of the euro will be the return of EUR/USD to the resistance of 1.0825, from which a good upward correction will be formed in the region of the highs of 1.0860 and 1.0886, where I recommend taking profits.

To open short positions on EURUSD you need:

Bears continue to bend their line, and weak fundamental data on the state of the European economy help them in this. Sellers have already updated the low of the year this morning, but failed to gain a foothold on it. Today there are regular reports on the state of the German economy, which is balancing on the verge of a recession, creating more and more pessimistic investors. A break of support of 1.0788 will bring EUR/USD to the area of new annual lows 1.0765 and 1.0740, where I recommend taking profits. However, be careful with selling the euro at current lows, especially on a breakout, since a bullish correction may be formed at any time. In case the pair grows in the morning, only the formation of a false breakout in the 1.0825 area will be a signal to open short positions in euros. I recommend selling immediately on the rebound only after a test of a high of 1.0860.

Signals of indicators:

Moving averages

Trading is carried out in the region of 30 and 50 moving average, which indicates another attempt by euro buyers to form an upward correction.

Bollinger bands

A break of the lower boundary of the indicator at 1.0788 will lead to a new fall in the euro.

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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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Overview of the GBP/USD pair. February 20. The paradoxical pound ignores the strong UK inflation report

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: -199.7291

The British pound sharply resumed its downward movement at the auction on February 19 and fell by 80 points. We believe that this development has been brewing for a long time and have repeatedly stressed in their reports that there are no fundamental and macroeconomic reasons for the growth of the British currency. Moreover, from our point of view, the pound remains overbought since its growth at the end of last year is still difficult to explain from logic and economic validity. Thus, we can only wait for days like yesterday, when the reasons for a sharp resumption of the fall of the pound/dollar currency pair were not obvious. In the future, we expect a resumption of the long-term downward trend.

Yesterday, only one important macroeconomic report was expected from the UK – inflation for January. Forecasts predicted an acceleration of this indicator from 1.3% y/y to 1.6% y/y. We questioned this scenario since there were no grounds for such a sharp acceleration. In reality, the consumer price index rose to 1.8% y/y but still lost 0.3% every month. Thus, the following conclusions can be drawn from this release: 1) the report was stronger than the expectations of traders and experts in annual terms; 2) inflation concerning the previous month still slowed down and there is deflation, which negates any positive effect of the acceleration of the annual indicator. What did we see if we looked at this report more closely? Prices in the UK fell by 0.3% compared to December. And the annual indicator shows longer-term changes but this does not reflect the real situation. Either the majority of the market regarded the report in the same way or simply ignored it. However, the British pound did not react to this data in any way. More precisely, it did not react to this data with growth.

Well, negotiations between the EU and the Kingdom on relations after the completion of the Brexit procedure are already becoming a byword for market participants. These very negotiations have not even started yet, however, both sides regularly make statements. The essence of each statement is to list their terms of the agreement, which are very far from the opinion of the opposite side. This time the statement was made again by the chief negotiator from the alliance, Michel Barnier. He once again said that Britain would not get the same trade agreement as Canada. He said: "The trade agreement will contain various aspects, such as fishing, for example, which will reflect the uniqueness of the circumstances (territorial and economic proximity between the EU and Britain). It (the agreement) can not be compared with Canada or Japan." Michel Barnier also indicated the EU's desire to work hard to reach a consensus. "We remain ready to offer the UK an ambitious partnership," Barnier said. So now it's up to Boris Johnson, who should now voice why Britain will not accept the terms offered by the European Union.

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On Thursday, February 20, the macroeconomic background for the British pound will be contained in the report on retail sales for January. According to experts' forecasts, this indicator will increase by 0.7% in annual terms and by 0.7% in monthly terms. If you look at the data from the last 24 months, it becomes obvious that the growth rate of retail sales is slowing and may reach the minimum values for the last 2 years. This report may become another disappointing event for the bulls of the GBP/USD pair and the British pound.

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Also, a less significant report on the change in the number of CBI industrial orders will be published, which has long been in the negative area, showing a reduction in the volume of these orders. Thus, the industrial production index is falling due to declining orders for industrial products. And if a new reduction in volumes is found today, then we should not expect any improvements from industrial production. In general, in the last 9 months, the report on industrial orders in Britain signals only a reduction.

Thus, today the British currency can be supported by the retail sales report if its value exceeds +0.7% y/y. Otherwise, traders will get new grounds for selling the British currency. From a technical point of view, the downward movement has already resumed. Both channels of linear regression were directed downward, indicating a downward trend in different time plans.

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The average volatility of the pound/dollar pair over the past 5 days has increased to 88 points and is characterized as "average" in strength. According to the current volatility level, the working channel on February 20 will be limited to the levels of 1.2829-1.3005. The macroeconomic background will be present on Thursday, so traders can expect to maintain the current levels of volatility.

Nearest support levels:

S1 - 1.2909

S2 - 1.2878

S3 - 1.2848

Nearest resistance levels:

R1 - 1.2939

R2 - 1.2970

R3 - 1.3000

Trading recommendations:

The GBP/USD pair resumed its downward movement and settled below the moving average. Thus, it is now recommended to sell the pound with the targets of 1.2878, 1.2848 and 1.2829 before the Heiken Ashi indicator turns up. It is recommended to buy the British currency not earlier than the reverse price fixing above the moving average line with the first targets of 1.3031 and 1.3062.

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

Explanation of the illustrations:

The highest linear regression channel is the blue unidirectional lines.

The lowest linear regression channel is the purple unidirectional lines.

CCI - blue line in the indicator window.

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

Murray levels - multi-colored horizontal stripes.

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

Possible variants of the price movement:

Red and green arrows.

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

Overview of the EUR/USD pair. February 20. Fed's protocol: low-interest rates can cause the economy's vulnerability

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: -66.8690

Nothing changed for the EUR/USD currency pair. The pair's quotes are still moving down at a slow pace, often with minimal volatility, and still without the slightest hint of an upward correction. Before the current downward trend, the pair faced a situation for several months in a row when there were all reasons and grounds for continuing the depreciation of the euro against the dollar. However, this did not happen since the bears simply refused new sales at the minimum for 2 years of the pair's value. Now, bears update three-year lows every day and have no problems. All trend indicators are directed downwards. There were no macroeconomic publications in the European Union and the United States that could have drawn attention to yesterday. Only the minutes of the last Fed meeting were published late in the evening. An event with a "loud" name, which rarely causes any reaction from traders. It happened this time as well and it can be seen from the currency pair chart.

As we said yesterday, there was nothing very important or interesting in the minutes of the last meeting. After a detailed study of the document, the main conclusion that can be drawn is that the members of the monetary committee disagreed about the consequences of the policy of low-interest rates. Some Fed officials believe that low rates have a beneficial effect on the US economy, while others fear negative consequences and vulnerability of the financial system. As a result, the regulator will continue to rely on indicators of inflation and the level of employment of the population when making decisions about changing the parameters of monetary policy. Also, the Fed added language regarding the "coronavirus" to its final release, considering it a factor that increases uncertainty for the global economy. In general, the Fed representatives note stability, economic growth, low unemployment and a good state of the labor market.

If we consider the report in more detail, then the following becomes clear. The Fed still does not believe that the trade conflict between the United States and China is completely over. It is feared that the signing of the "second phase" will be delayed for a long time, respectively, the negative effects will continue to affect the US economy. Fed officials also believe that inflation "above 2%" will emphasize the "symmetry" of the target level. GDP forecasts for 2020 and 2021 in the United States have been raised on the background of reaching an agreement in the "first phase" with Beijing. The Fed's monetary committee also believes that unemployment will continue to decline in the future. Also, the Fed allows for possible intervention to reduce risks to financial stability but does not give any signals that it may happen soon.

In general, from our point of view, it is absolutely a passing protocol of the Fed, which does not contain any new information. On Thursday, February 20, again no important macroeconomic information is expected from either the EU or the US. The calendar contains only minor releases, such as the consumer confidence index in Germany or the level of consumer confidence in the European Union. However, these indicators are not very interesting for market participants. Thus, we do not believe that the volatility of the currency pair will change in the course of tomorrow, and traders will begin to change their preferences in trading. By all indications, tomorrow we will have a trading day that is no different from the previous. Of course, the correction can still start at any time, however, we still believe that it is more likely to start if the pair's quotes reach a strong support level, near which a large number of pending purchase orders are located. The next more or less significant macroeconomic publications are scheduled for Friday.

From a technical point of view, the last two bars are colored purple by the Heiken Ashi indicator. That is, we can formally talk about the beginning of a correction, however, there is no correction, and the pair has moved away from local lows by "as much as" 30 points. Thus, we recommend that traders focus more on the moving average line, which is located close to the price and gradually decreases. As long as the price is below it, the downward trend persists.

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The average volatility of the euro/dollar currency pair has decreased again and is now only 38 points. For the last three days, the pair can not exceed the mark of 33 points per day. On Thursday, therefore, we expect movement between the borders of the volatility corridor of 1.0765-1.0841. The fundamental background will be extremely weak again, so it is unlikely to expect a rise in volatility on Thursday.

Nearest support levels:

S1 - 1.0742

S2 - 1.0681

S3 - 1.0620

Nearest resistance levels:

R1 - 1.0803

R2 - 1.0864

R3 - 1.0925

Trading recommendations:

The euro/dollar pair continues its calm and extremely weak downward movement. Thus, sales of the European currency with the targets of 1.0765 and 1.0742 remain relevant now, which can be kept open until the Heiken Ashi indicator turns up. You can also keep sell positions open until the move is completed. It is recommended to buy the EUR/USD pair not earlier than fixing the price above the moving average line with the first target of the Murray level of "3/8" - 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

Forecast for EUR/USD on February 20, 2020

EUR/USD

The euro gained 13 points on Wednesday as part of a moderate expected correction after the previous three-figure fall. The growth could have been greater, but this was hindered by the fall of the British pound and the Japanese yen and the report on the eurozone balance of payments for December, which showed a balance of 32.6 billion euros against expectations of 34.5 billion. Data on the laying of new homes in the US for January showed a small decrease: 1.57 million against 1.63 million a month earlier, but the issued building permits increased from 1.42 million to 1.56 million, showing the highest figure since January 2007. Published minutes from the last FOMC Fed meeting showed nothing interesting.

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On the daily chart, the signal line of the Marlin Oscillator is pointing upward, it is possible to continue the correction to the Fibonacci level of 161.8% at the price of 1.0840. The main objectives of declining 1.0745 and 1.0650/80 are maintained.

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On the four-hour chart, the double convergence according to Marlin retains its potential effect, which may result in continued price growth, but the signal line of the oscillator stopped at the boundary with the territory of growth. Its withdrawal under its own support (the turquoise line) neutralizes the influence of convergence. This will happen if the price goes below yesterday's low.

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

Forecast for GBP/USD on February 20, 2020

GBP/USD

The pound fell by 75 points yesterday, the price noted a low of December 23 and is now ready for further movement towards the previously identified goals at 1.2845 (110.0% Fibonacci level), 1.2758 (123.6%). The price on the daily chart is below the lines of balance and MACD, the Marlin oscillator is falling in the zone of negative values.

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On the four-hour chart, the price has consolidated under the MACD line, Marlin is also in a stable falling position. We look forward to the pound declining further.

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But today there may be a slight delay in the planned decline. In the afternoon, data on retail sales in the UK for January are released, the forecast for them is 0.7% versus -0.6% in December, the balance of production orders for the current month may also slightly improve - the forecast is -19 versus -22 in January. Technically, it will be consolidation in the range of February 10th.

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

Forecast for AUD/USD on February 20, 2020

AUD/USD

The Australian dollar has already come close to the first target at 0.6624, formed by the Fibonacci level of 223.6% and the support of the embedded line of the price decreasing channel. When the level has been overcome, the goals are subsequently opened for the price: 0.6595 - Fibonacci level of 238.2%, range 0.6536/53, formed by the Fibonacci reaction levels of 271.0% and 261.8%.

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On the daily chart, the Marlin line has a sufficient power reserve before entering the oversold zone, which indicates a high probability of achieving these goals.

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On the four-hour chart, the downward trend is developing in its own way, there are no obstacles to lower prices.

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

Fractal analysis of the main currency pairs for February 20

Forecast for February 20:

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.0891, 1.0861, 1.0832, 1.0807, 1.0775 and 1.0751. Here, we expect a correction in 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: 1.0775 Take profit: 1.0752

Sell: Take profit:

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2990, 1.2955, 1.2932, 1.2891, 1.2863, 1.2827 and 1.2804. Here, we are following the development of the downward cycle of February 13. Short-term downward movement is expected in the range 1.2891 - 1.2863. The breakdown of the latter value will lead to a pronounced movement. Here, the target is 1.2827. For the potential value for the bottom, we consider the level of 1.2804. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 1.2932 - 1.2955. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.2990. This level is a key support for the downward structure.

The main trend is the downward cycle of February 13.

Trading recommendations:

Buy: 1.2932 Take profit: 1.2954

Buy: 1.2957 Take profit: 1.2990

Sell: 1.2890 Take profit: 1.2865

Sell: 1.2861 Take profit: 1.2828

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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 0.9819 - 0.9804. 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

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For the dollar / yen pair, the key levels on the scale are : 112.11, 111.58, 111.30, 111.05, 110.81 and 110.49. Here, we are following the development of the ascending structure of January 31. Short-term upward movement is expected in the range 111.30 - 111.58. The breakdown of the last value will lead to a pronounced movement to the potential target - 112.11. We expect a pullback to the bottom upon reaching this level.

Short-term downward movement is possibly in the range of 111.05 - 111.05. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 110.49. This level is a key support for the top.

Main trend: upward structure of January 31

Trading recommendations:

Buy: 111.30 Take profit: 111.55

Buy : 111.60 Take profit: 112.10

Sell: 111.05 Take profit: 110.83

Sell: 110.79 Take profit: 110.51

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3281, 1.3259, 1.3242, 1.3201, 1.3165, 1.3137 and 1.3105. Here, the descending structure of February 10 is considered medium-term. The continuation of the movement to the bottom is expected after the breakdown of the level of 1.3201. In this case, the target is 1.3165. Short-term downward movement, as well as consolidation is in the range of 1.3165 - 1.3137. For the potential value for the top, we consider the level of 1.3105. The movement to which is expected after the breakdown of the level of 1.3135.

Short-term upward movement is possibly in the range of 1.3242 - 1.3259. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3281. This level is a key support for the downward structure.

The main trend is the descending structure of February 10

Trading recommendations:

Buy: 1.3242 Take profit: 1.3257

Buy : 1.3260 Take profit: 1.3280

Sell: 1.3200 Take profit: 1.3165

Sell: 1.3163 Take profit: 1.3140

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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 are following the descending structure of 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 of 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

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For the euro / yen pair, the key levels on the H1 scale are: 122.04, 121.25, 120.97, 120.57, 119.97, 119.62, 119.16 and 118.42. Here, the price forms expressed initial conditions for the top of February 18. The continuation of the movement to the top is expected after the breakdown of the level of 120.57. In this case, the target is 120.97. Price consolidation is near this level. The passing at the price of the noise range 120.97 - 121.25 will lead to a pronounced movement. Here, the potential target is 122.04. We expect a rollback to the bottom from this level.

Short-term downward movement is possibly in the range of 119.97 - 119.62. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 119.16. This level is a key support for the upward structure.

The main trend is the formation of initial conditions for the top of February 18

Trading recommendations:

Buy: 120.58 Take profit: 120.96

Buy: 121.25 Take profit: 122.04

Sell: 119.95 Take profit: 119.62

Sell: 119.60 Take profit: 119.17

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For the pound / yen pair, the key levels on the H1 scale are : 145.19, 144.57, 144.12, 143.50, 143.25, 142.75 and 142.22. Here, we are following the ascending structure of February 10. The continuation of the movement to the top is expected after the breakdown of the level of 144.12. In this case, the goal is 144.55. The breakdown of this value will lead to the movement to the potential target - 145.19. When this level is reached, we expect a pullback to the bottom.

Short-term downward movement, as well as consolidation, are possible in the range of 143.50 - 143.25; hence, the likelihood of a reversal to the top. The breakdown of the level of 143.25 will lead to an in-depth correction. Here, the goal is 142.75. This level is a key support for the top.

The main trend is the rising structure of February 10

Trading recommendations:

Buy: 144.12 Take profit: 144.55

Buy: 144.60 Take profit: 145.16

Sell: 143.50 Take profit: 143.26

Sell: 143.23 Take profit: 142.80

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

Pound: cancellation of the long scenario

Good evening, dear traders! I present to your attention an analysis of the GBP/USD pair.

So, according to our morning recommendation, we advised taking long positions on the GBP/USD pair, in particular, on the good news on inflation today. In this regard, inflation data came out more than positive:

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After that, the GBP/USD pair started to increase rapidly; however, the growth slowed down after half an hour and the news positive was completely absorbed.

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For this reason, the log scenario is considered undeveloped. Apparently, there are reasons that force traders to sell the pound even on such strong and positive news. And this is unusual, given that this is not the first positive news about Britain in recent times.

The target level for purchases of 1.3070 remains with us. Thus, we will recommend taking long positions for this target when there are buy signals (possibly lower than current prices).

Have a successful trading and control the risks!

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

GBP/USD. Brexit vs inflation

The pound continues to be under pressure: despite good data on the growth of British inflation, the GBP/USD pair showed only a small price spurt, after which the pair plunged to the middle of the 29th figure. To the disappointment of the bulls of the pair, the news background regarding the prospects of the negotiation process between London and Brussels was not on the side of the British currency. And as you know, the Brexit issue is a priority for the pair - even American events are often ignored by the market when it comes to the "divorce proceedings". And although Brexit itself is already left behind, now the parties are trying to crystallize the rules for further relations. Harsh statements and comments (both from Brussels and London) offset any other fundamental factors.

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It is noteworthy that the main reports that were published this week did not significantly pull down the pound. On the contrary, the labor market showed good dynamics (though salaries did not reach the forecasted values), and today's inflation indicators - as a selection - they all came out in the green zone. If not for the Brexit factor, the pound paired with the dollar would probably have already tested 31 figures, opening up new price horizons for themselves. After all, current data suggest that the Bank of England will continue to maintain a wait-and-see attitude, despite calls by some members of the regulator to lower their interest rates. But the political events of recent days have mixed all the cards. GBP/USD traders again bogged down in a swamp of uncertainty amid the ultimatum statements of British and European politicians.

In particular, Michel Barnier, the EU's chief negotiator, said today that Britain would not be able to get the same trade deal with the European Union as Canada. He said that Brussels is ready to voice a proposal to London, suggesting an "ambitious partnership", but the British proposed the Johnson team's scenario should be excluded from the list of probable ones. Barnet made this statement after his colleague, the British negotiator David Frost, called on Europeans to build relations that would "be built on a free trade scheme with Canada."

Simply put, he proposed the so-called "Canadian option," according to which London enters into a deal with Brussels similar to the Comprehensive Free Trade Area Agreement (SETA) between the EU and Canada. This option allows for almost duty-free trading, with the exception of a number of goods and the service market. As an alternative, the British propose to go for the "Australian version". In this case, the parties can choose which sectors of the economy they can agree on, while all other areas will be regulated by the rules of the World Trade Organization.

All the options voiced have their flaws - primarily from the point of view of the interests of the EU. According to Barnier, the trade deal between Britain and the EU will include, in particular, regulation of the fishing industry and other specific conditions for relations, given the territorial and economic proximity. Therefore, the future relations of Great Britain and the EU, according to Barnier, cannot be compared with the relations of the European Union with Canada or Australia. In addition, Brussels continues to insist that London accept the jurisdiction of the EU Court in possible trade disputes. Johnson predictably opposes this proposition.

By the way, the agreement on trade and economic cooperation between the EU and Canada was concluded in 2016 after seven years of negotiations (!). Similar negotiations between Brussels and Australia on a free trade deal began in the year before last and still have not ended. But negotiations between the UK and the EU will officially begin only in March and should end in December. Given such a short time and all the previous statements by politicians, one can imagine how complex and nervous they will be.

Actually, the pound is losing points against the background of such prospects. The good data on the growth of British inflation could not convince traders to strengthen the bullish positions in the pair. Although all inflation indicators today came out better than expected. For example, in annual terms, the general consumer price index jumped immediately to 1.8% - there has not been a similar result since last summer. Core inflation also exited in the green zone, recovering to 1.6%. In addition, the retail price index rose to six-month highs (on an annualized basis), and the producer purchase price index, instead of dropping to -0.1%, unexpectedly increased to 2.1%. Similarly, the producer price index rose.

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But all the successes "on the inflation front" today were ignored by traders of the GBP/USD pair - market participants focused on the Brexit topic, thereby increasing pressure on the pound. At the moment, the pair is heading to the bottom of the 29th figure, while the closest support level is located slightly lower - at around 1.2860 (the lower line of the Bollinger Bands indicator on the daily chart). It is worth noting that significant news of a positive nature regarding the prospects of the negotiation process can turn the pair 180 degrees in the blink of an eye. But, apparently, such a scenario seems unlikely so far - at least in the short term. Therefore, in the near future, the price may get stuck in the range of 28-29 figures in anticipation of the next information drivers.

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

EUR/USD. February 19. Results of the day. Traders await Fed minutes, which will not bring new information

4-hour timeframe

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Amplitude of the last 5 days (high-low): 60p - 55p - 33p - 22p - 52p.

Average volatility over the past 5 days: 45p (average).

The EUR/USD currency pair, in a completely on-duty style, updated three-year lows, reaching 1.0785, and did not move from the current lows on Wednesday, February 19. The upward correction does not start and the single currency continues to fall. Despite the fact that today no important macroeconomic publication has been planned in the European Union and the United States that traders could use to take part of the profit on short positions, the correction stubbornly does not want to begin. However, we warned traders that such a weak, but confident, downward movement, which is observed now, can be very long. Thus, nothing changes for the euro/dollar pair. It should also be noted that the quotes of the pair have already worked out the support level of 1.0786 twice and failed to overcome it. Volatility has also decreased today and is currently 23 points. Thus, neither fundamental nor technical grounds for starting the correction are still observed. Even an unsuccessful attempt to overcome the level of 1.0786 cannot be considered a rebound, since the price has not rebounded anywhere, but is simply now trading along the indicated level.

Thus, the only event today that could even theoretically affect the course of trading is the minutes of the Fed meeting. We believe that it will not have any particular effect on the movement of the euro/dollar pair. If only because it is difficult to even remember the last time that the publication of the minutes would provoke serious movements in the market. In this case, it should be clearly understood that traders do not react to the minutes itself with any information in it, but to very specific information. If this information is already known to traders, then no reaction will follow. Thus, in essence, one question remains: will the document contain anything that the market may not know? And again, the answer is no. There have been no changes in the US economy recently, there have been no global geopolitical events (such as a trade war or an outbreak of the virus). Thus, the Fed simply has nothing to tell traders. Based on this, most likely, the document will contain a standard set of theses characterizing the US economy, monetary policy, as well as global risks. We can only say good things about the US economy, as it again began to accelerate, in contrast to the European and British. Certain issues still cause industrial production and GDP, but the Fed still does not see a problem in the slowdowns of these indicators, which in time coincided with the period of the trade war with China. Monetary policy in a document can only be discussed in the context of its conformity to the current economic situation. And about global risks, most likely, it will be said that they continue to soften and fall. The only problem that can cause a certain excitement is the coronavirus, but this problem is not new and it is also well known in the trading community.

Thus, for the rest of today, we do not expect any major price changes. Most likely, the downward trend will continue. We consider the issue of correction and inflation in the European Union to be more pressing issues, which will be published on Friday. Today in the UK, the consumer price index suddenly accelerated immediately by 0.5% in annual terms. Maybe something similar should be expected from European inflation? Although unlikely. German inflation showed minimal acceleration, so European inflation can accelerate to a high of 1.5% y/y. In addition, indices of business activity in the services and production sectors of the European Union, Germany and the United States will be released at the end of the week. The values are only preliminary, nevertheless they are very interesting.

From a technical point of view, there is simply nothing to say now. The euro/dollar stood in one place all day, near the support level of 1.0786. There is not even a hint of working out one of the boundaries of the volatility channel. And since the fundamental background is extremely weak today, it is unlikely that anything will change. Thus, prior to the start of the correction, it is recommended not to try to guess its beginning, but simply continue to trade "in the trend". There are high chances for downward movement to continue below the Kijun-sen line

Trading recommendations:

The EUR/USD pair maintains a downward movement without starting to adjust. Thus, it is now recommended that you stay in euro-currency sales with targets at support levels of 1.0786 and 1.0745. The MACD indicator has again turned up and is discharging. It will be possible to consider purchases of 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 critical line.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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

EURUSD and GBPUSD: Pound not satisfied with UK inflation data. Euro ready to continue its decline

A slight increase in the eurozone balance of payments current account surplus to 33 billion euros in December 2019 did not greatly help exhausted buyers of risky assets to regain at least part of their positions following the fall that has been observed since the beginning of this year. Let me remind you that the positive balance of the current account of the balance of payments of the eurozone amounted to 32 billion euros in November 2019.

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All attention will be shifted to the minutes of the January meeting of the US Federal Reserve today, which are unlikely to make any significant changes to the market, since traders will not find anything new in them. The Fed will publish the minutes, but the central bank's current approach to interest rates will remain unchanged. Let me remind you that in January, the Fed leaders voted to keep the key rate unchanged, in the range of 1.5% -1.75%. Before that, it was possible to observe three lows throughout 2019.

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It is possible that the emphasis in the minutes will be shifted to the likelihood of coronavirus affecting both the global economy and the trade conflict between the United States and China, a truce on which was reached at the end of last year. Last week, during his speech, Fed Chairman Jerome Powell touched on this problem, saying that the central bank is closely monitoring the situation and is ready to act as necessary, which is more likely to lead to lower interest rates than to raise them. However, this did not have any effect on the US dollar.

The technical picture of the EURUSD pair remained unchanged. All that European bulls can count on is the pair's return to the resistance area of 1.0830, since it will only be possible to talk about a larger increase to the area of the highs of 1.0860 and 1.0890 above this range. If the pressure on the trading instrument continues further, update of the lows 1.0740 and 1.0680 is not ruled out.

GBPUSD

The British pound rose on the news that annual inflation was higher than expected, which reduces the likelihood of lowering the Bank of England key interest rate. However, buyers of the pound have not yet managed to break above the quite important level of resistance.

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According to the report, the UK consumer price index increased by 1.8% in January 2020 compared to the same period of the previous year after rising by 1.3% in December. Economists had expected inflation to rise by only 1.6%. Let me remind you that the BoE's target level is about 2.0%. But core inflation, which does not take into account volatile categories, jumped to 1.6% in January against 1.4% in December, which indicates a very likely upward trend in domestic inflation in the coming months.

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Given that the BoE's monetary policy committee is not so keen on lowering interest rates, such indicators will allow it to push the likelihood of a slightly softening policy change.

As for monthly indicators, according to the UK National Bureau of Statistics, the consumer price index fell by 0.3% in January 2020 compared to December, when inflation remained unchanged. Economists had expected a decline of 0.4%. The retail price index fell 0.4% after rising 0.3% in December, and the purchasing price index rose 0.9% after a similar increase in December 2019.

As for the technical picture of the GBPUSD pair, the struggle for the important level 1.3010 continues. Only a breakthrough of this range will allow buyers of the pound to expect a return to the upper boundary of the side channel 1.3060, and its breakdown will open a direct path to the highs of 1.3100 and 1.3140. If the bears prove to be stronger and break below the support of 1.2970, then, most likely, only the lows of 1.2925 and 1.2870 will have to catch the pound.

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