Decline in oil prices triggered a drop in the CAD's rate

analytics5e5388f1d6828.jpg

The main news this weekend is the spread of coronavirus outside of China which led to a drop in oil prices from $ 53 to $ 52. This is due to the concern of investors regarding the slowdown in the global economy and a decrease in global consumption of black gold.

analytics5e5390978593c.png

This led to a weakening of the Canadian dollar, as Canada is one of the largest suppliers of oil to the market, and the exchange rate of the American dollar against the Canadian dollar jumped sharply:

analytics5e5390ab45900.png

We have already made recommendations for buying this instrument last week, and the news confirms the correctness of the chosen direction. If you do not have time to cling to this movement, I recommend picking up this instrument from the pullbacks in longs, forming a common long position.

Have a successful trading and control the risks.

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

EUR/USD Preview of the week: background statistics and fears around the coronavirus

On Friday, the dollar bulls weakened their grip, after which the EUR / USD pair was able to develop a correction to the middle of the eighth figure. However, the pair's upside impulse turned out to be short-term and today a price pullback followed, which signals the pair's bulls' inability to develop large-scale upward movement. It is likely that in the medium term the pair will get stuck in a flat at this price area. After all, when the price drops to the middle of the seventh figure, the pair begins to attract buyers, while with the development of a more or less large-scale correction, the pair begins to sell. Therefore, it will be quite difficult for both bears and bulls to break out of this price range - this requires a powerful informational occasion. While the economic calendar of the current trading week is not eventful with minor statistics and rare speeches by the Fed representatives. This means that over the next few days the price dynamics will be determined primarily by the external fundamental background. Growth or decline in anti-risk sentiment will push the pair either down or, respectively, up. Macroeconomic reports will serve only as a background, and in some cases, a catalyst.

analytics5e5373d1b3438.jpg

Nevertheless, the most significant statistics should be highlighted. For example, today the European currency will respond to reports from the IFO. Let me remind you that last week reports from ZEW and PMI were published, which showed multidirectional dynamics. Therefore, the opinion of specialists from the Munich Institute for Economic Research is of particular interest in this context. According to preliminary forecasts, the indicator of the business environment in Germany will decrease minimally (from 95.9 to 95.0 points), but the indicator of economic expectations will remain at its former positions. If the real numbers coincide with the forecast, the euro will receive minimal support. If the indicators sag significantly, the EUR / USD bears will get another reason to test the seventh figure.

On Tuesday, February 25, the Conference Board consumer confidence index will be published. Since November of last year, it has been gradually growing - in December and January, it reached quite high values (128.2 and 131.6 respectively), supporting the American currency. According to experts' general forecasts, the February index will reach 132.6 points - this is the best result since last August. The dollar will negatively react to this release only if it comes out much worse than forecasted values, reflecting the uncertainty of American consumers. Also to happen on the same day, the head of the Dallas Fed, Robert Kaplan, will make a speech. Recall that in early February, he announced that he expected strong economic growth in the United States this year amid a ceasefire in a trade war between the United States and China.

By the way, US economic growth will be in the spotlight on Thursday. On this day, we will find out the second estimate of US GDP growth for the 4th quarter. According to forecasts, this indicator will be revised upward from 2.1% to 2.2%. And although this review will be minimal, the very fact of such dynamics will improve the position of the greenback. The price index should remain at the same level, reflecting a slowdown - if in the second quarter of 2019 it reached 2.4%, then in the fourth quarter, it fell to 1.4%.

Also, the publication of the data on the volume of orders for durable goods in the United States is expected on Thursday. In December, the indicator showed positive dynamics, having got out of the negative area (similarly, without taking into account transport). In January, experts predict contradictory dynamics which is that the overall indicator should slow down to -1.4% (from the previous value of 2.4%), and without taking into account transport, it should grow to a minimum of 0.2%. If both indicators collapse into the negative area, the dollar may be under pressure. Meanwhile, the publication of the data in the real estate market of the United States is expected today. We are talking about the volume of outstanding transactions for the sale of housing. This indicator is an early indicator of housing market activity. In December, the indicator crashed into the negative area, but in January it should show growth. However, this release affects the EUR / USD pair only when there are significant fluctuations.

But on Friday, the pair will respond to the main index of personal consumption spending, which measures the core level of spending and indirectly affects inflation in the United States. It is believed that this indicator is monitored by the members of the regulator "with particular bias". According to forecasts, the index will show contradictory dynamics as in monthly terms, it will grow to 0.2%, while in annual terms, it will decrease to 1.5%. This release may have a significant impact on the position of dollar bulls.

analytics5e5373c3c2c14.jpg

As you can see, the economic calendar for EUR / USD this week is not completely empty. On the other hand, all the above reports will have a short-term impact on the couple - they will neither be able to reverse the trend, nor lower the price below the support level of 1.0750 (the lower line of the Bollinger Bands indicator on the monthly chart) with subsequent consolidation. These statistics can only strengthen or weaken the influence of the external fundamental background.

The news flow regarding the spread of coronavirus will be in the spotlight this week, determining the level of anti-risk sentiment. Further panic growth will allow the EUR / USD bears to keep the pair in the 100-point range of 1.0750-1.0850. I note that over the past weekend alone, the number of patients with coronavirus in Italy jumped from three to 159 people, with three deaths. Now, this European country ranks third in the world in terms of the infection spread, and as a result, all mass events were canceled there and even before the deadline they completed the legendary Venice Carnival. If further events develop in the same way, the euro will be under additional pressure, while the dollar will retain the status of a protective instrument.

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

Trading plan for EUR/USD on February 24, 2020. The virus attacks outside of China: Italy, Korea, Iran.

analytics5e536aeeb78b4.jpg

The coronavirus was once again the number 1 news.

Although China managed to stop the spread of the infection in the country, new cases had appeared in different countries.

In China, there are 77.5 thousand cases in total. Many of those have recovered already, moreso, the number of patients is decreasing. Because of this, Chinese authorities have announced that non-residents of Hubei province, who are not ill, are now allowed to leave the province. In other words, everything is under control in China. Moreover, in order to overcome the downturn caused by the epidemic, the Chinese government has promised a stimulus package for the economy.

On the other hand, at the moment, there are already 700 people infected in Korea, there is a sharp increase of 152 cases in Italy, and about 50 cases more is recorded in Iran.

As a result, Austria closed communications with Italy, while Turkey and Armenia closed the border with Iran.

It is clear that in the event of a global epidemic, we will face a severe global economic crisis, perhaps more severe than in 2008-09, because there will be a huge decline in world trade.

EUR/USD: because of the negative news on the virus, a gap was opened downwards in the euro.

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

Euro and pound are moving in different directions amid rising panic

The weekend was overshadowed by alarming statistics on the spread of COVID-19 outside of China and the strong increase in infections in South Korea, Japan, and Italy. So, the panic sales are intensifying, European stock exchanges will begin the week in the red zone, as the first data begins to appear, which indicate a much stronger slowdown in the global economy in the last month than previously thought.

Both the PMI Markit index in the US went below expectations, with the service sector index falling to 49.9p in March against the expected 53.4p. The composite index, usually ignored by the ISM-oriented market, declined almost 4 points to 49.6 points, and this is the lowest level in 6 years. As a result, US stock indices lost from 1 to 2%, bond yields fell sharply, and demand for gold scares even experienced traders.

EUR/USD

The February Eurozone PMI Markit indices came out with significantly higher forecasts. The activity index in the manufacturing sector slowed down from 47.9p. to 49.1p, the service sector increased from 52.5p to 52.8p, and it seems that companies are still managing to cope with the consequences of the spread of COVID-19 across Europe.

analytics5e5376ebe151a.jpg

At the same time, the long-term picture of the euro so far looks unclear. According to the CFTC's Friday report, the net short position in the euro increased and reached 91.5 thousand contracts. The dynamics of the current price are negative, and even some of its lag from the current spot price should not be misleading - the euro continues to be under serious pressure.

There were good chances for EUR/USD growth In September-October, but the crisis in the US repo market led to a sharp reaction by the Fed and the measures taken did not allow the upward movement to develop. Since then, investors are skeptical of the European currency, and it is highly likely that the decline will continue.

analytics5e53770452ca2.jpg

On the other hand, Ifo German indices for February will be published today. The forecasts are neutral, however, given that Germany's PMI turned out to be worse than the average level of the eurozone, especially in the manufacturing sector, it is likely that Ifo will also come out worse than forecasts.

The decline of EUR/USD on Friday was held back by the weak in the US, but it is unlikely to take long. The Euro remains under strong pressure and is set to decline further. The long-term target of 1.0338 will not move quickly, but it seems inevitable in the current conditions, as capital is preparing to flee Europe before the threat of economic slowdown due to the spread of the coronavirus.

GBP/USD

The pound, unlike the euro, feels much more confident. Retail sales in January rose above forecasts, the CBI report on industrial orders showed signs of improvement, the PMI Markit in the manufacturing sector, instead of the forecasted drop, rose from 50p to 51.9p, and the decline in the services sector was insignificant.

In addition, a CFTC report showed that the pound was the only one who was more likely to buy than the dollar. The outlined correctional decline was called into question, since the estimated current price turned up, which means a positive cash flow direction for the pound and growing demand, which can lead to an increase in GBP/USD on the spot.

analytics5e53771b3e8cb.jpg

Tomorrow, the EU should agree on its final goals before the trade negotiations between the EU and the UK, which are expected to start after March 2. The tensions between the EU and the UK are growing as the UK continues to rule out EU compliance, while the EU says it cannot offer a deal similar to the EU-Canada trade deal.

The probability of updating the low of 1.2848 and moving to a wide support zone of 1.2768 / 85 seems to be low, attempts to reduce it is more logical to use for purchases with the expectation of breaking a short-term downward trend that began in December. The nearest goal is the resistance zone 1.3035 / 65, and in case of successful passage, we can expect attempts to increase to 1.3203.

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

Panic returns, CFTC report showed that the dollar will continue to strengthen, CAD correction is completed, and demand for

The CFTC report confirmed the trend towards a stronger dollar and the bullish mood is developing. The total long position increased by 1.4 billion and reached 11.4 billion dollars. At the same time, a clear increase in gold demand should be noted. The price of the April futures reached 1682.55 at the opening of the week, updating the seven-year high.

On the other hand, oil loses about 2.5%, as a result, Asian stock indexes are in the red zone, the largest losses are mainly in commodity indices in Australia and New Zealand, each of which has decreased by more than 2% as of 5.00 Universal time.

USD/CAD

The loonie with varying success resisted the strengthening of the dollar last week and the most obvious reasons are still rising oil prices, the difference in profitability spreads, as well as a positive inflation report for January. The correlation between CAD and WTI oil reached 68%, which is a good sign for the Canadian currency, because it indicates that the market is guided by traditional indicators and to a lesser extent by geopolitics or the threat of the spread of the COVID-19 epidemic.

Meanwhile, the next meeting of the Bank of Canada will be held on March 4, while the consensus of the market is that the rate will remain at the same level of 1.75%, although some banks are of the opinion that there will be a decrease in the rate by 0.25%. The chances of a rate cut are also reduced after the inflation index rose from 2.2% to 2.4%.

By Monday's opening, USD/CAD is moving up again from the level of the current price, which is calculated on the basis of the balance of T-bills yield the state of the stock market and currency positioning of speculators according to CFTC reports.

analytics5e5359becf695.jpg

Since the USD/CAD rate is close to the calculated one, the correctional impulse to the downside has already been consumed or is close to consumption. The level of 1.32 is supportive, and it is likely that a local basis is formed to resume growth, since the current level is in the growth phase, which means that players are reviewing their portfolios in favor of the dollar, and this review should lead to another wave of growth on the spot.

The nearest resistance is 1.3268 and 1.3278. They are unlikely to resist on Monday, the goal is to get to the level of 1.3329. And given the increase in panic at the opening of trading on Monday morning, this scenario looks most likely.

USD/JPY

The consumer price index rose in January by 0.7%, while prices for goods rose by 1.3%, while prices for services fell 0.2% from the December level. Services account for more than half of all inflation components, and therefore there is no chance that general inflation will be able to sustainably reach the target level of 2%.

analytics5e5359e7060bb.jpg

One of the main factors affecting the level of prices for services is the growth of wages. In conditions when corporate incomes are declining, there is no reason to rely on the growth of workers' incomes, while prices in the services sector, directly or indirectly related to tourism or housing construction, will noticeably decrease. At the same time, a sharp slowdown in China's economy leads to lower commodity prices, which also puts pressure on inflation in Japan. As an aid, price dynamics will not seek to target the Bank of Japan, but rather, the threat of deflation will be stronger every month.

The CFTC report showed minimal dynamics in the currency exchange contracts for the Japanese yen, but you need to pay attention to the fact that for three months the yen was trading in a narrow range relative to the dollar, while the estimated current price level indicated a growing probability of a breakdown from the upward range, which happened last week.

analytics5e5359fe80012.jpg

The gap between the spot and settlement prices has narrowed to a minimum, but the dynamics of the estimated price is such that further growth in USD/JPY should be expected, which can be prevented by a sharp increase in the panic index on world markets.

The head of the Bank of Japan Haruhiko Kuroda said on Sunday that the country's monetary authorities are ready for action if it is necessary to level out the impact of coronavirus on the Japanese economy. This is the case, and the likely steps on the part of the Bank of Japan and the government will be the main constraints on the growth of the yen.

The resistance test 112.39 looks very likely. In case of breakdown, this level will turn into support, and the yen will be targeted at 114.58.

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

GBP/USD: plan for the European session on February 24. Pound buyers fight back against bears using good UK economy data

To open long positions on GBP/USD you need:

The UK PMI composite index showed growth, and the British pound managed to break in the afternoon of Friday above the resistance of 1.2927, which now acts as a support. An important task for the bulls today will be for a false breakout to form at this level, on which a further upward trend depends. Moving averages are also in this range, which may provide additional support to the pair. In the scenario of a breakthrough of this level, the pressure on the pound will increase, so it is best to postpone short positions until the test of a low of 1.2884, from which you can buy immediately for a rebound, since large players will try to build the lower boundary of the new rising channel there . An equally important task for the bulls will be to break through and consolidate above the resistance of 1.2960, which will allow us to count on the test of highs of 1.2996, where I recommend taking profits.

To open short positions on GBP/USD you need:

Bears will wait for the situation with the spread of coronavirus to worsen and the pair to consolidate below the support level of 1.2927, which will quickly push GBP/USD back to a low of 1.2884, where I recommend taking profits. If you find those who want to buy in the current conditions, it is best to wait for an upward correction and the formation of a false breakout in the resistance area of 1.2960, but I recommend selling the pound immediately for a rebound only after updating the high of 1.2996. Given that today important fundamental statistics on the UK economy are not published, attention should be paid to the statements of representatives of the Bank of England.

Signals of indicators:

Moving averages

Trading is slightly higher than 30 and 50 moving average, which saves the likelihood of continued upward correction.

Bollinger bands

In case the pair falls, the pound will be supported by the lower boundary of the indicator at 1.2913. You can sell immediately on the rebound after updating the upper boundary of the indicator in the area of 1.2980.

analytics5e537cb06c70e.png

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD: plan for the European session on February 24. Coronavirus in Italy hinders euro from spreading its wings. Bulls

To open long positions on EURUSD you need:

On Friday, it was possible to observe the upward correction in the European currency after the breakout of the resistance of 1.0822, but it all ended in the area of the high of 1.0860, which I repeatedly paid attention to in my reviews. The emergence of coronavirus in Italy again discouraged investors from buying euros, and now the bulls need to protect 1.0820, because we can only expect a return to a high of 1.0860 if a false breakout forms there, which is where I recommend taking profits. If there is no activity on the part of large players in this range in the first half of the day, then long positions are best left aside until this year's low test in the 1.0785 area. An equally important task of the bulls will be to break and consolidate above the resistance of 1.0860, which will strengthen the correction and lead EUR/USD to the area of 1.0886.

To open short positions on EURUSD you need:

On Friday, the bears retreated from the market after the breakout of resistance of 1.0820, which occurred against the backdrop of weak data on manufacturing activity and the service sector in the United States. Currently, the problems of coronavirus infection are helping sellers, but first of all they need to cope with the support of 1.0820, a breakthrough of which will lead to the euro's quick return to the low of this year, and its breakout will open a direct path to the levels of 1.0765 and 1.0740, where I recommend taking profits. In case the pair grows in the morning, only the formation of a false breakout in the 1.0860 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 1.0886.

Signals of indicators:

Moving averages

Trade is conducted slightly above 30 and 50 moving averages, which now act as support for the European currency.

Bollinger bands

In case the euro falls, the lower boundary of the indicator will provide support around 1.0795. You can sell immediately on the rebound from the upper boundary in the 1.0870 area.

analytics5e537c753dd3f.png

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of ETH/USD for 24/02/2020:

Crypto Industry News:

The Malta Financial Services Authority (MFSA) says it has never approved the Binance cryptocurrency exchange to operate in this country.

MFSA issued a public statement today in which it states that Binance "is not authorized by MFSA to operate in the field of cryptocurrency". The agency emphasized that recent media reports incorrectly define Binance as "a Malta cryptocurrency company," while the stock exchange "may not fall under regulatory oversight."

While major local publications refer to Binance as a Malta-regulated crypto company, MFSA has apparently issued a similar statement before, claiming:

"Following reports in some media about Binance as a cryptocurrency company in Malta, the Malta Financial Services Authority (MFSA) recalls that Binance is not authorized by MFSA to operate in the field of cryptocurrency and therefore is not subject to MFSA regulatory oversight."

MFSA also emphasizes that conducting cryptography activities in the country requires an MFSA license in accordance with the Act on Virtual Financial Assets of 2018.

Binance announced that it will open an office in Malta in 2018 after pressure from Japanese regulators forced the stock exchange to move. At that time, Binance CEO Changpeng Zhao (CZ) said he was invited by the government to Malta to look at an upcoming bill that would benefit crypto companies.

Technical Market Outlook:

The ETH/USD has hit the technical resistance zone located between the levels of $277.02 - $275.41 and reversed after the Shooting Star candlestick pattern has been made. Currently, the bears are trying to fill the weekend gap located between the levels of $262.88 - $268.97. 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 - $334.89

WR2 - $309.29

WR1 - $291.76

Weekly Pivot -$264.76

WS1 - $245.87

WS2 - $220.22

WS3 - $202.34

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.

analytics5e536f99ccc99.jpg

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

Technical analysis of BTC/USD for 24/02/2020:

Crypto Industry News:

Irish Clifton Collins, who was recently imprisoned for drug trafficking, claims that the robbers took keys to $ 56 million in Bitcoin, which the Irish Supreme Court ruled should be confiscated.

After obtaining more than 6,000 Bitcoins by 2017, Collins decided to protect itself against hackers by distributing cryptocurrency to 12 newly created accounts. He thus transferred 500 Bitcoins to each of them, reports the Irish Times. At present, each portfolio would have a value of around $ 4.87 million.

Collins then printed the keys to all his 12 accounts on a sheet of paper, which he claims he had hidden in the aluminum part of the rod. He kept her in the house he rented in County Galway, Ireland. However, when he was arrested for trafficking in cannabis in 2017, he was allegedly burglary.

What's more, the owner asked to clean the house and throw away many of Collins's items. The dump workers confirmed to the police that they had seen the fishing rod, but the dump was then sent to Germany and China. The rod containing the keys to Collin Bitcoins apparently has never been found.

It is noteworthy that many witnesses - including those who cleaned the house, landlords and those who helped Collins distribute his Bitcoins to new bills - gave the police the same details about what happened to the rented house and fishing rod.

Collins commented on this message saying it was a punishment for his own stupidity.

Technical Market Outlook:

The BTC/USD pair has been trading in a range over the weekend as the bulls have tested (and broken through) the 61% Fibonacci retracement of the last wave down located at the level o f$9,866. Nevertheless, the bears took control over the market again and immediately ushed the price right back on towards the level of $9,555, where the short-term technical support is located. Currently, the Bitcoin is trading in the middle of the range in neutral market conditions, but the larger timeframe trend remains bullish.

Weekly Pivot Points:

WR3 - $11,253

WR2 - $10,744

WR1 - $10,274

Weekly Pivot - $9,742

WS1 - $9,288

WS2 - $8,756

WS3 - $8,263

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.

analytics5e536dce0cd17.jpg

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

Technical analysis of GBP/USD for 24/02/2020:

Technical Market Outlook:

The GBP/USD pair rallied through all the near technical resistance levels located at 1.2871, 1.2904, 1.2939 and 1.2962, but eventually, bulls did not make it through the technical resistance located at the level of 1.2988. The market had made a Bearish Engulfing candlestick pattern around this level and the bears took control over the market. Currently, the price is coming off the hight and traders around the level of 1.2939. The larger timeframe trend remains up, but the recent breakout from the consolidation zone is a signal, that the uptrend might be reversed soon.

Weekly Pivot Points:

WR3 - 1.3255

WR2 - 1.3152

WR1 - 1.3043

Weekly Pivot - 1.2942

WS1 - 1.2840

WS2 - 1.2740

WS3 - 1.2640

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.

analytics5e536c3806bc0.jpg

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

Technical analysis of EUR/USD for 24/02/2020:

Technical Market Outlook:

The EUR/USD pair has finally bounced from the extremely oversold market conditions and went up towards the lower line of the main descending channel. The bulls have managed to push the price towards the level of 1.0855 and the high was made at the level of 1.0863. Moreover, the price is out of the short-term channel for good (the black one), so now the bulls can make another wave up way more easier. The next target for bulls is seen at the level of 1.0879 - 1.0904 zones and the immediate support is seen at the level of 1.0772. The larger timeframe trend is still down.

Weekly Pivot Points:

WR3 - 1.0954

WR2 - 1.0908

WR1 - 1.0871

Weekly Pivot - 1.0825

WS1 - 1.0787

WS2 - 1.0735

WS3 - 1.0693

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.

analytics5e536aed34342.jpg

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

GBP/USD intraday high and low for FEB 24, 2020

analytics5e5368649a876.jpg

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

STDV 10 - 1.3294.

STDV 9 - 1.3262.

STDV 8 - 1.3230.

STDV 7 - 1.3198.

STDV 6 - 1.3166.

STDV 5 - 1.3134.

STDV 4 - 1.3102.

STDV 3 - 1.3070.

STDV 2 - 1.3038.

STDV 1 - 1.3006.

CBDR - 1.2974.

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

CBDR - 1.2942.

STDV 1 - 1.2910.

STDV 2 - 1.2878.

STDV 3 - 1.2846.

STDV 4 - 1.2814.

STDV 5 - 1.2782.

STDV 6 - 1.2750.

STDV 7 - 1.2718.

STDV 8 - 1.2686.

STDV 9 - 1.2654.

STDV 10 - 1.2622.

Pay attention to the level between today & yesterday range at 1.2974 & the previous day high at 1.2980 with the previous day low at 1.2874. This level can be a potential turning point.

(Disclaimer)

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

EUR/USD intraday high and low for FEB 24, 2020

analytics5e536759f01d3.jpg

Today's high and low from the Flout Range usually form at STDV 2-STDV 4 in the normal condition market but sometimes can reach STDV 5-STDV 6. Here's today's level:

STDV 10 - 1.1078.

STDV 9 - 1.1056.

STDV 8 - 1.1034.

STDV 7 - 1.1012.

STDV 6 - 1.0990.

STDV 5 - 1.0968.

STDV 4 - 1.0946.

STDV 3 - 1.0924.

STDV 2 - 1.0902.

STDV 1 - 1.0880.

FLOUT - 1.0858.

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

FLOUT - 1.0814.

STDV 1 - 1.0792.

STDV 2 - 1.0770.

STDV 3 - 1.0748.

STDV 4 - 1.0726.

STDV 5 - 1.0704.

STDV 6 - 1.0682.

STDV 7 - 1.0660.

STDV 8 - 1.0638.

STDV 9 - 1.0616.

STDV 10 - 1.0594.

Pay attention to the level between today & yesterday range at 1.0770 & the previous day high at 1.0864 with the previous day low at 1.0784. All these levels can be a potential turning point.

(Disclaimer)

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

Forecast for EUR/USD on February 24, 2020

EUR/USD

The euro gained a little over 60 points on Friday due to higher European PMI and weakened PMI in the US. Manufacturing PMI of the euro area increased from 47.9 to 49.1 in February (forecast 47.4), Services PMI increased from 52.5 to 52.8. In the US, the production indicator fell from 51.9 to 50.8, while in the service sector it weakened from 53.3 to 49.4.

analytics5e535b4dd3543.png

In corrective growth, the price lingered at the Fibonacci level of 161.8%, today in the Asian session the price is developing slightly below it. To continue the growth, the price should go above yesterday's high, in this case, the correction will continue to the Fibonacci level of 138.2% at the price of 1.0898. The Marlin oscillator is in a downward trend within the clear framework of its own channel. In such a situation, a reversal of the signal line from its upper boundary is more likely than continued growth of the indicator and price.

analytics5e535b6391369.png

The price is determined with the direction on the MACD line on the four-hour chart. Here, the first sign of a decline will be when the price consolidates below the MACD line, a confirmation of the signal will be the Marlin line going into the zone of negative values, which also corresponds to the price going below Friday's low of 1.0780.

We are waiting for the price to go down below 1.0780 and the euro to fall further to the target range of 1.0650/80.

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

Forecast for GBP/USD on February 24, 2020

GBP/USD

The pound grew by 75 points on Friday, amid the general weakening of the dollar, reaching the resistance of the balance line on the daily chart.

analytics5e535af702387.png

Convergence was formed according to the Marlin oscillator; its refinement by the indicator itself can stretch to the upper limit of its own resistance, indicated by the azure color line. On the price chart, this development coincides with the Fibonacci level of 76.4% at the price of 1.3046, which coincides with the resistance of the trend line drawn at the highs of December 13 and January 31 (also azure). The price should go above Friday's high in order to work out such a scenario.

analytics5e535b0ca9478.png

The price is on the MACD line on the four-hour chart, the signal line of the Marlin oscillator on the boundary with the territory of the bears. Consolidating the price under the line will return the trend to the main one - a decrease to 1.2842 and further to 1.2758.

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

Forecast for AUD/USD on February 24, 2020

AUD/USD

The Australian dollar fulfilled the target at the Fibonacci level of 238.2% on the last day of last week, breaking the support of the embedded price channel line. Now, the price is open at 0.6535/53 as a range of Fibonacci levels of 271.0-261.8%. Furthermore, it is likely to fall to the level of 314.0% at the price of 0.6457, where the lower embedded line of the price channel also passes.

analytics5e535a9bc8e6b.png

On the four-hour chart, when the new week opens, the gap is not yet closed, fluctuations are possible around the level of 0.6624, that is, we are waiting for the main movement on Tuesday, when the US data on real estate prices and consumer confidence indicators will be published. The S&P/Case-Shiller home price forecast in the 20 largest cities in the US is 2.7% y/y compared to 2.6% y/y, the Conference Board consumer confidence index is expected to rise from 131.6 to 132, 6 points.

analytics5e535ab1da792.png

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

GBP/USD. Preview of the new week. Thursday is the most significant and interesting day of the coming week

4-hour timeframe

analytics5e534fced8029.png

Amplitude of the last 5 days (high-low): 56p - 78p - 115p - 80p - 105p.

Average volatility over the past 5 days: 87p (average).

A new trading week for the GBP/USD currency pair begins with an upward correction. In general, the British currency's movement remains slurred and incomprehensible. On the one hand, a downward trend persists, which is more clearly visible on the 24-hour timeframe. On the other hand, the abundance of deep corrections against this very trend does not allow us to work it out confidently. Moreover, we believe that now the pound/dollar pair is faced with a kind of paradoxical situation, which we previously described in the euro/dollar pair. We have already said in previous articles that there are plenty of reasons to pull down the pound, but there are only a few reasons for its growth. However, the pair does not demonstrate the dynamics that we expect from it. Therefore, the solution to the problem may come as unexpectedly as for the EUR/USD pair - a strong downward movement will start in just one day.

As for the macroeconomic background, it is immediately worth noting that this week no important report will be published in the UK. Thus, both traders of the EUR/USD pair and traders of the GBP/USD pair will rely only on US statistics. However, with statistics from overseas, not everything will be smooth. For example, on Monday only the minor index of national activity of Chicago will be published, on Tuesday - the housing price index, and on Wednesday - the number of sales of new homes. Obviously, these reports will not cause any attention from traders. Thus, the first three days for the GBP/USD currency pair will be completely empty in the news plan.

analytics5e534fe46d838.png

Important information will begin to arrive from the United States on Thursday. The first report is orders for durable goods for January. In the past two years, growth and decline indicators have alternated, and the decline were often stronger than growth. In January 2020, it is expected that the main indicator will again lose 1.5% m/m. The second most important indicator of orders for durable goods, excluding defense and aviation orders, is expected with a loss of 0.1%.

analytics5e535003ed83e.png

Another no less significant indicator, excluding defense orders, is projected at +1.3% m/m. The latest report, excluding transport orders, is projected by experts at + 0.2%. It should be noted right away that forecasts and real values for all four reports rarely coincide, or at least are approximately equal. Typically, the discrepancies are very serious, so the forecast values are purely nominal. However, the reports themselves are important and cannot be missed.

analytics5e53501907b1d.png

Another significant indicator of the state of the US economy is the fourth quarter GDP, although only in a preliminary value. According to experts, the Gross Domestic Product will remain unchanged at +2.1%. Another publication of unimportant data on unfinished housing sales transactions will be released on Thursday, February 27.

analytics5e5350350066f.png

Changes in the income level of the US population is set to be released on Friday.

analytics5e53504a45178.png

... and the level of expenses. Both reports have more than neutral forecast values of +0.3% m/m. It should also be noted that these data rarely affect the mood of market participants. Therefore, one can hardly expect a strong market reaction if there are no serious deviations of the actual values from the forecast,. However, serious deviations are also not expected. If you look at the statistics for the last two years, it becomes clear that in most cases both indicators show a steady increase from 0.2% to 0.4%. The index of expenditures on personal consumption, the Chicago PMI and the consumer sentiment index from the University of Michigan are also slated for release on Friday, February 28. Also far from the most important data.

Thus, it turns out that the most important and, in fact, the only day when the macroeconomic background will really be strong is Thursday. Until then, respectively, the volatility for the pound/dollar pair may be low, and the trend may still be absent. However, despite the scarcity of the news calendar at first glance, one should not forget that at any moment information from Boris Johnson or Michel Barnier may be received regarding negotiations on a trade deal between the EU and Britain. But this information will definitely not be left without attention and may cause serious movements in the market.

From a technical point of view, the pound/dollar has now consolidated above the Kijun-sen line, so the downward trend has been canceled. Nevertheless, next week, technical factors will probably be the main ones, since the macroeconomic background is likely to be weak. The Senkou Span B line could not be overcome, so the downward movement may resume.

Trading recommendations:

GBP/USD began a new round of correction. Thus, it is recommended to sell the British pound with targets at 1.2867 and 1.2796 if the price consolidates back below the critical line. We recommend considering purchasing the pair with a target of 1.3041 if the upper boundary of the Ichimoku cloud is overcome.

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. Preview of the new week. Euro will not wait for support from the EU next week

4-hour timeframe

analytics5e534f5bf19f7.png

Amplitude of the last 5 days (high-low): 22p - 52p - 26p - 43p - 80p.

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

The EUR/USD currency pair begins a new and interesting week. This week is only interesting because we have to find out if the upward correction will continue? Recall that for almost three full weeks, the European currency fell daily against the US dollar, with little or no correction. The long-awaited correction began last Friday. However, at the moment, the quotes of the pair only managed to work out the lower boundary of the Ichimoku cloud. Thus, even inside the cloud, traders have not been able to gain a foothold. It is this moment that leaves the bears hope for the resumption of the downward trend. An important factor next week will be the macroeconomic background. That is macroeconomic reports. The fundamental background for the euro/dollar pair has not changed a long time ago. So we should figure out what to expect from the coming week. This article will examine all publications related to the European Union, and the article on GBP/USD - regarding the United States and Great Britain.

And immediately I want to note that there will not be any publications on the state of the EU economy in the coming week. More precisely - not a single important one. For example, an indicator of the assessment of the current situation, an index of economic expectations and an index of business optimism from IFO will be published on Monday in Germany. These reports are nothing more than polls from the heads of 7,000 enterprises. It is unlikely that these data can greatly affect the movement of the currency pair.

analytics5e534f714e1c2.png

The more important GDP for the fourth quarter will be published in Germany on Tuesday, which experts predict will be 0.4% y/y. Zero GDP growth is expected in quarterly terms. Needless to say, these are very low numbers that have not changed since the publication of the third quarter GDP report? That is, for the better, such an important and significant indicator of the state of the German economy does not change. Of course, if the forecast value is exceeded, then the euro can receive additional support from traders.

The EU will not publish a single macroeconomic report on Wednesday. And on Thursday, dozens of secondary data will be available right away: inflation in Spain, consumer lending in the EU, an index of sentiment in the EU economy, an index of sentiment in the services sector, a level of consumer confidence, an indicator of the business climate and an index of business optimism in industry. Do traders remember when the last time one of these reports had an impact on the movement of the euro?

analytics5e534f92b25e6.png

On Friday, some of the less important reports will be published again. More precisely, these reports will be quite important for Germany. But Germany is just one country in the EU, despite the unofficial status of being the "locomotive" of the EU economy. Therefore, reports on unemployment, changes in the number of unemployed in February and the import price index can be safely ignored. Only the consumer price index for February remains, which is expected to slow down to 1.6% y/y. Neither in the European Union nor in Germany are we talking about stable two percent inflation. Recall that the ECB policy regarding interest rates depends on inflation. As long as inflation is weak, the ECB will not think of any tightening of monetary policy. Thus, two more or less important reports are expected from the eurozone this week - on inflation in Germany and on GDP. No improvement are expected from both indicators. And now it is becoming clear that help for the euro should be expected either from technical factors or from across the ocean.

As we have said, US data will be considered in the article on the pound. As for the technical factors, they are just now quite strong for the euro. The total loss of the euro reached nearly 300 points over the past three weeks. Thus, even if the correction takes the standard 50%, you can count on the strengthening of the euro to the level of 1.0935. Furthermore, everything will again depend on macroeconomic information and the mood of traders. It should be understood that such a strong and recoilless, as in the last three weeks, the movement occurs once or twice a year. Thus, now the euro/dollar is likely to return to a more familiar style, with frequent corrections and pullbacks, without a pronounced trend. Thus, short positions have so far lost their relevance.

Trading recommendations:

The EUR/USD pair started a correction movement. Thus, now we can formally consider long positions with targets at the level of volatility of 1.0891 and Senkou Span B line, but with extremely small lots. It will be possible to consider selling the euro/dollar pair with the goal of the support level of 1.0742, if traders manage to gain a foothold back below 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

Overview of the GBP/USD pair. February 24. Emmanuel Macron does not believe in signing the agreement in 2020. Frost and Barnier

4-hour timeframe

analytics5e531bc630cc0.png

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: -2.1830

The British pound also starts the last trading week of February with an upward movement. However, in general, the GBP/USD pair keeps a vague movement with a downward bias. On the first trading day of the week, neither the UK nor the US will have any important and significant publications, so traders will be deprived of macroeconomic factors. Since both linear regression channels are directed downward, we still expect the downward trend to resume. However, to find out about the readiness of traders to resume sales, you need to wait for the price to fix below the moving average line.

Despite the absence of a macroeconomic background, we can not say that no events are happening around the British pound right now. For example, French President Emmanuel Macron said that his personal opinion is that the UK and the European Union will not be able to conclude a trade agreement before the end of the "transition period". According to Macron, the parties cannot agree on rules for fishing in British waters. However, there are actually many more stumbling blocks in the negotiations. The President of France only said about the issue that is most important for his country. Recall that France and several other EU countries want to continue fishing in British waters. However, London insists on restricting the access of European fishermen to its waters. British sailors export most of their catch to the EU, so it will really be beneficial for the UK to establish a monopoly on fishing in its waters.

At the same time, the EU's chief diplomat for negotiations with London, Michel Barnier, once again spoke harshly about Boris Johnson's wishes and prospects for a deal. Barnier said that London "will not get the Canadian version of the agreement." According to Barnier, Johnson refuses to understand that each partner has its own trading rules, which are based on geographical location. Moreover, all of them are determined by a number of reasons and factors. Thus, Barnier believes that the "simplicity" of Boris Johnson (who proposes to give London a "Canadian" or at least an "Australian" version of the agreement) is not appropriate in these negotiations. Earlier, David Frost spoke in Brussels, saying that the UK is not going to bind itself to the rules and regulations of the EU after leaving the EU. According to Frost, the UK is not going to make concessions to get a "soft version of the agreement". Frost also noted that the UK itself should determine the standards by which the country and its residents will live. "That's what it's called to be an independent country," Frost concluded. Thus, as we can see, the positions of the parties remain unchanged for about a week before the start of official negotiations between the parties. And these positions do not promise anything good for London or Brussels. If there was enough time, then we could expect that sooner or later the parties will come to an agreement. However, most likely, on the initiative of Boris Johnson, the "transition period" will end on December 31, 2020. And until that date, European diplomats say that it will be extremely difficult to reach an agreement.

Thus, from our point of view, the prospects for the British currency remain very vague. There is no denying that without a trade deal, the UK economy will be hit even harder. If the financial sector is currently losing 70 billion a year, it may start losing even more after 2020. All this will affect macroeconomic indicators, monetary policy, and the exchange rate of the British currency. Thus, in the long term, we are still waiting for the depreciation of the pound. If traders manage to overcome the moving average, the trend will formally become upward and buy positions can be considered, but in extremely small lots, since both channels of linear regression are directed downward.

analytics5e531bdba5a4a.png

The average volatility of the pound/dollar pair over the past 5 days was 87 points and is characterized as "average" in strength. According to the current volatility level, the working channel on February 24 will be limited to the levels of 1.2867-1.3041. A downward reversal of the Heiken Ashi indicator will indicate a possible resumption of the downward movement.

Nearest support levels:

S1 - 1.2939

S2 - 1.2909

S3 - 1.2878

Nearest resistance levels:

R1 - 1.2970

R2 - 1.3000

R3 - 1.3031

Trading recommendations:

The GBP/USD pair adjusted to the moving average line. Thus, it is now recommended to resume selling the pound with the targets of 1.2909 and 1.2878, if the pair rebounds from the moving average. It is recommended to buy the British currency not before fixing the price above the moving average line with the first targets of 1.3000 and 1.3031, but in small lots since the fundamental factors remain on the side of the US currency.

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 24. Donald Trump is in favor of increasing trade with China, even at the expense of

4-hour timeframe

analytics5e531b574e30a.png

Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: 144.1236

The EUR/USD currency pair begins the week with an upward movement that began last Friday. After a long downward movement, the hour of correction has come, which is also an upward trend, since the quotes have fixed above the moving average line. Thus, the upward movement is expected to develop this week. However, as for Monday, no important macroeconomic publications are scheduled for this day. Secondary indicators for assessing the current situation, the index of economic expectations, the index of business optimism in Germany and the index of national activity of the Federal Reserve of Chicago in the United States are 95% likely to cause no reaction from market participants. Thus, we believe that the first trading day of the week can pass in very boring trading with a corrective mood.

Meanwhile, US President Donald Trump is once again coming to the forefront. The odious US leader supports the sale of GE aircraft engines to China. According to Trump, the States should not refuse to sell almost any categories of goods to other countries, even if this is a threat to national security. "The United States cannot and will not be a country that is difficult to deal with in terms of purchasing our products by foreign companies, including because of the ever-used justification for national security issues. We want to sell our products to China and other countries. We don't want to make it impossible to do business with us. I want China to buy our aircraft engines, which are the best in the world. I have seen some regulations circulating, some of them are being considered by Congress, and they are outrageous," the US President said. "I want it to be easy to do business with the US, not difficult," Donald Trump summed up. Earlier it was reported that the presidential administration, as well as Congress, has the ability to ban the sale of American jet engines to China. The American leader also said that he takes a tough position against the Chinese company Huawei, but does not believe that the States should behave harshly towards everyone.

Thus, we believe that Donald Trump once again gives reasons to Democrats and all his opponents to raise questions of loyalty to the oath. After all, Trump is following the path of a merchant. He doesn't care what to sell and who to sell. The main thing is to sell so that the economy produces as many goods as possible and grows. At the same time, some categories of goods may be used against the United States in the future. Thus, it would be reasonable not to export to the main competitors on the world stage. Obviously, if we were talking about a small country that does not pose a serious threat to America, then it does not make much difference to sell it or not to sell products such as jet engines. But China (with huge production and technological development and even greater potential) can use these engines to copy technologies and place them on their combat aircraft. Given the constant competition between China and the United States, this is really a too risky step. And Democrats can again use this position of Trump to accuse him of short-sightedness.

From a technical point of view, we expect boring and uninteresting trades on Monday. It is unlikely that the correction will continue at the same pace as on Friday. Thus, volatility is likely to decrease. Both channels of linear regression continue to be directed downward, however, as we have said in previous reviews, it is likely that the euro/dollar pair will now go into consolidation for several weeks. The long-term outlook for the euro remains the same - moving towards price parity, as most macroeconomic and fundamental factors remain in favor of the US currency.

analytics5e531b6dc4315.png

The average volatility of the euro/dollar currency pair is 45 points per day. In general, the indicator remains unchanged and the pair still passes about 40 points from the minimum to the maximum of each day. Thus, on Monday, we expect movement between the borders of the volatility corridor of 1.0801-1.0891. In general, volatility remains fairly low.

Nearest support levels:

S1 - 1.0803

S2 - 1.0742

S3 - 1.0681

Nearest resistance levels:

R1 - 1.0864

R2 - 1.0925

R3 - 1.0986

Trading recommendations:

The euro/dollar pair started a corrective movement. Thus, purchases of the European currency with the targets of 1.0891 and 1.0925 are relevant now. You can return to sell positions after the price is fixed below the moving average line with the targets of 1.0803 and 1.0742.

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

GBP/USD. Pound loves silence: the pair could return to the 30th figure next week

The pound paired with the dollar experienced a rise and fall last week - rising first to the middle of the 30th figure, a few days later it crashed to around 1.2848, thereby updating the annual low. Nevertheless, the GBP/USD pair completed the five-day trading on a major note, touching the boundaries of the 29th figure. Such price fluctuations are due to completely different fundamental factors - if at the beginning of the week the pound reacted only to "its" circumstances (British macroeconomic statistics, comments of politicians regarding Brexit, etc.), then GBP/USD moved in the wake of the US currency on Friday. The recipe for further growth of the pair is quite simple: silence at the front of the negotiation process amid a general decline in anti-risk sentiment in the foreign exchange market. Under such conditions, the dollar will continue to weaken, while the pound will finally be able to win back the macroeconomic releases of the past week, which were left without the attention of traders.

analytics5e5320e257e47.jpg

Let me remind you that last week the British currency was forced to respond to political factors that were associated with the prospects of the negotiation process between London and Brussels. Negotiations themselves will not begin until March, but now there is a fairly tough correspondence battle between politicians. Thus, the chief negotiator from the British side proposed the so-called "Canadian option" to his European colleagues, according to which London enters into a deal with Brussels similar to the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada. This option involves almost duty-free trading, with the exception of a number of goods and the service market. As an alternative, he proposed to consider 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.

The EU's chief negotiator Michelle Barnet threw both options back, saying that the economic relations between Britain and the EU have their own specifics, so the proposed scenarios cannot be "redrawn". He also recalled that London should accept the jurisdiction of the EU Court in possible trade disputes. Johnson naturally reacted negatively to the position of the Europeans.

This is far from the first friction between the parties on the eve of the 10-month negotiation marathon. Prior to this, Brussels promised to support Spain in the matter of territorial claims regarding Gibraltar, while Johnson threatened to completely leave the negotiating table. GBP/USD traders are forced to respond to these statements, while ignoring the most important macroeconomic reports. But it is worth noting here that political factors have a sufficient short-term effect on the pair. While key statistics are waiting in the wings. That is why the reports released last week are in "standby mode". Indeed, by and large, the January figures allow the Bank of England to continue to maintain a wait-and-see attitude.

First, all January inflation indicators came out better than expected. In annual terms, the general consumer price index jumped 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 declining to -0.1% unexpectedly increased to 2.1%. Similarly, the producer price index rose: + 0.3% m/m, 1.1% y/y. Published data on the labor market also supported the pound (excluding salaries): the unemployment rate remained at a record low 3.8%, while the growth rate of the number of applications for unemployment benefits reached five thousand, then most experts expected it to the level of 20 thousand.

We were also pleased with retail sales. The consumer activity of the British has increased, despite the panic about the spread of coronavirus. The total retail trade (including fuel costs) grew in January by 0.9% in monthly terms and by 0.8% in annual terms (both indicators came out better than expected). Excluding fuel costs, the indicator showed a more significant growth: firstly, it left the negative area and rose to 1.6% (instead of the forecasted level of 0.8%) in monthly terms and up to 1.2% year on year, instead of the expected increase to 0.5%.

analytics5e5320f6d9a4e.jpg

In other words, almost all macroeconomic reports came out in the green zone last week. Some of them significantly exceeded the forecast values. All this suggests that the BoE is likely to take a wait-and-see attitude at its next meeting (to be held on March 26).

The economic calendar for the GBP/USD pair is practically empty next week: the dollar will respond to the "coronavirus chronicles", and the pound will respond to the news flow regarding the prospects of the negotiation process between London and Brussels. If the anti-risk sentiment fades (for example, if the growth rate of the recoveries exceeds the growth rate of those infected), and the European and British politicians take a break before the official negotiations begin, the pound will have a chance not only to return to the boundaries of the 30th figure, but also confidently step over this resistance level. Unlike the euro, the British currency has weighty arguments for its own growth, which, alas, are often drowned out by loud statements by politicians.

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

GBP/USD. Results of the past week. Pound supported by data on business activity in Britain and the US

24-hour timeframe

analytics5e5325019c40b.png

The British pound with grief in half on the 24-hour timeframe is moving down. The most surprising thing is that before the start of the current downward trend, an upward trend was observed, which was quite strong, although we have repeatedly noted all the unfounded growth of the British currency. Recall that the last time the pound strengthened was due to the traders' expectations of Boris Johnson's victory in the parliamentary elections. Then this victory was identified with the long-awaited end of Brexit, with Brexit having a deal, since Johnson managed to come to an agreement with Brussels when no one else believed in it. Once again: these expectations provoked a full-blown growth of the British currency. February 2020 is now ending, that is, two and a half months have passed since those events. The probability of Britain leaving the EU at the end of 2020 with a deal fell to 20-30%, although there is a formal agreement with Brussels. Only now the parties have now to agree on how they will coexist with each other after 2020, and a huge number of problems have already emerged with this process, and the negotiations themselves have not even begun. Macroeconomic statistics continued to deteriorate in these 2.5 months, the Bank of England with outgoing Mark Carney surprised the markets, not one step closer to easing monetary policy, in general, there is still no reason to expect the emergence of fundamental support factors. But at the same time, traders are in no hurry to get rid of the UK currency. Either they expect it when really disappointing information begins to arrive, or now the GBP/USD pair has encountered a paradoxical situation in which the euro has been for several months. Recall that the paradoxical situation for the euro ended in a collapse of 300 points, which, with an average daily volatility of about 40 points, is quite a lot. Moreover, the euro fell by only 200 points for the whole of 2019. Thus, we believe that everything will ultimately end in a fall for the pound sterling. We continue to believe that it is the pound that remains extremely overbought paired with the US dollar, and not vice versa.

A large number of macroeconomic statistics were published in the UK last week. Someone could say that most of this package of statistics turned out to be positive. We believe that behind this whole "positive" wrapper lies a "negative" filling. Let's start with the average wage in the UK. And taking into account bonuses, and without taking into account thereof, the growth rate decreased. Inflation in January accelerated in annual terms to 1.8%, but in monthly terms it fell by 0.3%, which, in essence, means precisely deflation in January. Retail sales in Great Britain grew by 0.8% y/y and 0.9% m/m, exceeding forecast values. Only here the value of the previous month was higher, and the current annual growth rate of retail sales fell to the lows of October 2017. The CBI Industrial Orders Report also exceeded forecast values and amounted to -18. Finally, on Friday preliminary data on business activity for February in the sectors of services and production were published and only these data can really be considered positive and encouraging for the British pound. However, while in the manufacturing sector an increase was recorded to 51.9, then in the services sector, on the contrary, a decrease to 53.3. Thus, in fact, only one indicator of the week from the UK can be considered positive. These are the results of the past week. Of course, statistics from the United States helped the British pound a lot on Friday, as both Markit business activity indices declined, but it's too early to say that the US economy was starting to have problems, which could theoretically help the British currency.

Thus, from our point of view, the general conclusions for the British pound remain disappointing. There is still no fundamental reason for growth. The Bank of England still has to seriously consider reducing the key rate, although it will no longer do so with Carney at the head. A sufficient number of potential risk situations may arise in 2020, and the British economy continues to lose 70 billion a year.

From a technical point of view, the next round of correctional movement against the Dead Cross began on the 24-hour timeframe. Bollinger Bands continue to remain down. Thus, sell orders remain relevant in general. From a fundamental point of view, until traders receive really important and really strong information, one cannot count on the continued growth of the British pound.

Trading recommendations:

The pound/dollar pair started an upward correction on the 24-hour timeframe. Thus, at the moment, the sale of the pound is recommended with the target support levels of 1.2838 and 1.2724, but after the correction is completed, that is, after the price rebounds from the critical Kijun-sen line. Shorts are also relevant on the 4-hour timeframe, but only if there is a Dead Cross and the price is below 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.

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

EUR/USD. Results of the past week. Euro begins to recover after a three-week crash

24-hour timeframe

analytics5e531c162f16c.png

The week just ended and the EUR/USD currency pair continued to move down for most of the week. The upward correction sharply began on Friday, February 21, which was facilitated by macroeconomic statistics from across the ocean. At the moment, we can say that the next stage of the downward trend is completed. Thus, the pair can now be adjusted for several weeks, but what are the prospects for the European currency in the future? Has the fundamental background changed dramatically for the pair to expect an upward trend now? From our point of view, no. The situation remained approximately the same as it was. The decline in business activity indices in the services and manufacturing sector Markit in the United States does not mean anything but a local slowdown. The growth of business activity in industrial production in Germany and the European Union is pointless, given the fact that both indicators remained below the level of 50.0. What else could traders pay attention to during the week? There were no important publications in the EU and the US on Monday and Tuesday. The US producer price index was released on Wednesday, which was insignificant. Nothing interesting was published on Thursday. Only Friday remains. Indices of business activity in the US, the EU and Germany, we have already analyzed and made conclusions on them. The consumer price index in the EU remains, which accelerated to 1.4% in January y/y ...

analytics5e531c2be2eca.png

Firstly, it should be noted right away that acceleration to as much as 1.4% y/y is very small. The European Central Bank pays a lot of attention to inflation. Thus, as long as inflation in the eurozone is not stable at 2% or higher, there will be no talk of any tightening of monetary policy. Accordingly, one has to rely on long-term strengthening of the euro. If we analyze the data for the last ten years, we see that there were periods when deflation was generally observed in the EU, and there were periods with inflation between 2% and 3%. But in general, we can say that the ECB was not able to achieve stable 2% inflation, so now Christine Lagarde intends to make structural changes to the ECB, and the monetary committee is considering a proposal to lower the inflation target.

Based on the foregoing, we can conclude that no particular positive changes for the EU economy happened last week. In fact, only one indicator really deserved attention - this is inflation, while the rest (business activity indices) were inconclusive. There were no important publications at all in the United States. The same business activity indexes on Friday were also preliminary. Thus, we believe that nothing has changed in the balance of power between the dollar and the euro, between the ECB and the Fed, between the eurozone and the United States. And what growth of the European currency can we talk about now, if in total it has lost 250 points over the past three weeks?

In addition to the small number of macroeconomic events last week, we also note the complete absence of fundamental events. There was not a single speech by a high-ranking official like Jerome Powell, Christine Lagarde, Stephen Mnuchin or Donald Trump. Even the US president has recently been openly in the shadows after the impeachment procedure has ended. There is no new information on US-China trade talks, although the parties should have already embarked on a "second phase", which, according to many experts, would be much more complicated than the first. Even new information on the topic of presidential elections in the United States is not available. Although not so long ago, various media and analytical agencies regularly published information about political ratings and the chances of winning a particular candidate.

From a technical point of view, an upward correction has begun on the 24-hour chart, but the downward trend remains, since the price is below the critical line. However, the correction may last a long period of time.

Trading recommendations:

The trend for the euro/dollar pair remains downward. Thus, it is recommended that the 4-hour timeframe continue to consider short positions after the formation of new Dead Crosses. The pair began to adjust on the 24-hour timeframe, so short positions will become relevant after its completion.

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.

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