Decrease in panic mood in the markets will lead to a strong increase in demand for risk (we expect USD/CAD pair to continue

The news that China is beginning to reduce the number of patients with coronavirus, as well as the real expectations of the local financial market of new measures to stimulate the national economy, have led to a sharp increase in stock indices throughout the Asia-Pacific region.

After last week's strongest sales, amidst panic in global markets, a sharp reversal took place on Friday due to the spread of the virus's crown around the world, which can be described as a very likely end to the correction in the stock markets and it really could be so. The coming week will confirm this argument or not.

There is a weakening of the US dollar against commodity currencies on the currency market on Monday, which is associated with a sharp recovery in prices for commodity assets and crude oil. The reason for this, as already mentioned above, is the strong growth in the first place of the Chinese stock indices, which are supported by the hopes that the growth of coronavirus diseases in the Middle Kingdom will decrease, and the state support for the national economy, on the contrary, will increase. At the time of writing, quotes of oil are growing by more than 3.0%, while futures on copper and other industrial metals add more than 1.0%.

We believe that if the correction in the markets is indeed over and the panic mood associated with the coronavirus gradually disappears, then we will witness a massive rebound in demand for risky assets. On the whole, we expect just such a reaction in the markets, unless, of course, some catastrophic news regarding the situation with this affliction comes again.

In addition, the growth of positive sentiment will lead to a rebound in equity markets in Europe and North America. On this wave, we expect a local increase in the Canadian, New Zealand and Australian dollars. At the same time, the demand for defensive assets will decline as well as the Japanese yen and Swiss franc. In turn, gold quotes may also be under pressure.

Regarding the single currency, we note that its upward momentum may continue, since the ECB has not yet given a clear and convincing signal about the decision to expand stimulus measures for the European economy, but on the contrary, the Fed is expected to lower its key interest rate at the March meeting. According to the dynamics of futures on rates on federal funds, almost one hundred percent of the market is confident that this will happen.

The probability of a local continuation of the growth of the euro / dollar pair also confirms the distribution of the net positions of the futures contracts for the pair, which indicates a decrease in the sentiment of Commitments of Traders (COT) of large investors (Large Traders). However, this decrease on February 25 is not so pronounced and looks more like a small profit fixation. The growth of the euro strengthened later, along with an increase in sentiment regarding cuts in interest rates by the Federal Reserve this month.

On the whole, assessing the prospects of the currency exchange market, we believe that the prospects for the dying of panic around the spread of coronavirus and the growth in the expectation of the Fed to lower interest rates amid strengthening stimulus measures by China for its economy will lead to a local weakening of the dollar, paired with an increase in demand for risky and commodity assets, which will be the basis for the end of the correction held last week.

Forecast of the day:

The USD/CAD pair is trading above the level of 1.3325. Continued increase in crude oil prices against a generally favorable background in the markets may become the reason for the resumption of its decline to 1.3215 after the price breaks through the level of 1.3325.

The USD/JPY pair found support at the level of 107.40 and is recovering in the wake of rising demand for risk. We believe that maintaining such sentiments in the market and breaking through the level of 108.30 will lead to a local growth of the pair by 109.00.

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CFTC report was outdated before it was released, CAD will try to develop a correction, and the demand for JPY is unlikely

Asia-Pacific exchanges opened higher on Monday after a large-scale decline last week. The leader is the Shanghai Composite, which won 3.43% as of 6.30 Universal time. On the other hand, Nikkei225 looks more modest, rising 0.98%, while indices in countries oriented towards exporting raw materials continue to decline - DJ New Zealand is down 0.99%, and the Australian S & P / ASX 200 is down 0.77%.

In turn, the simultaneous growth of oil and gold indicates a growing weakness of the dollar rather than a reversal of trends. There is no reason to expect that the panic has ended.

USD/CAD

The key event of the week for the Canadian dollar will be the meeting of the Bank of Canada on Wednesday and on Thursday, the head of BoC Poloz will make a report on the current state of the economy.

The Bank of Canada is expected to lower the discount rate. However, there are too many events that are not directly related to internal conditions that affect the future decision. Oil prices lost almost 30% in just over a month, which is a serious blow to Canada's economic outlook, as well as a massive drop in the stock market. Domestic demand is declining, GDP growth in the last 2 quarters is weak, and there is also a virus - as a whole, there is a risk of seeing a drop in GDP already in the 1st quarter.

While inflation looks confident, the target of 2% has been reached in January. However, according to a number of indirect signs, there is clearly a risk of seeing a slowdown in this parameter already in the coming month.

The CFTC report for the Canadian currency turned out to be neutral positive. The net long position rose to $ 1.1 billion, but here, we must assume that the main sale in the markets occurred at the end of the week, and these data will be reflected only in the next report. Moreover, the USD/CAD rate has grown significantly relative to the estimated fair price; therefore, we can expect a corrective decrease in the loonie in the coming days.

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Support zone is at 1.3320 / 30. We can expect that there is a serious probability of breaking through this zone taking into account the fact that the estimated price is also directed downwards. This can happen if BoC on Wednesday and Poloz next day emphasize the temporary nature of the negative trend, and the Bank limits itself to lowering the rate and does not inform the markets of its readiness to expand incentive measures.

This scenario would be logical if it were not for the panic associated with the coronavirus. It could provoke another wave of large-scale sales, which will push USD/CAD up regardless of what guidance BoC investors will give.

USD/JPY

The sharp increase in demand for the yen last week is the result of the collapse of markets and flight into defensive assets. The CFTC report did not show any signs that investors were preparing to buy the yen - the net short increased by the end of the week, that is, speculators still adhered to a negative forecast for the yen, even though the threat of a global recession grew, and the spread of COVID-19 accelerated.

The fair price is in the range 110 - 110.50, so the probability of USD/JPY returning to the zone of the highs reached before is still high. However, the estimated price has turned down and is below its average, which indicates a trend reversal.

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An additional factor that led to increased demand for the yen was the publication on Friday of a number of macroeconomic indicators, which turned out to be generally worse than expected. In February, inflation in the Tokyo area declined to 0.4% y / y, which is already almost deflation. The unemployment rate unexpectedly increased from 2.2% to 2.4%, activity in the construction sector sharply decreased - the volume of orders in January declined by 17%, and the construction started on 10.1%.

Mizuho Bank, analyzing the pace of distribution of COVID-19, wonders which country, next to Italy and South Korea, will be next. If the epidemic gets out of control, neither a reduction in rates nor a quantitative easing will help, and such a scenario will directly contribute to a further increase in demand for the yen.

Nevertheless, the bearish momentum of USD/JPY remains strong. A pullback to the resistance level of 108.29 may provoke a new wave of sales if it is not possible to rise higher the next day.

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EUR/USD. Preview of the week: ISM manufacturing index, European inflation and Nonfarm

The financial world continues to show panic. Almost all of Friday's trends were continued on Monday: the euro-dollar pair continued to grow during the Asian session, gaining a foothold in the 10th figure, and the yield on the treasuries continued to fall - for example, the yield on 10-year bonds hit a record low (1.062%). The dollar index also plunged, reflecting weak demand for US currency throughout the market. After Friday's statement by Jerome Powell, who had already made it possible in plain text to reduce the rate due to the negative consequences of the spread of coronavirus, this behavior of the currency looks quite logical. The greenback was also pressured by the PMI Caixin index for the manufacturing sector - today it slumped to a record low of 40.3 points (even in the fall of 2008 it was slightly higher). Nevertheless, the bulls of the EUR/USD pair need additional boost from macroeconomic reports. If upcoming releases disappoint dollar bulls, the price could go into the 11th figure.

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It is worth noting that the current week is eventful. For example, today all the attention of the pair's traders will be focused on the US manufacturing ISM index, which can significantly spoil the positions of dollar bulls. Let me remind you that the US production indicators have recently left much to be desired, and this fact puts background pressure on the US currency. This pressure significantly increased in early January - the December production ISM US unexpectedly collapsed to 10-year lows, reaching 47.2 points. The index was below the key 50-point mark for five months, so this trend disappointed investors. But the January indicator turned out to be better than expected: the indicator unexpectedly climbed above the 50th level, reaching 50.9 points. It is noteworthy that according to general forecasts, the ISM index may show a slight decline in March - up to 50.5 points. Such dynamics is unlikely to affect the pair. But if, contrary to forecasts, it again falls below the key 50-point mark, the dollar will come under strong pressure.

The central event of Tuesday will be the publication of data on the growth of European inflation. The general consumer price index in the eurozone has been gradually growing since October, and in January reached its local high of 1.4% (the highest since April last year). Positive dynamics is also expected in February - according to analysts, the indicator will grow to the level of 1.5%. Core inflation should demonstrate a similar dynamics - experts believe that the core index will be released in the green zone, at around 1.2%. If the indicators come out at least at the forecast level, the EUR/USD pair will get a reason for its growth, as inflation dynamics is under the scrutiny of the European Central Bank. There are certain prerequisites for the growth of pan-European inflation - judging by the growth rate of German inflation. In February, inflation in Germany rose to 0.4% m/m and 1.7% y/y (with a forecast of growth to 0.3% and 1.6%, respectively). The harmonized consumer price index also ended up in the green zone: 0.6% m/m and 1.7% y/y. In annual terms, the indicator showed the strongest dynamics since April last year. In monthly terms, indicators also reached many-month highs, contrary to the neutral forecasts of most analysts. All this suggests that tomorrow's release may pleasantly surprise EUR/USD buyers.

Nonetheless, Nonfarm will be the most important event of the week for the pair's traders. It is worth recalling that the previous release, which was published in early February, made an ambiguous impression. Many components came out better than expected, reflecting positive trends in the labor market. In particular, instead of an increase of 185 thousand (a consensus forecast), the employment growth rate jumped 225 thousand. At the same time, the inflationary component of Nonfarm was disappointing - the level of average hourly wages. This most important indicator for the Fed was at around 0.2% on a monthly basis and 3.1% at an annual rate. Unexpectedly, the unemployment rate rose (albeit minimally) to 3.6%.

According to the general forecast, the February Nonfarms will show a weaker result. The employment growth rate should drop to 180 thousand, and the average hourly wage may drop to a three percent mark. The growth rate of people employed in the manufacturing sector of the economy can again show a negative result, though not as significant as in January (the indicator should decrease by 4 thousand).

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Thus, this week macroeconomic releases that are quite important for the pair will be published. But with all this, the role of the first violin will be played by the coronavirus, or rather the panic mood that is associated with the spread of COVID-19. For example, if the profitability of 10-year-old Treasuries declines to a one percent mark (and judging by the dynamics of the decline, this may happen today), the dollar will come under strong pressure - regardless of the dynamics of macroeconomic reports. The US stock market will also affect the health of the greenback, especially if it continues the trends of the past week. Fed's dovish comments may also increase pressure on the dollar: Loretta Mester, James Bullard, Charles Evans, Jones Williams, Eric Rosengren and Esther George are expected to perform this week.

From a technical point of view, EUR/USD bulls, firstly, it is necessary to overcome the resistance level of 1.1070 (the middle line of the Bollinger Bands indicator on D1), and secondly, to overcome the mark of 1.1110 (at this price point the upper and lower boundaries of the Kumo cloud on the same time frame): in this case, we can already speak with confidence about a trend reversal.

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Technical analysis of ETH/USD for 02/03/2020:

Crypto Industry News:

Hong Kong Financial Secretary Paul Chan said his administration will strengthen its anti-money laundering (AML) and anti-terrorism (CTF) policies on cryptocurrency.

In his last budgetary speech, Chan pointed out that the amendments would concern recommendations made by the global financial supervisory authority, the Financial Action Task Force (FATF).

The FATF assessed that Hong Kong largely complied with the AML / CTF guidelines after the September 2019 assessment. As a result of the assessment, Hong Kong became the first jurisdiction in the Asia-Pacific region to pass the FATF assessment.

The proposed changes in anti-money laundering and terrorist financing policies in Hong Kong have been presented as part of the government's budget for 2020-2021 and will be implemented after a period of public consultation.

Chan pointed out that the changes will mainly affect cryptocurrency exchanges and money transfer service providers, adding that detailed proposals will be published this year. Precious metals, stones and jewelry investors will also be covered by the new AML / CTF structure.

The Financial Services Regulatory Authority, one of the three global market regulators in Abu Dhabi (ADGM), announced changes to its cryptography regulations. The changes include changing the term "cryptographic resource" to "virtual resource" in order to adapt it to the FATF vocabulary.

ADGM will also expand the regulatory category "Conducting Cryptographic Asset Activities" to include other regulated cryptographic activities, including fiduciary services, trading platform and investment transactions.

Abu Dhabi and Hong Kong include the latest jurisdictions that update cryptography regulations in response to recent FAFT directives, in accordance with South Korea, Singapore and Switzerland.

Technical Market Overview:

The ETH/USD pair has been trading close to the recent lows all the weekend and the bearish pressure is still visible on the market. Ethereum stays below the short-term trendline resistance and is keeps trading in a narrow range located between the levels of $212.48 - $235.42. The downward momentum is decreasing, but is still weak and negative, so another wave down can occur soon. The next target for bears is seen at the level of $200 and below at $196.61.

Weekly Pivot Points:

WR3 - $315.76

WR2 - $294.92

WR1 - $247.66

Weekly Pivot - $227.96

WS1 - $180.28

WS2 - $159.27

WS3 - $113.10

Trading Recommendations:

The larger timeframe 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 02/03/2020:

Crypto Industry News:

A recent presentation by the US Federal Bureau of Investigation (FBI) shows that ransomware hackers have stolen huge amounts of Bitcoins since 2013.

Joel DeCapua, head of the FBI, pointed out to the RSA conference that between October 2013 and November 2019, victims paid about $ 144 million in Bitcoins to ransomware hackers.

When hacked through ransomware, fraudsters take control of a person's or entity's computer systems, demanding payment, often in Bitcoins, to unblock victim platforms. DeCapua noticed that almost all ransomware payments are sent in Bitcoins.

As part of the FBI presentation at the RSA conference, a government agency provided detailed information on ransomware.

The virus from China known as Ryuk raised around $ 61 million - the most in one year, while Crysis, also known as Dharma, accumulated around $ 24 million in three years. The office found a complex ecosystem in the dark web that included contractors to create viruses and partner programs offering income to those involved in some operations.

Technical Market Overview:

The BTC/USD pair has been trading close to the swing lows at the level of $8,405 during all the weekend as all the bounces form this level was very shallow. The downwards momentum is now decreasing, but is still weak and negative, so another wave down might happen any time now. The next target for bears is seen at the level of $8,000 and the key short-term technical resistance is seen at the level of $9,013.

Weekly Pivot Points:

WR3 - $10,789

WR2 - $10,332

WR1 - $9,212

Weekly Pivot - $8,808

WS1 - $7,687

WS2 - $7,218

WS3 - $6,064

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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Technical analysis of GBP/USD for 02/03/2020:

Technical Market Overview:

The GBP/USD pair has broken through the level of 1.2757 and made a new swing low at the level of 1.2725, but the market bounced quickly and the price got back to the middle of the range. This behavior might indicate increased bullish activity, so they are defending the key technical support levels. Currently, the market is trying to test the technical resistance located at the level of 1.2828 and if successful, the next target is seen at the level of 1.2871 and 1.2904. This would also mean the GBP/USD is again back to the wilder trading zone.

Weekly Pivot Points:

WR3 - 1.3239

WR2 - 1.3125

WR1 - 1.2954

Weekly Pivot - 1.2840

WS1 - 1.2657

WS2 - 1.2545

WS3 - 1.2353

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 NZD/USD for March 2, 2020

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Last week, the kiwi purged all the Liquidity Pool at 0.6273 on the Weekly basis and at 0.6201 on the Monthly basis. The NZD/USD pair is expected to go up first to rebound to 0.6256 before the price goes down again to follow the overall downtrend. The downtrend will last as long as NZD/USD does not break out and closes above 0.6332.

Overall, the NZD/USD pair has been trading with the bearish bias.

Disclaimer: Trading Forex on margin carries a high level of risk, and may not be suitable for all traders or investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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GBP/USD Price Movement For March 02, 2020

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On the daily chart, we can see that after a breakout below 1.3050, GBP/USD has been trading with a bearish bias. Now the Cable is trying to reach the 1.2649 level as long the pair does not rebound higher than 1.3000 - 1.3017. Afterwards, the Cable is expected to continue its bearish bias.

Disclaimer: Trading Forex on margin carries a high level of risk, and may not be suitable for all traders or investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Technical analysis of EUR/USD for 02/03/2020:

Technical Market Overview:

The EUR/USD pair has been rallying higher for the last week and the bulls have managed to hit the key short-term technical resistance located at the level of 1.1076. The Bearish Engulfing candlestick pattern made a few hours before the price has hit the resistance is an indication of decreasing momentum and a possible trend reversal, but to do it, the bears must break through the level of 1.0940 and get back to the main channel. The market conditions are now overbought despite the positive and strong momentum, so the downtrend might start to be continued any time soon.

Weekly Pivot Points:

WR3 - 1.1388

WR2 - 1.1223

WR1 - 1.1151

Weekly Pivot - 1.0973

WS1 - 1.0899

WS2 - 1.0724

WS3 - 1.0648

Trading Recommendations:

Despit the recent strong rally on EUR/USD the best strategy for current market conditions is the same as it was for last week: 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 1.0778 and the technical resistance at the level of 1.1267.

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GBP/USD: plan for the European session on March 2. Pound storms before the start of important negotiations on a trade deal

To open long positions on GBP/USD you need:

The British pound underwent a sell off on Friday amid the start of trade talks between the UK and the EU, but the bulls quickly bought the lows, not allowing a major decline to end the day lower. Currently, buyers of the British pound will be counting on long positions after a good correction down. In the morning, the formation of a false breakdown in the region of 1.2809, or a support test of 1.2772 will signal the opening of long positions. In the region of 1.2770, the lower boundary of the new rising channel can also form. An equally important task for the bulls will be to break and consolidate above the resistance of 1.2854, which will increase the demand for the pound and lead to the renewal of the highs of 1.2891 and 1.2930, where I recommend taking profits. However, the upside potential of the pound is limited by moving averages, indicating the formation of a bear market.

To open short positions on GBP/USD you need:

Today it is best to sell the pound after a false breakout has formed in the resistance area of 1.2854, slightly higher than which the moving averages go. However, larger bears will probably prefer to act on the resistance of 1.2891, where the upper boundary of the new descending channel will form. A bear's priority will be to break through and consolidate below the support of 1.2809, which will increase the pressure on the pair and lead to the renewal of the lows 1.2772 and 1.2728, where I recommend taking profits. It should be understood that the start of trade talks in any case will be negative for the pound, since neither side wants to make concessions on the terms.

Signals of indicators:

Moving averages

Trading is carried out below 30 and 50 moving average, which saves the likelihood of continued downward correction. The averages also play the role of resistance.

Bollinger bands

Growth will be limited by the upper level of the indicator in the area of 1.2900, from where you can sell immediately for a rebound. Support will be provided by the lower boundary of the indicator in the region of 1.2740, from where you can buy immediately for a rebound.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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EUR/USD: plan for the European session on March 2. Probability of a reduction in US rates supports the euro. Bulls aim for

To open long positions on EURUSD you need:

US stock markets continued to fall on Friday, while the likelihood of Federal Reserve intervention increased. Against this background, the risk of lower interest rates increased, which retained an upward momentum in the euro. Today, buyers will rely on good performance indicators in the eurozone countries, as well as a breakthrough and consolidation above the resistance level of 1.1067, which will open a direct path to the highs of 1.1095 and 1.1116, where I recommend taking profits. In the scenario of a downward correction against the background of bad data, and there is nothing good to expect from the eurozone production, I recommend returning to long positions when a false breakout is formed in the support area of 1.1025, or slightly lower from the level of 1.0992. Larger players will again wait for the test area of 1.0957, where there was a major surge in volume on Friday.

To open short positions on EURUSD you need:

I don't recommend that you hurry with selling the euro on such a large increase. Although the indicators speak of overbought, it is better to wait for the formation of a false breakout in the resistance area of 1.1067, or wait for the test of new highs in the areas of 1.1095 and 1.1116, where I recommend opening short positions immediately for a rebound. A breakout and consolidation under the support level of 1.1025 will be an equally important task for the bears, which will increase the pressure on the euro and return the pair to the lows of 1.0992 and 1.0957, where I recommend taking profits, since a new lower boundary of the current ascending channel can be formed in this range. The bad fundamental data on the eurozone is unlikely to move to the background the situation in the US stock market and the expectations of participants to reduce interest rates in the United States, but do not forget about the serious problems of the European economy.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates the likelihood of further upward correction of the euro. With a decrease in the pair, the moving averages will also act as support.

Bollinger bands

Growth will be limited by the upper level of the indicator in the region of 1.1085, while the lower boundary in the area of 1.0960 will provide support.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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Technical analysis of GBP/USD currency pair for the week of March 2 to 7

Trend analysis:

This week, the price can continue to move down, in order to reach the support line of the ascending channel - 1. 2671 (white bold line) and if this line is reached, work up with the target at 1.2877 - pullback level of 38.2% (red dashed line).

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Fig. 1 (weekly schedule).

Comprehensive analysis:

- indicator analysis - down;

- Fibonacci levels - down;

- volumes - down;

- candlestick analysis - down;

- trend analysis - down;

- Bollinger lines - down;

- monthly chart - down.

The conclusion of a comprehensive analysis is a downward movement.

The overall result of calculating the candle of the GBP / USD currency pair according to the weekly chart: the price of the week will most likely have a downward trend with the absence of the first upper shadow of the weekly black candlestick (Monday - down) and the presence of the second lower shadow (Friday - up).

The first lower target of 1. 2671 is the support line of the upward channel (white bold line).

An unlikely upper scenario: working up with the first target 1.2941 - a pullback level of 50% (red dashed line), from a pullback level of 50.0% - 1.2735 (blue dashed line).

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EUR/USD: plan for the European session on March 2. Probability of a reduction in US rates supports the euro. Bulls aim for

To open long positions on EURUSD you need:

US stock markets continued to fall on Friday, while the likelihood of Federal Reserve intervention increased. Against this background, the risk of lower interest rates increased, which retained an upward momentum in the euro. Today, buyers will rely on good performance indicators in the eurozone countries, as well as a breakthrough and consolidation above the resistance level of 1.1067, which will open a direct path to the highs of 1.1095 and 1.1116, where I recommend taking profits. In the scenario of a downward correction against the background of bad data, and there is nothing good to expect from the eurozone production, I recommend returning to long positions when a false breakout is formed in the support area of 1.1025, or slightly lower from the level of 1.0992. Larger players will again wait for the test area of 1.0957, where there was a major surge in volume on Friday.

To open short positions on EURUSD you need:

I don't recommend that you hurry with selling the euro on such a large increase. Although the indicators speak of overbought, it is better to wait for the formation of a false breakout in the resistance area of 1.1067, or wait for the test of new highs in the areas of 1.1095 and 1.1116, where I recommend opening short positions immediately for a rebound. A breakout and consolidation under the support level of 1.1025 will be an equally important task for the bears, which will increase the pressure on the euro and return the pair to the lows of 1.0992 and 1.0957, where I recommend taking profits, since a new lower boundary of the current ascending channel can be formed in this range. The bad fundamental data on the eurozone is unlikely to move to the background the situation in the US stock market and the expectations of participants to reduce interest rates in the United States, but do not forget about the serious problems of the European economy.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates the likelihood of further upward correction of the euro. With a decrease in the pair, the moving averages will also act as support.

Bollinger bands

Growth will be limited by the upper level of the indicator in the region of 1.1085, while the lower boundary in the area of 1.0960 will provide support.

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

Indicator analysis. Daily review of GBP/USD on March 2, 2020

The pair continued to move down on Friday, testing a pullback level of 50% equivalent to 1.2553 (yellow dashed line). Today, strong calendar news for the pound is expected at 09:30 UTC, and for the dollar at 15:00 UTC. The price may continue to move down.

Trend analysis (Fig. 1).

Today, from the level of 1.2818 (closing of the Friday afternoon candle), a downward movement is possible towards the support line of 1.2661 (red bold line). If this level is reached, work up with the target of 1.2743, the retracement level of 14.6% (red dotted line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - the top;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

Today, the price may continue to move down.

An unlikely scenario is from the level of 1.2818 (closing of the Friday afternoon candle), work up with the target of 1.2936, the pullback level of 50% (red dashed line).

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

Indicator analysis. Daily review of EUR / USD on March 2, 2020

Trend analysis (Fig. 1).

The market may continue to move up today with the target of 1.1126, the resistance line of the downward trend (white bold line). Upon reaching this line, work down with the target of 1.1079, the retracement level of 14.6% (blue dashed line).

analytics5e5c9e346da53.png

Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

A continued upward movement is expected today with the target of 1.1126 - the resistance line of the downward trend (white bold line).

An unlikely scenario is from the level of 1.1029 (closing of the Friday afternoon candle), work down with the target of 1.0993, the retracement level of 38.2% (blue dashed line). Upon reaching this level, the next lower target is 1.0952, the pullback level of 50.0% (blue dashed line).

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

Forecast for EUR/USD on March 2, 2020

EUR/USD

Good data on the US came out on Friday, which put pressure on most currencies, but the euro ended the day higher after a bit of confusion. Personal incomes of consumers increased by 0.6% in January, expenses increased by 0.2%, business activity in the manufacturing sector of the Chicago region in February amounted to 49.0 points against 42.9 a month earlier. Also, the commodity trade balance improved from -68.7 billion to -65.5 billion in January.

Today the final PMI estimates for February will come out in the eurozone (expectations unchanged), while the US ISM Manufacturing PMI is projected to decrease from 50.9 to 50.5, which may extend the euro's growth amid expectations of a Fed rate cut on the 18th. Markets lay a 94.9% probability of a rate cut immediately by 0.50% to 1.25% and another decrease by 0.25% at a meeting on April 29th. Looking ahead, we note that lowering rates will have a short-term effect on the dollar, the development of the crisis will nevertheless return market sentiment to the purchase of safe haven currency, as it was during the 2008 crisis.

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On the daily chart, the price went above both indicator lines - above the red balance line, which shifts the price balance towards growth, and above the MACD line, which indicates a medium-term direction to growth. The immediate goal is the correction level of 76.4% at the price of 1.1130, overcoming the level opens the second goal of 1.1175 - a strong record level (a high on January 16, December 17, etc.).

The daily Marlin oscillator is close to the overbought zone, it has significantly pulled down the growth rate. We are waiting for the euro's next reaction. Labor indicators on Friday will become very important for understanding the Fed's intentions on the rate - good data are unlikely to push the central bank to double the rate cut, and one decrease by 0.25% is already actively included in the price.

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The situation is completely upward on the four-hour chart, only the Marlin oscillator forms a kind of consolidation in front of the overbought zone, and a small divergence, which indicates an imminent slowdown in price growth with the likelihood of converting into a short-lived horizontal trend (1-2 days).

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

Forecast for GBP/USD on March 2, 2020

GBP/USD

On Friday, after the release of optimistic economic indicators for the United States, the pound sterling reached a 155-point drop. The 1.2758 target for the Fibonacci reaction level of 123.6% was fulfilled, after which the price went to a correction. Personal incomes of consumers in the US increased by 0.6% in January, expenses increased by 0.2%, business activity in the manufacturing sector of the Chicago region in February amounted to 49.0 points against 42.9 a month earlier. The trade balance in January recovered from -68.7 billion to -65.5 billion.

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According to the Marlin oscillator, convergence began to form on the daily chart. The immediate goal of growth is the Fibonacci level 1.2904 (December 23 low).

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The four-hour chart also has Marlin convergence. Target level 1.2904 coincides with the MACD line approaching it.

Minutes from the last meeting of the Bank of England will be published tomorrow. Perhaps there will be indications of a change in monetary policy (that is, a decrease in the rate) against the backdrop of all world problems. The next BoE meeting will be on March 26.

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

Forecast for USD/JPY on March 2, 2020

USD/JPY

The dollar relative to the yen quickly fulfilled the target level of 108.00, determined by the point of intersection of the lines of rising and falling price channels. Fast speed made it possible for the price to pierce the support with testing the Fibonacci reaction level of 200.0%. Today in the Asian session, the price once again tested the level of 200.0% and began to go above the line of price channels. APR stock indices are rising today despite the failed Chinese PMI for January, released on Saturday; the business activity index (PMI) in the manufacturing sector slumped from 50.0 to 35.7 points, the PMI of the services sector collapsed from 54.1 to 29.6. The Chinese Shanghai Composite is growing at 2.20%, the Japanese Nikkei225 is adding 1.08%.

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The first goal of correctional growth is the Fibonacci level of 161.8% at the price of 108.46. The second target is 109.00 at the level of 138.2%. Furthermore, most likely, there will be a reversal in a downward movement, since we only get the first crisis data for China. On Saturday, March 9, China's trade balance for January will be released - a forecast of $ 12.7 billion compared to 47.2 billion in December.

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On a time scale of H4, the Marlin Oscillator returns from the oversold zone. With the restoration of the indicator, it will be again ready for the likely expected decline.

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

GBP/USD. Preview of the week. Strong macroeconomic background, beginning of negotiations with the EU, speeches by Fed representatives

4-hour timeframe

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Amplitude of the last 5 days (high-low): 68p - 104p - 108p - 87p - 194p.

Average volatility over the past 5 days: 113p (high).

The British pound, as we said in previous articles, did what it should have done a long time ago at the end of last week. Namely, resumed the downward trend. "I want to believe" - not because we want the pound to continue moving down, but because this is the most logical option for the development of events, given the entire macroeconomic and fundamental background. March begins, and for the UK and pound traders a new saga begins, which will keep them in suspense for a long time, called trade talks with the European Union. We have repeatedly reviewed this topic and talked about all the possible problems and pitfalls that the parties to the negotiation process may face. The conclusion is unchanged: if Boris Johnson fails to agree with the EU, the pound will fall under a sell-off. And since the information will come gradually and for at least six months, the British currency may remain prone to fall all this time. The current week for the British pound paired with the US dollar will also be very interesting. A little economic information will come from Great Britain, but extremely important reports will be published in the United States several, which, with a high degree of probability, will affect the EUR/USD pair.

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On Monday, Britain will receive data on the index of business activity in the manufacturing sector Markit, which last month was 50.0, and in February it could be 51.8-51.9. Thus, this index will not only get out of the recession zone, but it will be enough to move away from it, in contrast to the European and German indices. However, in spite of the seemingly emerging growth of the manufacturing sector, during 2020 it may again encounter serious problems, for example, due to a slowdown in business activity in China due to the pneumonia virus.

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In the United States, the day is scheduled for the publication of the index of business activity in the manufacturing sector Markit, which may drop to 50.8.

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As well as the index of business activity in the manufacturing sector ISM, which after a sharp increase to 50.9 may fall in the range of 50.4-50.2. If the forecasts for these two indices come true, the US manufacturing sector will begin to raise serious concerns, as industry growth has been negative for more than six months, and business activity continues to decline and comes close to the recession zone.

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Britain will release PMI in the construction sector on Tuesday, which regularly affects exchange rate changes of the pound. By the end of February, a value in the range of 48.4-48.6 is expected. That is, no major changes compared to January are expected. The calendar of macroeconomic events of the US will be empty on this day.

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The rest of the week will be held under the American flag. On Wednesday, a fairly important report on the change in the number of workers in the private sector from ADP will be published, which last month showed an increase of almost 300,000 units of labor. Forecasts for February are much weaker, but still quite high, from 170,000 to 191,000.

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As for business activity in the US services sector, here, most likely, the preliminary values for February will be justified according to Markit, and the index will drop to 49.4.

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In the case of the ISM index, it is from a fairly high value of 55.5, according to experts, it is likely to slow down to values of 54.2-54.5. The ISM index is more significant, so it should help the US dollar on Wednesday be in demand among traders in the foreign exchange market.

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Nno important statistics will be received from across the ocean on Thursday. Finally, a key report of the entire week will be released on Friday - US NonFarm Payrolls. Six of the past seven months have shown very high growth rates in the number of newly created jobs outside the agricultural sector. In February, another +165,000 or even +175,000 new jobs are expected.

What can be said in general for the entire statistics package this week? There will be little news in the UK, at least planned and economic in nature. But a lot in the United States, however, the prospects for the euro, pound and the dollar will depend more on technical factors, less on statistics from the United States, since it is it that can push technical factors into the background. Reporting on ISM indices, as well as NonFarm Payrolls and ADP, will be extremely important. But do not forget that for the British pound, information on the course of negotiations between London and Brussels, which may already begin to come at the disposal of traders, will be extremely important, at least preliminary. Thus, there will be plenty of factors that will be able to influence the movement of major currency pairs this week. We would also like to draw attention to the speeches this week by representatives of the Fed, in particular James Bullard, Loretta Meister and others (almost all members of the monetary committee will speak). In recent weeks, there have been rumors in the markets that the Fed will accept one or two key rate cuts in 2020. The reason is called the slowdown in the global economy due to the Covid-2019 virus. It is the members of the monetary committee that will either dispel these rumors or confirm them. And finally: on Thursday, Bank of England Chairman Mark Carney will give a speech, who, although he will soon leave his post, can nevertheless make an important statement regarding monetary policy. Recall that the Bank of England has long been expected to lower rates, but this decision still supports only two members of the monetary committee of nine.

Trading recommendations:

We can say that the GBP/USD pair has already begun an upward correction. Thus, it will be possible to sell the British pound again with targets at 1.2747 and 1.2700 (to be revised tomorrow), after the completion of the current correction. We recommend considering the pair's purchases with a view to the Senkou Span B line in small lots if the bulls are able to gain a foothold above the Kijun-sen line. In any case, the fundamental background does not remain on the side of the pound. Till...

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 week. Important data can be ignored by traders. Technical factors are stronger

4-hour timeframe

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Amplitude of the last 5 days (high-low): 67p - 60p - 54p - 127p - 102p.

Average volatility over the past 5 days: 82p (average).

After completing a completely crazy week for the EUR/USD pair, a number of reasonable questions arise that need answers. Firstly, initially the last week of February was considered corrective, following a three-week fall in the euro. Thus, the upward movement was expected, but at the end of the week it intensified too much and turned into a rather strong upward trend. Question: what next? Did the bulls reverse the trend in their favor or was the correction just too strong? Secondly, macroeconomic data last week (even though there were few of them), in fact, were ignored. It is also impossible to say that traders reacted to the fundamental background when they either got rid of the dollar, or invested in euros. Question: Are the markets ready to calm down and react logically to macroeconomic publications again? In fact, nothing has changed fundamentally for the euro/dollar currency pair. The euro is still weak, the dollar is still strong. Nothing has changed in the economies of the United States and the European Union, and the notorious coronavirus, which causes panic in the foreign exchange market, in the stock markets, has to do with both the United States and the EU. Thus, it cannot be concluded that the coronavirus has a greater negative impact on someone else's economy. Thus, we believe that nevertheless last week there was a correction. Since the euro continued to grow for six days, now we need a correction against the correction. Accordingly, in almost any case, in the new week we expect the euro's price to fall. This is evidenced by banal technical analysis. As before, we recommend that you do not try to guess the trend reversal points, but simply be prepared for a downward reversal in response to technical indicators.

However, technical techniques, but also the macroeconomic background should not be pushed aside. Last week traders paid almost no attention to reports and publications. However, firstly, there were very few of them, and secondly, they were insignificant (except for the report on orders for durable goods in the US). There will be plenty of important publications this week in both the United States and the European Union. Thus, it is unlikely that traders will be able to continue to ignore macroeconomic statistics.

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We will begin to consider events in chronological order. Germany will release the index of business activity in the manufacturing sector for February. A value of 45.3 was recorded in January, and preliminary data for February indicated an increase to 47.8. It is such forecasts that economists give as the final value of the second month of 2020. Most likely, the forecasts will come true, so the industrial sector may begin to show signs of recovery.

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A similar index will be published in the European Union. According to preliminary values for February, the index rose to 49.1 and the same forecasts for the final value. Thus, the industrial sector may begin to show recovery in the eurozone. Accordingly, European data on Monday may please traders. However, both indicators are likely to remain below the level of 50.0, that is, a decline in the region will be recorded this time.

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Significant data will be published in the European Union on Tuesday. First, the unemployment rate and producer price index, and then the basic consumer price index and the main CPI. Core inflation, according to various forecasts, will be in February from 1.1% to 1.2% yoy. That is, acceleration, if expected, is negligible. Recall that the base indicator does not take into account changes in food and energy prices. If you look at the chart above, over the past two years, core inflation has been constantly around 1%.

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The main inflation indicator takes into account price changes in all categories of goods. In recent months, it began to accelerate, but forecasts for the month of February indicate a new slowdown to 1.2% - 1.3% y/y. Thus, this indicator will most likely remain at rather low values and is unlikely to support the European currency.

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On Wednesday, March 4, Germany will publish a retail sales figure for January, which may accelerate slightly according to experts' forecasts to 1.2%-1.4% y/y.

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As well as the index of business activity in the services sector, which does not cause any concern among economists and traders, although it is projected with a slight decrease to 53.3. Over the past two years, the indicator has never dropped below the key level of 50.0, so the service sector is considered a stable sector of the economy.

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In the eurozone, PMI will also be published for the service sector, which also does not cause any concern among traders, and is projected with a slight increase to 52.8.

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Retail sales in the European Union may add from 1.1% to 1.4% in January, but overall will remain at the level of the previous month, December. No important publications are planned in the European Union on Thursday and Friday.

What can be said about this news package as a whole? The data is quite important, but after a strong six-day growth in the euro, traders will need very strong reports from the eurozone to continue to buy the euro. Thus, we believe that if the data on business activity in industry, inflation, as well as retail sales in the EU do not turn out to be significantly higher than forecast values, then market participants will not pay due attention to all European reports. Moreover, forecasts for some indicators predict growth, and for some - decrease. A technical correction is necessary for the pair and only very strong statistics from the EU or very weak from the USA will block the technical factors. Thus, we believe that the fall of the euro is more likely next week.

Trading recommendations:

The EUR/USD pair is still in an upward movement. Thus, now you can stay in long positions with the target level of volatility of 1.1108, however, the MACD indicator has already turned down, and the likelihood of the start of correction is very high. It will be possible to sell the pair with targets at 1.0881 and Senkou Span B line, when traders will be able 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

GBP/USD. February 29. Results of the week. Friday's US macroeconomic data turned out to be good, but they are not the reason

4-hour timeframe

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Amplitude of the last 5 days (high-low): 68p - 104p - 108p - 87p - 194p.

Average volatility over the past 5 days: 113p (high).

The GBP/USD currency pair continued to conduct indistinct multidirectional trading for most of last week. In general, the entire period of indistinct movements was several months. However, as we have repeatedly warned traders, sooner or later, the luck of the British currency in any case would end. If the situation for the GBP/USD pair was neutral, then we could equally expect an upward trend and a downward trend. However, we have repeatedly warned: there are no grounds for strengthening the pound.

From time to time, the market openly finds a reason for restrained purchases of the pound, but this is not often the case. Moreover, the situation for the pound is getting worse and worse every quarter. Previously, only Brexit and any uncertainty associated with it scared traders. Now, traders are afraid of Brexit without a deal with the EU. The most interesting thing is that if the government of Boris Johnson does not agree with Brussels, and it clearly does not burn with the desire to do this, then, in fact, Britain will be faced with the "hard" Brexit. That is, the two-year war of the Parliament with the prime ministers will be in vain. As we have said more than once, the UK economy is already losing 70 billion a year, experiencing serious problems, and slowing down. And factors such as, for example, the coronavirus, are also relevant to the British economy. In general, the situation remains, if not hopeless, then very difficult. On the last trading day of the week, pound quotes fell, although formally there were no reasons for this. Most other currencies went up against the dollar, however, the pound found the most inopportune moment to collapse.

As for macroeconomic statistics this week, everything is very, very simple here. Not a single more or less significant report has been received from the UK. The first three days the calendar of events was completely empty in the United States. Several reports were published only on Thursday and Friday, but the most important (orders for durable goods, GDP) were simply ignored by traders. But on Friday, when much less significant data were published, the pound collapsed like a cut.

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The most significant reports published on Friday - the change in the average level of income and expenses of the US population. Personal incomes of Americans grew by 0.6% in January, which is much higher than all experts' forecasts.

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But personal expenses increased by only 0.2% in January compared with December, which is lower than forecasted values. Thus, in general, we can say that both indicators remained at their stable levels (as can be seen from the two-year data on income and expenses) and, in general, they can be considered neutral.

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Another more or less significant index is consumer confidence from the University of Michigan. This indicator increased from 100.9 to 101.0. Purely formal growth.

The fundamental background from the UK over the past week was limited only to secondary messages, such as preparing both sides for the upcoming talks. The first reports of infection of British citizens with the coronavirus were also received. Mark Carney said the Chinese virus has already begun to negatively impact the British economy. Carney complained that the problems for the British economy could be the supply of goods, parts, or equipment from China, where quarantine has been declared in some provinces, many businesses are not functioning, or are operating on a limited basis. For example, the largest British automaker Jaguar Land Rover said that it has enough spare parts from China to maintain its British production for two weeks, no more. Thus, problems with deliveries from China can slow down the British economy even more, which already showed zero growth in the last quarter. Accordingly, the pound also has nothing to expect except a miracle. Perhaps traders will decide to wait for the receipt of important information from the negotiations on the deal, and before that they will decide not to build up their positions. It may take several weeks before this, as the negotiations should last at least for some time so that it can be concluded that the negotiations are progressing. However, even this hope does not save the pound from long-term downward prospects.

From a technical point of view, the pound/dollar pair worked out the second support level of 1.2747 and rebounded from it. Therefore, correction may begin in the near future. We also believe that markets should calm down because Friday's trading was too volatile.

Trading recommendations:

GBP/USD starts upward correction. Thus, it will be possible to sell the British pound again with targets at 1.2747 and 1.2700, after the correction is completed. We recommend considering the pair's purchases with a view to the Senkou Span B line in small lots if the bulls are able to gain a foothold above the Kijun-sen line. In any case, the fundamental background remains not on the side of the pound.

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

GBP/USD. Mandate war, dollar issues and coronavirus

The British currency paired with the dollar showed increased volatility last week. After unsuccessful attempts to conquer the 30th figure, the GBP/USD pair collapsed to many-month lows, testing the 27th figure. The last time the price was at such lows in October last year, when British and European politicians once again frightened the financial world with a "hard" Brexit. To date, the Brexit theme is still in trend, but now traders are prone to other "horror stories."

The magnitude of the possible consequences of the coronavirus epidemic made nervous not only the participants in the foreign exchange market: for example, the MSCI World index (a stock index reflecting the situation on the global stock market) showed a weekly decline of 9.4%, a similar trend was observed except in the fall of 2008. Japan's Topix index fell by 3.7%, the Australian S&P/ASX 200 and South Korean Kospi - by 3.3%. US markets finished trading on Friday with the worst result in ten years. In particular, the S&P 500 lost about 9% for four days of the week, and fell another 4.42% on Friday. The Dow Jones Industrial Average and Nasdaq Composite Index experienced a similar downward turn.

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The dollar index slipped to 97 points against this background, thereby reflecting sales of the US currency throughout the market (for comparison: at the end of last week, this figure was near the hundredth level). Therefore, the greenback played the role of a "whipping ball" in most currency pairs: the yen strengthened against the dollar by more than 200 points per day, and the European currency still completed the week within the 10th figure. But the pound paired with the dollar behaved somewhat differently. The British currency looked a weaker greenback, while the coronavirus factor only aggravated the position of the GBP/USD bulls. In particular, the current head of the Bank of England Mark Carney (he will leave his post in March) said on Friday that the country is already seeing an economic effect from the epidemic. According to him, the tourism industry, as well as the production sector, will suffer the most. And here it is worth recalling that the UK economy showed zero growth in the fourth quarter of last year compared to the previous three months. Manufacturing output fell 1.1% on a quarterly basis. Obviously, the epidemic will only exacerbate the situation in the first quarter of this year.

It is noteworthy that the comments of Mark Carney came at a time when around 20 confirmed cases of infection in the UK were announced. Moreover, the Ministry of Health has reported the first human-to-human transmission of coronavirus in the country. The market again started talking about the fact that the English regulator could soften monetary policy at the next meeting, although until recently the likelihood of this scenario was quite low - good data on rising inflation, the labor market and the volume of retail sales eliminated the corresponding concerns. Now the issue of rate cuts is again on the agenda.

This combination of news flows put pressure on the British currency. But the main catalyst for pulling down GBP/USD was Brexit.

Let me remind you that last week the EU Council approved the mandate of the European Commission in negotiations on future relations with Britain. The 46-page document will become the basis for the upcoming negotiations within the transition period - the first consultations between the parties will begin on March 2, that is, on Monday. The European mandate reflected Brussels' rather tough stance in the upcoming talks. A common thread is the idea that EU standards should serve as an "unconditional reference point" in any version of a future trade agreement. According to the European Commission, these standards should be applied in the areas of state aid, competition, state, social and labor standards, environmental standards, climate change, relevant tax issues "and other regulatory measures and practices in these areas". In other words, Europeans initially rejected both the "Canadian" and the "Australian version of the deal."

A few days later, London announced its mandate for trade negotiations with the European Union. It turned out to be no less rigid and quite ultimatum. First, the British continue to insist that the trade deal with the EU should be similar to the agreement with Canada. Secondly, the Johnson team ruled out the possibility of prolonging the transition period - although almost all experts unanimously say that the parties will not have time to agree on all the nuances of future relationships in such a short period. For example, the negotiations of Brussels with Ottawa lasted no less than seven years. But London stands its ground. Moreover, an intermediate "deadline" was determined on Downing Street. If by June it becomes clear that the parties will not be able to conclude a trade agreement until December, then Britain will enter the regime of preparation for exit without a deal. According to Johnson, by the beginning of the summer, negotiators should agree at least on the general features of future relations. The British also once again emphasized that they would not follow the rules and regulations of the European Union.

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Thus, the dispositions of the parties indicate that in the coming months we will have a "big battle" between the negotiators. The British mandate runs counter to almost everyone with the requirements of Brussels, and in categorical form.

It is likely that during the many months of negotiations, the parties will nevertheless make certain compromises - as was the case during last year's dialogue. But initially, negotiators will almost certainly show an extremely tough and peremptory line of behavior, thereby raising rates and expressing readiness for any outcome of the negotiations. Therefore, the results of the first meetings of the negotiating groups can exert strong pressure on the British currency. Despite the price retreat to the close of the trading week, the GBP/USD pair may continue the downward movement next week, especially if the first dialogue between the negotiators ends on a minor note. The immediate goal of the downward movement is the support level 1.2670 - this is the lower line of the Bollinger Bands indicator, which coincides with the upper boundary of the Kumo cloud on the weekly chart.

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

4-hour timeframe

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Amplitude of the last 5 days (high-low): 67p - 60p - 54p - 127p - 102p.

Average volatility over the past 5 days: 82p (average).

The EUR/USD currency pair broke all records in the last week of February, both growth and volatility. The euro continued to not sharply fall for most of the second month of 2020, but surely, but it spread its wings at the end of the month. If we compare the current rate with the course of the previous month, then the euro has fallen in price anyway. Thus, despite a more than positive week, the euro continues to lose ground against the US dollar. And this despite the fact that the United States, the dollar and the whole situation that has developed now in the world, are doing their best to "try" to help the euro currency.

For example, the US stock market, which fell 15% this week, could trigger a weakening dollar on all fronts. Paired with the euro, this factor may have provided some help. And paired with the pound - no. One way or another, if you look at longer-term timeframes, it becomes clear that the downward trend for the euro/dollar pair continues. Moreover, no one can say for sure why the euro has shown a record growth this week. We have already said that if we consider the entire fundamental background of recent days, it becomes obvious: the pressure on the dollar is exactly the same as the pressure on the euro. Coronavirus is not a purely American phenomenon. Moreover, in Europe, in particular in Italy, there are much more infected than in the United States, at least according to official information. Thus, the impact on the European economy will also be present and negative. The ECB and the Fed can equally resort to easing monetary policy due to the outbreak of the coronavirus.

In this article, we will examine all the macroeconomic statistics of the week to understand how macroeconomic statistics have changed in the EU and the US. It should be noted right away that macroeconomic factors ruled the market this week. If at the beginning of the trading week, in the complete absence of any important publications, a purely technical strengthening of the euro currency was observed, then at the end of the week a whole bunch of various fundamental information sowed panic among traders and there was no talk of any logical and reasonable trading.

No important macroeconomic statistics were published either in the United States or in the European Union on Monday, Tuesday and Wednesday. These days we can only note absolutely neutral GDP in Germany for the fourth quarter, which amounted to +0.4% y/y, and, accordingly, remains at almost zero levels of growth rates. Traders witnessed important reports on Thursday, which, however, did not have a special effect on the movement of the pair. US GDP for the fourth quarter, according to preliminary estimates, was +2.1% y/y. That was the forecast, that was the value of the previous quarter. Traders did not respond to this report. Then a more important indicator of orders for durable goods in the United States was published. All four derivatives of the indicator exceeded forecast values, but did not cause the slightest appreciation of the US currency. It can be said that for most of the week, the euro/dollar was generally traded solely under the influence of technical factors that required serious correction after a three-week fall. Friday's news didn't matter at all to market participants, as it was completely blocked by other events. Nevertheless, we cannot bypass this data.

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German inflation in February remained unchanged at 1.7% y/y. It cannot be said that this is frankly weak inflation, however, it remains insufficient. Thus, there is no particular reason to expect an acceleration of the pan-European inflation rate, which currently stands at 1.4% y/y. Accordingly, there is no reason to expect an improvement in the general economic condition of the European Union. Once again, we are forced to state that statistics from the EU are either failed or neutral at best. From across the ocean on Friday, information was received about changes in the level of income and expenses of the US population, which is not the most significant, as well as a consumer sentiment index from the University of Michigan, which is secondary. Such data will be discussed in more detail in the article on GBP/USD.

Thus, in general, we can say that the euro was just adjusted all week, and next week the "correction against correction" will be very logical. Since the last upward movement was also completely recoilless. The first goal of the correction will be the Kijun-sen critical line.

Trading recommendations:

The EUR/USD pair is still continuing its upward movement. Thus, now you can stay in long positions, but the MACD indicator has already turned down, and the likelihood of a correction beginning is very high. It will be possible to return to sales of the euro/dollar pair with the goal of the support level of 1.0881, when traders will be able 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