Indicator analysis. Daily review of EUR/USD on March 4, 2020

The pair continued to move upward on Tuesday, testing a pullback level of 85.4% equivalent to 1.1173 (red dotted line). Today, strong calendar news for the dollar is expected at 13:15, 15:00 and 15:30 UTC. The price may roll back before the news.

Trend analysis (Fig. 1).

Today, the market may begin to roll back down with the target of 1.1151, a retracement level of 14.6% (blue dashed line). Upon reaching this level, the continuation of work down is with the target of 1.1112, a retracement level of 23.6% (blue dashed line). After the news at 13:15 UTC (if the news comes out according to the forecast), it is possible to continue moving up with the target at the upper fractal 1.1241 (red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, a downward reversal is possible with the target of 1.1112, the retracement level of 23.6% (blue dashed line).

An unlikely scenario is from a pullback level of 23.6% equivalent to 1.1151 (blue dashed line), work up with a target at the upper fractal 1.1241 (red dashed line). Upon reaching this level, work down.

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GBP/USD Intraday High and Low Projection For March 04, 2020

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The High Of The Day and Low Of The Day from the Central Bank Dealer Range (CBDR) today are usually formed at STDV 2-STDV 4 under normal market conditions, but sometimes the quote can reach the STDV 5-STDV 6. Here are the levels for today:

STDV 10 - 1.3090.

STDV 9 - 1.3064.

STDV 8 - 1.3038.

STDV 7 - 1.3012.

STDV 6 - 1.2986.

STDV 5 - 1.2960.

STDV 4 - 1.2934.

STDV 3 - 1.2908.

STDV 2 - 1.2882.

STDV 1 - 1.2856.

CBDR - 1.2830.

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

CBDR - 1.2804.

STDV 1 - 1.2778.

STDV 2 - 1.2752.

STDV 3 - 1.2726.

STDV 4 - 1.2700.

STDV 5 - 1.2674.

STDV 6 - 1.2648.

STDV 7 - 1.2622.

STDV 8 - 1.2596.

STDV 9 - 1.2570.

STDV 10 - 1.2544.

Pay attention to the level of confluence between today's & yesterday's range between 1,3064 and 1.2596 as well as the previous Day High of 1.2843 with the Previous Day Low of 1.2740. All these levels can be a potential turning point.

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 recommendations for EUR/USD and GBP/USD on March 04

Economic calendar (Universal time)

The following events can be noted and tracked in the economic calendar today:

9:30 composite index and index of business activity in the service sector (UK);

10:00 retail sales (eurozone);

13:15 change in the number of people employed in the non-agricultural sector (USA);

15:00 Index of Purchasing Managers in the Non-Productive Sphere (USA);

15:30 crude oil reserves (USA).

EUR / USD

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The euro continues its victorious upward movement, not stopping either for pauses or for correction. The current result is closing above the daily cloud and testing the lower boundary of the weekly Ichimoku cloud. The main task in this situation is to consolidate in the weekly cloud (1.1147) and the ability to update the maximum extremum of the previous weekly and monthly upward correction (1.1240). Among the nearest supports that can be noted now are 1.1111 (daily cloud), 1.1063-75 (weekly Fibo Kijun + monthly Tenkan) and a wide zone 1.1010-1.0955 (weekly and daily crosses Ichimoku + historical levels).

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The main advantage in the lower halves continues to remain on the side of players to increase. The upward reference points within the day are the resistance of the classic Pivot levels 1.1224 - 1.1279 - 1.1343. Moreover, on H1, we have been witnessing recently the emergence of a downward correction. The current corrective decline has already led to the fact that most of the analyzed technical indicators are ready to support the further strengthening of the bears. In addition, the players to decline have started testing support for the central Pivot level of the day (1.1160). Now, consolidation below the level will allow us to consider the further development of the correction. The main reference point of which will be the weekly long-term trend (1.1030), while intermediate support for today can be noted on S1 (1.1105).

GBP / USD

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After meeting with strong support for the area of weekly Kijun (1.2736) and monthly Tenkan (1.2736), inhibition is observed. The closest bearish benchmarks continue to remain at 1.2670-97 (the first target of the daily target + weekly Senkou Span B and Fibo Kijun) and 1.2601 (the level of 100% working out of the target for the breakdown of the daily Ichimoku cloud). At the same time, the associations of important resistance levels from different time intervals today also remain in their places - 1.2851-82 and 1.2967-1.3001.

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On the other hand, prolonged inhibition of the higher halves contributed to the fact that in the lower halves, players to increase managed to gain a foothold above the central Pivot level of the day and are now close to testing the weekly long-term trend (1.2843). Now, consolidation above the moving average (1.2843), as well as overcoming the closest strong resistance of the upper time intervals (1.2851-82) will help change the balance of forces and further strengthen the players to increase. Meanwhile, returning to the central Pivot (1.2797) and further updating of the correction minimum (1.2725) may lead to testing of new bearish benchmarks located now at 1.2670-97.

Ichimoku Kinko Hyo (9.26.52), Pivot Points (classic), Moving Average (120)

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Next up is the Bank of Canada?

The financial world continues to discuss the Federal Reserve's unexpected decision to cut interest rates by 50 basis points. Yesterday morning, the market argued about whether the Fed would soften monetary policy at its March meeting or wait until April? To date, these conversations have lost their relevance: Powell slashed the rate, succumbing to political pressure and panic in society. Now traders are puzzled by another question - which central bank of the world will follow the examples of the Fed and the RBA? According to some experts, the Bank of Canada is next in line, which will hold its next meeting today.

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But first, let's deal with the US currency's behavior from yesterday. The initial reaction is quite logical: the dollar sharply plunged throughout the market, responding to the unexpected and sudden decision of the Fed. But then the greenback won back some of the lost positions in almost all pairs, so the reaction of the dollar bulls to such a powerful move by the Fed turned out to be very wrinkled. Why did it happen? In my opinion, here traders were guided by the principle of "buy by rumor, sell by facts" - for example, the EUR/USD pair has been in demand for many days due to the dovish comments of members of the US regulator, which only increased the likelihood of a rate cut. But when the rumors became a reality, many traders took profits against the backdrop of multi-month price highs. As a result, the pair's upward impulse faded, as market participants chose to exit the game in anticipation of the next information drivers. A similar situation has developed in the remaining dollar pairs.

In addition, Jerome Powell at his unscheduled press conference tried to calm the markets. According to him, this is a necessary measure that will give an impetus to the US economy. He assured that the fundamentals of the US economy remain stable, but the coronavirus "brought new risks and problems." According to Powell, it is not yet known how long the epidemic will last - however, as soon as it wanes, key economic indicators will return to growth. In other words, the Fed chief made it clear that the measures taken are preventive and temporary. In general, Powell's rhetoric helped the US currency stay afloat - the dollar index even showed a slight correction.

Market participants have now switched to the possible action of the remaining central banks of the leading countries of the world. The European Central Bank is still keeping a wait-and-see attitude. Some members of the ECB said that there was no need for urgent measures to deal with the consequences of an outbreak of coronavirus. However, yesterday, Christine Lagarde issued a statement in which she voiced concern about the situation. She also added that the European regulator "is ready to take targeted measures commensurate with the main risks."

But the head of the Bank of Japan was more straightforward: Haruhiko Kuroda said that the central bank "will soon take the necessary steps to stabilize the markets." He added that the regulator will seek to stabilize markets by offering sufficient liquidity through market operations and asset purchases. This is a signal that the central bank will use all available tools to flood the market with money.

The Bank of Canada, which will hold its meeting today, is in the risk zone regarding possible actions of the dovish nature. I recall that at the previous meeting, the Canadian regulator removed the wording from the text of the accompanying statement that the current rate level is "appropriate to the situation". The regulator also pointed out that in determining the monetary policy, the central bank will find out whether the slowdown in the country's economy is "more stable than previously predicted".

The fact is that Canada's GDP indicator (on a monthly basis) for the first time in eight months has fallen into the negative region, reaching -0.1%. In annual terms, the indicator slowed down more than expected - up to 1.2%. The release structure suggests that 13 out of 20 sectors of the economy showed negative dynamics. In its accompanying statement, the Bank of Canada indicated that in the near future, the Canadian economy will "grow weaker than the central bank predicted at previous meetings." The regulator also criticized the growth rate of consumer confidence and expenses - according to the Bank of Canada, these indicators "turned out to be unexpectedly weak", as well as the volume of business investments.

At the final press conference, the head of the Central Bank made it clear that the members of the regulator discussed the need to ease monetary policy, but the balance of risks that was at that time made it possible to keep the rate at the same level – as Stephen Poloz put it, "at this stage". He specified that the weak inflation growth rates and signs of financial instability were primarily discussed. At the same time, the head of the central bank made it very clear that the balance of risks could shift in any direction - "in view of the new data."

Obviously, since the last meeting of the Canadian regulator (that is, since January), the specified balance of risks has shifted to the negative side, despite the growth in labor market indicators and inflation. Macroeconomic reports in this case play a secondary role, since we are talking about a slowdown in the global economy and a decrease in the oil market. In particular, a barrel of WTI crude oil is now trading at $47; Brent has dipped to $52.

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Therefore, given the previous rhetoric of Poloz, the negative consequences of the epidemic and the Fed's decision yesterday, it can be assumed that the Bank of Canada will take similar steps today. The only question is which strategy will the Canadian regulator choose for itself - more aggressive (decrease by 50 basis points) or a gentle one (decrease by 25 bp with a delay in the second decision). In any case, market participants lay a high probability of a rate cut at the March meeting - and the Bank of Canada is unlikely to act contrary to these expectations.

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Control zones of GBP/USD on March 4, 2020

Today, the pair is testing the WCZ 1/4 1.2830-1.2821. Forming a "false breakout" or "absorption" pattern on this zone will allow you to enter sales, which will continue the downward medium-term model. The first target of the decline will be the level of 1.2680, where we have a 90% probability of returning to.

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Work in the downward direction will be the priority, until the main resistance zone of the WCZ 1/2 1.2936-1.2917 is broken.

For an alternative model, you will need to fix the price above the level of 1.2830, which will open the way for growth to the WCZ 1/2 1.2936-1.2917, where the fate of the downward medium-term impulse will be determined. When working between the two zones, getting up to 100 points of profit is possible, so rebuilding above the WCZ 1/4 will make purchases profitable.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The area formed by the important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The area that reflects the average volatility over the past year.

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GBP/USD: plan for the European session on March 4. Pound buyers find strength in themselves and return the level of 1.2796

To open long positions on GBP/USD you need:

The Federal Reserve's decision to lower interest rates in the United States yesterday helped pound buyers regain resistance at 1.2796, above which the main trade is now taking place, which could save an upward correction. The primary goal of the bulls in the first half of the day is to break and consolidate above the high of 1.2847, which will lead to further growth of the pair and the resistance test of 1.2891, where I recommend taking profits. However, important PMI data for the UK services industry is coming out today that could significantly affect the market. In the event of a decrease in GBP/USD, only the formation of a false breakout in the region of 1.2796 will be a buy signal, while long positions can be opened at the bounce at the low of 1.2744, but with the expectation of a correction of no more than 20-30 points, since a break of 1.2796 increase the likelihood of a resumption of a downward trend.

To open short positions on GBP/USD you need:

The sellers are again faced with the task of returning the level of 1.2796 to themselves, consolidating below this range will raise the pressure on the pound and lead to a repeated update of the low in the area of 1.2744, and most likely, to its breakout and then it would pull down GBP/USD to 1.2707 and 1.2664, where I recommend taking profits. If the data indicates a decrease in the PMI index for the UK services sector, and most likely it will due to the impact of the coronavirus, then the formation of a false breakout in the region of 1.2847 will signal the opening of short positions. Otherwise, it is best to sell the pound only after testing the highs of 1.2891 and 1.2930.

Signals of indicators:

Moving averages

Trading is conducted slightly above 30 and 50 moving average, which indicates the likely continuation of the upward correction of the pair.

Bollinger bands

A break of the upper boundary of the indicator at 1.2834 will lead to an upward correction of the pound. A break of the lower boundary at 1.2780 will increase the pressure on the pair.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Moving Average Convergence / Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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Technical analysis of ETH/USD for 04/03/2020:

Crypto Industry News:

The organizers in Paris postponed the date of a local blockchain event because of a coronavirus outbreak.

According to the announcement, the Paris Blockchain Week summit - initially scheduled to take place from March 31 - April 1 - is now expected to take place from December 9-10.

The organizers postponed the event due to recent guidelines issued by the French government that prohibit large gatherings that could increase the extent and severity of the coronavirus outbreak.

The announcement stated that the conference would go as expected and that the place, schedule and configuration would remain the same. In addition, the organizers promised that more speakers would join the list of events.

Speakers to participate in the event include, among others CEO and co-founder of the Binance cryptocurrency exchange, Changpeng Zhao, as well as French Finance Minister Bruno Le Maire, founder and CEO of Parity Technologies Jutta Steiner, investment director of Coinshares Meltem Demirors, co-founder of Messari and CEO of Ryan Selkis.

Technical Market Overview:

Ethereum has broken above the short-term trendline resistance and is keeps trading in a narrow range located between the levels of $212.48 - $235.42. No relief rally has been made so far on ETH/USD because any rally attempt is being capped very quickly by bears. The downward momentum is increasing, 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 04/03/2020:

Crypto Industry News:

The German financial regulator has published guidelines classifying cryptocurrencies as financial instruments. This step extends the definition of financial instruments to cover all types of digital assets, with the previous paradigm only covering security tokens.

In a press release issued on Monday, the German Federal Financial Supervisory Authority (BaFin) described the crypto as follows:

"Digital representation of value that has not been issued or guaranteed by any central bank or public authority and is not necessarily linked to a currency defined by law and which has no legal status of currency or money, but is accepted as a medium of exchange by natural or legal persons and may be sent, stored and sold electronically ".

According to BaFin, its new classification reflects the guidelines of intergovernmental agencies such as the Special Group on the Prevention of Money Laundering (FATF). This is the second groundbreaking classification of cryptocurrencies that have appeared over the past few days, and an Australian judge recently ruled that crypto is an investment instrument - which means that virtual currencies can be used in the country.

The new BaFin cryptographic classification announcement is also another step in the country's aspiration to adopt the Fifth EU Money Laundering Directive (AMLD5), which appeared in January 2020.

As part of the new BaFin guidelines on cryptocurrencies, cryptocurrency depositors will have to obtain a license from the regulator to offer their services in this country. Cryptographic platforms already operating in a country without a license must apply for it by the end of November 2020, but they must demonstrate readiness for this before 30 March 2020.

Technical Market Overview:

The local high on Bitcoin was made at the level of $8,914, but it is still below the key short-term technical resistance located at $9,013, so all the Bitcoin bounces were very shallow so far. 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 04/03/2020:

Technical Market Overview:

The GBP/USD pair has bounced quickly from the level of 1.2747 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, but the momentum is still weak and negative. Despite this, the bearish pressure is still active and the next target for bears is seen at the level of 1.2747 and 1.2705. 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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Control zones of EURUSD 03/04/20

Today, the pair is trading outside the average weekly move, and last week's trading closed far beyond this range. This indicates an increase in the likelihood of a downward correctional pattern. The probability of the formation of a downward movement is above 75%, which makes it possible to sell the instrument during the formation of any pattern.

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The resumption of growth can be used to enter sales after the formation of a false breakdown of yesterday's maximum.

If the closing of today's trading occurs below the WCZ 1/2 1.1142-1.1135, a further decline will become a priority until the WCZ 1.1070-1.1056. Work in the downward direction will be the main until the end of this week. Sales have already come to the fore, and purchases from WCZ 1/2 are not profitable, as the pair is trading outside the average weekly move.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by the important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Technical analysis of EUR/USD for 04/03/2020:

Technical Market Overview:

The EUR/USD pair has made a new high at the level of 1.1213, but it is clear the bears are trying to regain control of the market around this level. The market conditions are now overbought despite the positive and strong momentum, so the downtrend might start to be continued any time soon. Euro has done the Pin Bar candlestick already, so the next target for bears might be seen around the level of 1.1091 - 1.1076. If this level is violated, then the odds for the price to return to the main channel are even higher.

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:

Despite 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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EUR/USD intraday high/low projection for MAR 04, 2020

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The high and low of the day from the Central Bank Dealer Range (CBDR) usually form on STDV 2-STDV 4 in the normal condition market. However, sometimes it can reach the STDV 5-STDV 6. Here's today's level:

STDV 10 - 1.1425.

STDV 9 - 1.1401.

STDV 8 - 1.1377.

STDV 7 - 1.1353.

STDV 6 - 1.1329.

STDV 5 - 1.1305.

STDV 4 - 1.1281.

STDV 3 - 1.1257.

STDV 2 - 1.1233.

STDV 1 - 1.1209.

CBDR - 1.1185.

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

CBDR - 1.1161.

STDV 1 - 1.1137.

STDV 2 - 1.1113.

STDV 3 - 1.1009.

STDV 4 - 1.1065.

STDV 5 - 1.1041.

STDV 6 - 1.1017.

STDV 7 - 1.0993.

STDV 8 - 1.0969.

STDV 9 - 1.0945.

STDV 10 - 1.0921.

Pay attention to the level between today & yesterday range at 1.1377, 1.0993 & the previous day high 1.1214 the previous day low 1.1095.

(Disclaimer)

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Control zones AUD/USD on 03/04/20

Developing in the direction of the upward movement is now becoming less profitable, as the pair is trading above the zone of the average weekly move. At the same time, the probability of a return to the level of 0.6576 is 90%; thus, it is necessary to wait for the formation of a pattern of "false breakdown" and enter the direction of return to the middle stroke zone. This pattern becomes the main one in the second half of this week.

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This week, further development will be targeted at returning to the level of 0.6576. The probability of closing trades above this level is 30%.

An alternative pattern will be developed if growth continues. This will allow you to get more favorable prices for the sale of the instrument in the future. In addition, buying from current levels is not profitable, since according to statistics, the probability of a return to the middle course zone is 90%. Any purchase should have a risk-to-profit ratio above 1 in 9, which is unlikely.

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Daily CZ - daily control zone. The zone formed by important data from the futures market that changes several times a year.

Weekly CZ - weekly control zone. The zone formed by the important marks of the futures market, which change several times a year.

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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Forecast for EUR/USD on March 4, 2020

EUR/USD

An emergency meeting of the FOMC Fed was held last night in order to cut the base rate immediately by 0.50% - from 1.75% to 1.25%. The last time the Federal Reserve convened an extraordinary meeting on the rate was back in the crisis year of 2008. The Fed exceeded market expectations, as investors already doubted a double rate cut at a scheduled meeting on the 18th, assuming one decrease by a quarter point in March and April. But since the growth on expectations last week was very high, the euro responded moderately directly to the news. Daily growth amounted to 36 points at extremely high volumes, which indicates the closure of positions opened in the period from February 21. When the entire volume is closed, the euro will unfold in decline. We can only say that by such actions the Fed officially recognized the current situation in the US as a crisis, as it was in 2008. Obviously, the crisis is not so much in the danger of the coronavirus as in the ruptured problems of the United States itself. Now we have to wait for technical conditions to form for strengthening the dollar as a safe- haven currency.

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The signal line of the Marlin oscillator is moving down on the daily chart. So far this is the only sign of the upcoming cooling of the market.

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On the four-hour chart, yesterday's events only slightly affected the oscillator, the signal line continues to consolidate at the lower boundary of the range highlighted in gray. A price drop under yesterday's low (1.1095) will be the first signal for a reversal. In this case, we are waiting for the price at the Fibonacci level of 50.0%, towards which the MACD indicator line (blue) is aiming.

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Forecast for GBP/USD on March 4, 2020

GBP/USD

Yesterday, the growth of the British pound was stopped at the Fibonacci level of 110.0% (1.2843). At the moment, technical indicators do not show any proactive signals of continued growth or a price reversal. The same situation of uncertainty in the political sphere, the results of trade talks between the UK and the EU should become known tomorrow.

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On the four-hour chart, the signal line of the Marlin oscillator touched the boundary with the growth territory. There may be a downward turn from this line, but there may be continued growth.

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In general, the situation is going down on both scales - the price is lower than the indicator lines, there are no warning reversal patterns. The pound may rise after the price overcomes the Fibonacci level of 110.0% (1.2904), a return to decline is likely after leaving the level of 123.6% at the price of 1.2760. We are waiting for news from Brussels where trade negotiations take place.

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Forecast for USD/JPY on March 4, 2020

USD/JPY

The US stock market lost 2.81% (S&P 500) on Tuesday. As a result, the yen strengthened against the dollar by 118 points on investors' desire to get out of risk, that is, according to the USD/JPY chart, there was a decrease. The price has stopped at the Fibonacci level of 223.6%, currently it is trying to overcome the red trend line of the price channel. It may be possible to do this to the price, but there is very strong resistance ahead of the two intersecting lines of the ascending and descending price channels in the region of 107.98. The price can turn down from this level again. Price taking under today's low opens the target range of 105.92-106.13, determined by Fibonacci levels of 271.0% and 261.8%.

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A convergence with price has formed on the four-hour chart on the Marlin oscillator. With a greater degree of probability, the price will choose a correction option. The 107.98 target level can be overcome, above it is the second target 108.45 in Fibonacci level on the daily chart 161.8%.

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

Fractal analysis of the main currency pairs for March 4

Forecast for March 4 :

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1322, 1.1268, 1.1242, 1.1196, 1.1116, 1.1083 and 1.1029. Here, we are following the local upward cycle of February 28. The continuation of the movement to the top is expected after the breakdown of the level of 1.1196. In this case, the target is 1.1242. Price consolidation is in the range of 1.1242 - 1.1268. For the potential value for the top, we consider the level of 1.1322. Upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is expected in the range 1.1116 - 1.1083. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 1.1029. This level is a key support for the top, its passage at the price will lead to the formation of initial conditions for the downward cycle.

The main trend is the local upward cycle of February 28

Trading recommendations:

Buy: 1.1196 Take profit: 1.1242

Buy: 1.1268 Take profit: 1.1320

Sell: 1.1116 Take profit: 1.1084

Sell: 1.1081 Take profit: 1.1030

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2866, 1.2827, 1.2795, 1.2759, 1.2717, 1.2689 and 1.2631. Here, we are following the development of the downward cycle of February 25. The continuation of movement to the bottom is expected after the breakdown of the level of 1.2759. In this case, the first goal is 1.2717. Short-term downward movement is possibly in the range of 1.2717 - 1.2689. The breakdown of the last value will lead to a movement to a potential target - 1.2631. Upon reaching this level, we expect a pullback to the top.

Consolidated movement is possibly in the range of 1.2795 - 1.2827. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.2866. This level is a key support for the downward movement.

The main trend is the downward cycle of February 25.

Trading recommendations:

Buy: Take profit:

Buy: 1.2828 Take profit: 1.2864

Sell: 1.2759 Take profit: 1.2718

Sell: 1.2717 Take profit: 1.2690

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9655, 0.9622, 0.9598, 0.9553 and 0.9518. Here, the price is near the limit values for the descending cycle of February 20. In connection with which, we expect a correction. Short-term upward movement is possibly in the range of 0.9598 - 0.9622. The breakdown of the latter value will lead to in-depth movement. Here, the target is 0.9655. This level is a key support for the downward structure.

Short-term downward movement is possibly in the range of 0.9553 - 0.9518. From here, we expect a key reversal to the top.

The main trend is a downward cycle of February 20, we expect a correction

Trading recommendations:

Buy : 0.9598 Take profit: 0.9621

Buy : 0.9624 Take profit: 0.9653

Sell: 0.9551 Take profit: 0.9520

Sell: Take profit:

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For the dollar / yen pair, the key levels on the scale are : 108.51, 107.76, 107.33, 106.77, 106.43 and 105.74. Here, we are following the development of the downward cycle of February 21. Short-term downward movement is expected in the range of 106.77 - 106.43. The breakdown of the last value will lead to movement to a potential target - 105.74, when this level is reached, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 107.33 - 107.76. The breakdown of the latter value will lead to an in-depth correction. In this case, the target is 108.50. This level is a key support for the downward structure.

The main trend: the downward cycle of February 21

Trading recommendations:

Buy: 107.33 Take profit: 107.74

Buy : 107.78 Take profit: 108.50

Sell: 106.77 Take profit: 106.45

Sell: 106.40 Take profit: 105.74

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3409, 1.3373, 1.3350, 1.3308, 1.3282, 1.3262, 1.3224 and 1.3201. Here, we are following the formation of the descending structure of February 28. The continuation of the movement to the bottom is expected after the breakdown of the level of 1.3308. In this case, the target is 1.3282. Price consolidation is near this level. The passage at the price of the noise range 1.3282 - 1.3262 should be accompanied by a pronounced downward movement. Here, the target is 1.3224. For the potential value for the bottom, we consider the level of 1.3201. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is possibly in the range of 1.3373 - 1.3409. There is a high probability of a downward reversal from this range. At the same time, the breakdown of the level of 1.3410 will lead to the formation of initial conditions for the upward cycle. In this case, the target is 1.3464.

The main trend is the formation of the downward structure of February 28

Trading recommendations:

Buy: 1.3375 Take profit: 1.3409

Buy : 1.3412 Take profit: 1.3460

Sell: 1.3308 Take profit: 1.3282

Sell: 1.3260 Take profit: 1.3225

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6701, 0.6667, 0.6649, 0.6623, 0.6602, 0.6571, 0.6558 and 0.6539. Here, we are following the development of the upward cycle of February 28. Short-term upward movement is expected in the range of 0.6602 - 0.6623. The breakdown of the latter value will lead to a pronounced movement. Here, the target is 0.6649. Short-term upward movement, as well as consolidation is in the range of 0.6649 - 0.6667. For the potential value for the top, we consider the level of 0.6701. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 0.6571 - 0.6558. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.6539. This level is a key support for the top.

The main trend is the upward cycle of February 28

Trading recommendations:

Buy: 0.6602 Take profit: 0.6620

Buy: 0.6625 Take profit: 0.6649

Sell : 0.6570 Take profit : 0.6558

Sell: 0.6556 Take profit: 0.6540

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For the euro / yen pair, the key levels on the H1 scale are: 122.07, 121.61, 121.36, 120.92, 120.23, 119.95 and 119.54. Here, we are following the formation of the initial conditions for the top of February 28. The continuation of the movement to the top is expected after the breakdown of the level of 120.23. In this case, the first goal is 120.92. The breakdown of which, in turn, will allow you to count on the movement to 121.36. Price consolidation is in the range of 121.36 - 121.61. For the potential value for the top, we consider the level of 122.07. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 119.54 - 119.31. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 118.87. This level is a key support for the upward structure.

The main trend is the formation of initial conditions for the top of February 28

Trading recommendations:

Buy: 120.25 Take profit: 120.90

Buy: 120.92 Take profit: 121.36

Sell: 119.30 Take profit: 119.00

Sell: 118.85 Take profit: 118.44

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For the pound / yen pair, the key levels on the H1 scale are : 139.34, 138.82, 138.21, 137.79, 136.91 and 136.11. Here, we are following the downward cycle of February 21. The continuation of movement to the bottom is expected after the breakdown of the level of 136.90. In this case, the goal is 136.11. Upon reaching this level, we expect a rollback to correction.

Short-term upward movement is possibly in the range of 137.79 - 138.21. The breakdown of the last value will lead to the development of an in-depth correction. Here, the goal is 138.82. This level is a key support for the downward cycle. Its breakdown will lead to the formation of an upward structure. In this case, the goal is 139.34.

The main trend is the downward cycle of February 21.

Trading recommendations:

Buy: 137.80 Take profit: 138.20

Buy: 138.25 Take profit: 138.80

Sell: 136.90 Take profit: 136.11

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

GBP/USD: what prevents the pound from spreading its wings?

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GBP/USD continues to trade near 4.5-month lows. The continuing uncertainty surrounding the future relations between the UK and the European Union, as well as expectations regarding the interest rate cut by the Bank of England, are putting pressure on the pound.

About 100 British officials went to Brussels to participate in the first round of negotiations with EU representatives, which should last until Thursday. They will discuss annual trade and close ties in the field of security. At stake is a half-trillion-euro relationship.

The EU wants to give the United Kingdom favorable access to a single market in exchange for guarantees that London will prevent dumping.

British Prime Minister Boris Johnson has already stated that the country does not want to be bound by EU rules or the jurisdiction of its highest court. The EU believes that this is necessary to ensure fair competition.

Being near the lowest pound values over the past four and a half months, the pound is also held by increased fears about the spread of the coronavirus.

Signs that the impact of the new virus at the global level is beginning to affect production recovery in the UK after the December MP elections came on Monday, as local manufacturers reported large delays in their supply chains.

According to IHS Markit, the business activity index (PMI) in the country's manufacturing sector rose to 51.7 points in February compared to January 50.0. However, the indicator was below the forecast of 51.8 points and a preliminary estimate of 51.9.

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The BoE said it was working with the British Department of the Treasury and international partners to ensure that all necessary measures were taken to protect the banking system and the economy as a whole from the effects of coronavirus.

The derivatives market lays in the quotes with a more than 80% probability of lowering the interest rate BoE by 25 basis points at the March meeting.

"We believe that the Bank of England will reduce the interest rate by 0.25% at the next meeting, which will be held March 26. We also expect that the state budget, which will be presented on March 11, will be largely aimed at containing the coronavirus," analysts at ING said.

As for the technical picture, it has changed little since last week. After Friday's bearish breakout of the GBP/USD two-month downward trend channel, the mood remains downward.

The absorption of this year's lows in the region of 1.2750 will strengthen the bearish forecast and the pair can aim for the round 1.2700 mark. From here, sellers will head to the next important horizontal support at 1.2645.

Only a breakout of the 1.2875–1.2880 area can neutralize the bearish forecast and throw the pair above 1.2900. This will clear the bulls' path to the important psychological mark of 1.30, where the 50-day moving average passes, which makes this area a key turning point.

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

EUR/USD: pendulum of forex market could swing towards dollar growth and increased pressure on the euro

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Until recently, the single European currency was under pressure due to divergence in the monetary rates of the Federal Reserve and the European Central Bank. The euro also suffered from interruptions in the supply of components to the EU from China and weak macroeconomic indicators of almost all major European countries and the eurozone as a whole. However, in the past seven trading days, the fall of EUR/USD has given way to rapid growth. If the main currency pair was trading at 1.0780 on February 20, now it is above the 1.11 mark.

It should be noted that something similar already took place during the 2008 global economic crisis. Amid a sharp decline in stock indices, at a certain moment gold that was growing earlier began to fall in price. This happened because some market participants began to sell precious metals in order to plug holes and maintain unprofitable positions formed on stocks.

The question is, where should the investor go in conditions when the USD index is also falling, and high-yield and risky assets are falling by definition? All that remains is the euro, which temporarily acquires the status of a defensive asset that helps to survive the collapse in the stock market. However, if only the stock exchanges stabilize, they will start selling the euro from the top with terrible force. It is possible that this moment is already close.

Shares receive investor support pending coordinated action by national governments and central banks.

In particular, investors are actively playing out the idea of a deeper interest rate cut by the Fed compared to the ECB. Rumors about the weakening of the monetary policy of the Fed at an extraordinary meeting add fuel to the fire. Goldman Sachs and BofA Merrill Lynch experts expect that after the FOMC meeting in March, borrowing costs will fall not by 25, but by 50 basis points.

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It is possible that money markets have already laid very ambitious expectations in quotes. This revaluation last week became one of the main drivers of volatility.

Apparently, the markets have gone too far in their fears, which again creates favorable conditions for the dollar to grow as part of a rebound in the near future.

Against the backdrop of more than a weekly correction of the markets, the USD index slipped 2%, returning closer to the middle of the trading range over the past year after reaching three-year highs on February 20. The transition from the dollar to less profitable currencies occurred along with a sharp revision of expectations regarding the monetary policy of the Fed.

Currently, federal funds rate futures indicate a 100% chance of a 50-point decline in March. As of February 20, the derivatives market gave almost equal chances of keeping rates at the current level (1.50% –1.75%) and one decrease (1.25% –1.50%).

However, the full effect of lowering interest rates in the economy becomes noticeable only after six to nine months. In this regard, sharp cuts in rates are likely only with forecasts of a prolonged and sharp slowdown in economic activity. Now, however, most experts are inclined to believe that the effect will be short-term.

Most likely, measures to support markets will now focus on a short-term infusion of liquidity, and lowering rates against this background will be less decisive.

There is another point. The coronavirus epidemic is so far more affecting Europe than the United States. This is due to both the number of cases in the EU and its close ties with manufacturing companies in China. In this regard, the ECB's more stimulating actions look more logical than the Fed. This could be a turning point for the forex market. Last week, traders put too aggressively into the quotes expectations of lower interest rates by the US central bank.

It is possible that in the coming days, such a reassessment of expectations will put pressure on the long-term interest rates on eurozone government bonds. One can hear assurances that the Fed is unlikely to meet recent expectations. This means that the pendulum of the foreign exchange market has high chances to swing again towards a stronger dollar and increased pressure on the euro.

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

Comprehensive analysis of movement options of #USDX vs EUR/USD vs GBP/USD vs USD/JPY (DAILY) on March 2020

The first month of spring. Here is a comprehensive analysis of the options for the movement of the main currency instruments #USDX, EUR / USD, GBP / USD and USD / JPY - DAILY in March 2020

Minor operational scale (daily time frame)

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US dollar index

The movement of the #USDX dollar index in March 2020 will be determined by developing the boundaries of the equilibrium zone (97.15 - 97.65 - 98.10) of the Minuette operational scale forks. The details for working out the boundaries are shown in the animated chart.

In case of breakdown of the upper boundary of the ISL38.2 (resistance level of 98.10) equilibrium zone of the Minuette operational scale forks, together with 1/2 Median Line Minuette (98.20) upward movement of the dollar index can be continued to the upper boundary of 1/2 Median Line Minuette channel (98.60) and the control line UTL (99.00) of the Minor operational scale forks.

On the contrary, in case of breakdown of the lower boundary of the ISL61.8 (support level of 97.15) equilibrium zone of the Minuette operational scale forks, it will lead to an option to continue the downward movement #USDX to the targets:

- final Schiff Line Minuette (96.50);

- local minimum 96.36 ;

- final line FSL (95.40) of the Minuette operational scale forks.

The marking up options for the #USDX movement in March 2020 is shown in the animated chart.

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Euro vs US dollar

The development of the movement of the single European currency EUR / USD in March 2020 will depend on the development and direction of the breakdown of the range :

  • resistance level of 1.1175 - the initial line of SSL of the Minor operational scale forks;
  • support level of 1.1090 - the upper boundary of the ISL61.8 equilibrium zone ofof the Minuette operational scale forks.

A return below the support level of 1.1090 to ISL61.8 Minuette will determine the development of the EUR / USD movement in the equilibrium zone (1.1090 - 1.1030 - 1.0970) of the Minuette operational scale forks with the prospect of reaching the boundaries of 1/2 Median Line Minuette channel (1.0945 - 1.0900 - 1.0860).

Meanwhile, in the event of a breakdown of the resistance level of 1.1175 on the initial SSL line of the Minor operational scale forks, it will be possible to update the local maximum 1.1240 and the European currency will reach the final line FSL (1.1275) of the Minuette operational scale forks.

The details of the EUR / USD movement options in March 2020 are shown on the animated chart.

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Great Britain pound vs US dollar

In March 2020, the development of Her Majesty's GBP / USD currency movement will depend on the development and direction of the breakdown of the boundaries of 1/2 Median Line channel (1.2625 - 1.2800 - 1.2980) of the Minuette operational scale forks. The detail of movement inside the channel 1/2 Median Line Minuette is presented on the animated chart.

The breakdown of the upper boundary (resistance level of 1.2980) of the 1/2 Median Line channel of the Minuette operational scale forks will lead to the development of the upward movement GBP / USD which may continue to 1/2 Median Line Minor (1.3160) with the prospect of reaching the upper boundary of the 1/2 Median Line channel (1.3435) of the Minor operational scale forks.

Alternatively, in case of breakdown of the lower boundary (support level of 1.2625) of the 1/2 Median Line Minuette channel, then the downward movement of Her Majesty's currency will continue to the boundaries of the equilibrium zone (1.2580 - 1.2350 - 1.2120) of the Minuette operational scale forks.

The details of the GBP / USD movement in March 2020 can be seen on the animated chart.

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US dollar vs Japanese yen

The development of the USD / JPY currency movement of the "country of the rising sun" in March 2020 will be determined by the development and the direction of the breakdown of the range :

  • resistance level of 107.75 (upper boundary of the ISL38.2 of the Minuette operational scale forks);
  • support level of 107.35 (lower boundary of the 1/2 Median Line Minuette channel).

The breakdown of the upper boundary of ISL38.2 (resistance level of 107.75) of the Minuette operational scale forks will direct the development of the currency of the country of the rising sun to the 1/2 Median Line Minuette channel (108.20 - 109.40 - 110.60) of the Minor operational scale forks.

On the contrary, in case of breakdown of the lower boundary (support level of 107.35) of the 1/2 Median Line Minuette channel, the downward movement of USD / JPY can be continued to the goals :

- initial SSL line (107.05) of the Minor operational scale forks;

- 1/2 Median Line Minuette (106.35);

- lower boundary of ISL61.8 (105.00) of the equilibrium zone of the Minuette operational scale forks.

We look at the details of the USD / JPY movement in March 2020 on the animated chart.

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The review was compiled without taking into account the news background. Thus, the opening trading sessions of major financial centers does not serve as a guide to action (placing orders "sell" or "buy").

The formula for calculating the dollar index :

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

where the power coefficients correspond to the weights of the currencies in the basket:

Euro - 57.6% ;

Yen - 13.6% ;

Pound sterling - 11.9% ;

Canadian dollar - 9.1%;

Swedish krona - 4.2%;

Swiss franc - 3.6%.

The first coefficient in the formula leads the index to 100 at the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

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

GBP/USD. Results of March 3. Paradoxical pound ignores Fed decision and the coronavirus

4-hour timeframe

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Amplitude of the last 5 days (high-low): 104p - 108p - 87p - 194p - 111p.

Average volatility over the past 5 days: 121p (high).

The British pound was trading as if there were no news and events today, March 3. There were no planned macroeconomic publications in the United Kingdom and the United States. The pound/dollar pair quietly began to adjust in the morning. However, then trailers began to receive various kinds of messages and news that simply could not be ignored. The first thing that should be noted is the rumors that all the largest central banks of the world will lower key rates in the fight against the consequences of the coronavirus. The central bank of Australia and the US Federal Reserve have already done so. However, the pound almost did not react either to the rumors themselves, or to the negative expectations of most traders, or to the speech of Mark Carney, who almost openly declared his readiness to soften monetary policy, nor the Fed's decision to reduce the key rate by 50 basis points !!! And after all, if there were now more important topics for the British currency, such as negotiations between Britain and the EU on trade relations after 2020, one could understand this behavior of the pound/dollar pair. However, nothing of the kind happened. Traders of the pound simply missed the information about the sharp, unexpected rate cut by the US central bank. Even the GBP/USD volatility has not changed during the day. There was no surge of emotion, nothing. We talked in a neighboring review that the euro is paired with the US dollar is now devoid of logic in motion. It turns out that the pound sterling does not differ by this logic and validity either.

In the morning, Bank of England Chairman Mark Carney said that the regulator was ready to take all necessary measures to help the British economy cope with the consequences of the coronavirus. Earlier, Carney said that despite the fact that there are still quite a few sick and dead in the world, the quarantines imposed on many countries still have a negative effect on the British economy. The head of the British regulator also said that the monetary committee is now considering the consequences of the Covid-2019 virus and possible measures that it can take. At the same time, most likely, Carney will not be able to solve the problems of the coronavirus and its impact on Great Britain's economy, since he is set to leave his post on March 15.

Also today, the G7 countries have declared their readiness to use fiscal measures in case the situation with the epidemic worsens. Unfortunately, no specifics about the future actions of governments, ministries of finance and central banks were made available to traders. In fact, it was an emergency meeting of top officials of the G-7 countries, after which a statement was made in the style of: "the situation is under control, the governments of all countries of the world are in close cooperation to timely combat the spreading virus." The following message was posted on the US Treasury website: "Given the potential impact of Covid-19 on global economic growth, we consider it necessary to use all available tools to achieve strong, sustainable growth and protection against risks. Along with increasing medical efforts, G7 finance ministers are ready to take any action, including fiscal measures, to help counter the virus and support the economy at this stage." All other statements by officials from other countries were about the same. Thus, at the moment we can expect a softening of the monetary policies of the ECB and the BoE. In the current conditions, it's even hard to imagine what the market reaction to these events might be, how many key points key rates will be lowered, what consequences of the coronavirus all countries of the world will face in the near and more distant future. One thing is for sure, panic can take over markets. And if panic seizes the markets, then there is no need to talk about any reasonable trade. So far, we hope that the markets calm down a bit and trading returns to normal. But the situation in the world now is such that you cannot be sure of anything.

From a technical point of view, the pound/dollar has corrected today to the Kijun-sen critical line. Thus, since the fundamental and macroeconomic backgrounds do not currently have a special effect on the pair, technical factors remain the most important and significant. Based on this, a rebound in the price from the Kijun-sen line could trigger a resumption of the downward movement. Bollinger Bands and other trend indicators are also pointing down. If the BoE lowers its key rate in the near future, then the British pound may begin to feel more serious pressure from market participants.

Trading recommendations:

The GBP/USD pair continues the upward correction. Thus, it will be possible to sell the British pound again with targets at 1.2686 and 1.2647, after the completion of the current correction (MACD indicator turns down or rebounds from the Kijun-sen line). We recommend that you buy the pair with targets at the level of 1.2889 and the Senkou Span B line in small lots if the bulls are able to gain a foothold above the Kijun-sen line. The fundamental background now has practically no effect on the movement of the pair. This is alarming.

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. Results of March 3. EU inflation has failed again. Fed suddenly reduced the rate

4-hour timeframe

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Amplitude of the last 5 days (high-low): 60p - 54p - 127p - 102p - 157p.

Average volatility over the past 5 days: 100p (average).

The second trading day of the week ends with a new attempt by the euro to continue the upward movement, but it seems that the fuse in the bulls has completely dried up. We already drew the attention of market participants in previous reviews to the fact that there is very little logic and validity in the current upward movement of the euro currency. Initially, the upward movement was suggested for at least two weeks, as a necessary correction from a technical point of view. However, the correction turned out to be more than the downward trend itself. That is, in fact, it is very difficult to say why the European currency rushed up at a wild speed, and, for example, the British pound continues to fall in price paired with the dollar? Why did factors that seem to have an impact on the euro/dollar have no impact on the pound/dollar? Perhaps the problem is precisely in the pound, but on what, in principle, could the strengthening of the euro be based? On the fall of the US stock market? This is not the first time in history. On the fears of traders of the consequences of the coronavirus and its negative impact on the US economy? It will have no less impact on the economy of the European Union; this is clear to everyone. On a possible cut in the Fed key rate? So the European Central Bank announced its readiness to soften monetary policy. At the same time, the US economy continues to feel much better than the European one. In general, we stick with our original opinion: the market is now full of various kinds of news, data, rumors and speculation, all of them are very important, and traders simply panic, which leads to such unreasonable logical movements. The most vivid proof of this: today the Fed suddenly lowered its key rate by 0.5%, which did not happen a long time ago, and the euro managed to add no more than 40 points. Yesterday, when there were practically no important messages and fundamental events, the euro grew by more than 100 points. Thus, we still believe that markets need to calm down in the first place. The state of panic should pass. We do not know when this reassurance will come if the situation with the coronavirus does not improve. Now the Fed has lowered its key rate at an emergency meeting, completely unplanned. Tomorrow, the ECB or the Bank of England can do the same. Obviously, these news and events will not bring reassurance to either stock market investors or currency traders.

It is difficult to say whether there is any sense at all to consider the macroeconomic background of Tuesday, March 3? At the very beginning of the day, the euro/dollar began to adjust, but this correction was extremely weak, despite the fact that the consumer price index in the European Union slowed down to 1.2% yoy in February. This is, of course, a negative moment for the eurozone and the single currency, but, as we see, the EU currency did not fall under any selloff. Accordingly, we can already conclude that the bears did not plan to join the trade today, even with weak statistics from the European Union. Furthermore, the bulls that have recently dominated the market could begin to reduce long positions against the background of the same weak inflation report, however, did not begin to do this, although once again one of the key indicators of the state of the EU economy failed. Just the other day, ECB Vice President Luis de Guindos said that the regulator will continue to do everything necessary and use all its available tools so that inflation continues to move to the target level of 2.0%. Many in this speech considered a hint to lower rates in the near future due to the same current situation in the world with the Chinese virus. However, the fact of weak inflation in the EU cannot be denied. Well, after the Fed announced in emergency mode that the key rate was reduced by 0.5%, the bulls were completely at a loss. It's hard not to respond with selling the US dollar and purchases of the euro when the Fed cuts the rate by 50 basis points at once. But if at the same time the pair has already risen in price by 400 points in recent days, having passed them completely without rollbacks, a stupor arises.

From a technical point of view, a downward correction has begun, which the MACD indicator has signaled. However, at the same time the pair has just updated yesterday's highs and may continue to increase. And at the same time, the chances of resuming correction remain high after traders calm down after an unexpected decision by the Fed. Thus, now is not the most favorable situation for trading the EUR/USD pair.

Trading recommendations:

The EUR/USD pair retains the same chances for the beginning of the correction and for the continuation of the upward movement. Thus, now it is formally possible to stay in long positions with the target of the resistance level of 1.1209. However, from our point of view, this is rather dangerous, and this level has already been worked out today. It will be possible to sell the pair with the first goal of the 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

EUR/USD. Dollar falls throughout the market: Fed still succumbed to pressure

The European currency has suspended its triumphal procession for several hours today - conflicting data on inflation growth in the eurozone slightly cooled the bulls of the EUR/USD pair. Buyers stepped back, but did not capitulate, staying within the 11th figure. The fact is that the general consumer price index for February turned out to be lower than forecasted values (the indicator reached 1.2%, and the consensus forecast was 1.4%). While core inflation came out in accordance with the forecast, at around 1.2%. The producer price index also showed contradictory dynamics: on an annualized basis, the indicator remained in the negative area, dropping to the level of -0.5%, but on a monthly basis it rose to 0.4% (this is the best result since October 2018).

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The market, of course, focused on the negative aspects of today's release, and the EUR/USD bulls were forced to retreat from the daily high - but literally a few hours before the US session started. Looking ahead, it should be noted that short positions in the pair are now in any case extremely risky (even with price pullbacks), since the dollar remains vulnerable. Moreover, the rhetoric of the ECB representatives continues to amaze with their equanimity, while Fed members today unexpectedly and unscheduled reduced their interest rates by 50 basis points at once. This dissonance keeps the euro afloat, despite the slowdown in general inflation in the eurozone.

Let me remind you that Vice President of the ECB Luis de Guindos yesterday unexpectedly announced that it was necessary to respond to the current situation not with the help of monetary policy, but with the help of financial policy. Today, a similar position was voiced by ECB member Robert Holtzman (head of the central bank of Austria). In his opinion, those actions taken by the regulator are secondary with respect to fiscal support. At the same time, he clarified that at the moment he would not vote for a rate cut. His colleague, the head of the central bank of Slovakia, Peter Kazimir, also said that in the near future there is no need for easing monetary policy. In turn, the head of the central bank, Christine Lagarde, has for several months been calling for tax incentives for Germany and the Netherlands, which could use their budget surpluses.

In other words, the European Central Bank so far does not intend to soften the terms of monetary policy - instead, central bank officials are urging EU leaders to increase fiscal stimulus in their countries. It is likely that this position of the members of the European regulator is explained by the existing split in the ECB camp - after all, the resumption of QE and a decrease in the interest rate last year were not easy for Lagarde. After the September meeting, many central bank officials criticized the actions of the regulator. In particular, we are talking about Benoit Coeure, Jens Weidmann, Klaas Knot and Villeroy de Galhau. Given the positions voiced this week by Guindos, Holtzman and Kazimir, it can be assumed that the ECB will maintain a wait-and-see attitude in the near future.

But on the other side of the ocean, a whole campaign was launched to campaign for lowering the interest rate. US President Donald Trump today cited the Reserve Bank of Australia as an example, which cut interest rates by 25 basis points. According to him, the Federal Reserve "forces Americans to pay more." He added that the Fed's policies put pressure on exporters and deprives the country of their competitive advantage. "We need to lower the rate more, and Jerome Powell's policy is wrong," the head of the White House concluded. According to reporters from Bloomberg, the head of the National Economic Council under the White House of the US, Larry Kudlow and Finance Minister Stephen Mnuchin, also insist on reducing the rate. Representatives of the dovish wing of the Fed also called for easing monetary policy, increasing pressure on the centrists and on the hawks. As a result, the Fed surrendered and trimmed the rate immediately by half a percent.

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Meanwhile, the coronavirus continues to march around the planet, including on the territory of the United States of America. There have already been 91 recorded cases of coronavirus and six deaths from diseases caused by COVID-19. Just the day before yesterday, the number of cases was significantly less - 60 people. Dynamics does not bode well - in particular, Trump has already stated that he is considering the possibility of introducing additional restrictions on entry into the country. The increase in the number of sick and dead from COVID-19 in the United States will put further pressure on Fed members.

Thus, despite the fact that in Europe the number of infected is estimated at hundreds, the dollar looks like the "affected" currency in the EUR/USD pair - primarily due to the more restrained position of the ECB representatives. The Fed was under tremendous pressure, including from the top officials of the state, which is why it is not surprising that the US regulator made such a non-standard decision today.

All this suggests that the EUR/USD pair retains the potential for its further growth - to the nearest resistance level of 1.1240, which corresponds to the upper boundary of the Kumo cloud on the weekly chart.

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