EUR/USD. Trump supported the dollar, but short positions are still risky

The euro/dollar pair moves back: after an impulse rise to the level of 1.1496, the price is actively declining, returning to the area of 12-13 figures. The same dynamics is observed in other dollar pairs - the US currency is recovering after a strong fall. The dollar index rose from yesterday's low of 94.75 to the current level of 95.90. The price pullback of the EUR/USD pair is not only due to technical reasons – the unexpected support for the dollar was provided by US President Donald Trump. He reacted to recent events, and his comments served as a reason for a significant correction in many dollar pairs.

The head of the White House promised Americans tax breaks to mitigate the effects of coronavirus. Today, representatives of the Trump administration will consult with the Senate and Republicans in the House of Representatives to discuss the possibility of reducing the payroll tax "or significantly easing it." In addition, the US president urged "not to punish small, medium and large companies for forced violations in the field of hourly wages" in connection with the closure of the quarantine.

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The US currency reacted positively to a possible reduction in income tax. Moreover, this step will be only an integral part of package offers. According to Trump, he will hold an extended press conference, presenting further economic steps in detail after meeting with Congress.

In other words, the White House intends to deal with the negative consequences of the epidemic not only with the help of monetary policy (the mitigation of which is completely dependent on the uncontrolled Federal Reserve) but also with the help of financial policy. This plot twist provided significant support to the US currency, since we can now depend on more restrained steps on the part of the Fed at the March meeting (and subsequent meetings this year). This fundamental factor, in fact, explains the corrective pullback of the EUR/USD pair.

However, it is believed that short positions still look risky on the pair. Firstly, the dollar is now increasing on expectations, which subsequently may not come true (high expectations often lead to disappointment). Secondly, Trump announced only consultations with Congress, and not specific economic measures. The result "at the exit" may be more modest compared to market scenarios. Thirdly, the actions of the White House may not serve as a substitute for the Fed's action: an immediate rate cut can still not be discounted. Almost all economists and currency strategists at major banks suggest further easing of the fed's monetary policy. The only question is how large-scale the actions of the American regulator will be. The most optimistic scenario assumes a 25-point rate cut in March with the announcement of further steps in April and June. But the market is increasingly likely to hear more radical versions of events: according to some analysts, the Federal Reserve will cut the rate by 50 basis points at once, while according to others, it will be by 75 points at once.

Tax exemptions can only be "taken into account" by members of the Fed, but in no way affect their determination to reduce rates – by 25, 50 or 75 points.

If we talk directly about the EUR/USD pair, it is also worth considering that the European Central Bank is in any case not capable of such large -scale and "aggressive dovish" actions as the Fed is capable of. Of course, the ECB can take the rate further into the negative area or expand the volume of QE; however, all these measures have the opposite side, that is, side effects. Therefore, the European regulator will probably act with caution (if it starts to act this month), especially in comparison with the possible decisions of the US Central Bank.

Thus, for the EUR/USD pair, it is now better to take a wait-and-see position. There are too many "unknowns" in the current equation. The price pullback is quite reasonable and explainable, but the further downward prospects of the pair are still unknown.

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The technical picture of EUR/USD still speaks in favor of the upward movement. On the daily chart, the pair is still above the Kumo cloud of the Ichimoku Kinko Hyo indicator and above all its lines. The bullish signal "Parade line" indicates the potential for further price growth. In addition, the pair is located on the upper line of the Bollinger Bands indicator. This also indicates the bullish mood of traders. The upward scenario will not lose its relevance until the bears break through the level of 1.1080 (the lower border of the Kumo cloud on the same time frame). As the nearest goal of the upward movement, we can consider the level of 1.1496 – this is the price maximum of this year. In turn, stop-loss can be placed in the area of the first support level – this is the Tenkan-sen line on the daily chart (price 1.1190).

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Trading plan for EUR/USD on March 10, 2020.

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Oil war: on Monday, oil fell by 30%, after Moscow refused to support the OPEC in reducing oil production. Saudi Arabia has started a price war, announcing large price discounts from $5 to $7 per barrel to buyers from Asia, US, and Europe. It also announced an increase in production from 10 million to 12 million barrels.

In line with this, Rosneft also showed that it is ready to continue the war, announcing an increase in production as well. The price of oil may fall even lower because of it.

This situation, together with the coronavirus epidemic, has brought down the US market by 7%.

Update on the coronavirus: At the moment, there are 32 thousand patients outside China. More than 10% cases (+4000) are added per day.

Main foci - Italy (9,200 patients), South Korea (7,500), Iran (6,500)

Italy is now quarantined.

France and Germany has about 1,000 patients each. Meanwhile, New York has declared a state of emergency.

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EUR/USD: after a strong growth, the pair may experience a correction.

Keep purchasing from 1.1100.

Buy more from the rollback from 1.1200.

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Indicator analysis. Daily review of GBP/USD on March 10, 2020

Trend analysis (Fig. 1).

Today, from the retracement level of 76.4% equivalent to 1.3097 (red dashed line), it is possible to move down with the target of 1.3020, a retracement level of 38.2% (blue dashed line). From this line, work up with the target at the resistance line 1.3141 (black bold line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, the price may begin to roll back down.

An unlikely scenario: from a pullback level of 23.6% equivalent to 1.3020 (blue dashed line), work down with a target of 1.2963, a pullback level of 50.0% (blue dashed line).

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Indicator analysis. Daily review of EUR/USD on March 10, 2020

Trend analysis (Fig. 1).

Today, from a pullback level of 38.2% equivalent to 1.1454 (red dashed line) the price may begin to move downward with the target at the support line 1.1350 (white bold line). Upon reaching this level, an upward movement is possible with the target at the upper fractal 1.1497 (blue 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 - down;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

Today, from the retracement level of 38.2% equivalent 1.1454 (red dotted line) the price may begin to move downward with the target at the support line 1.1350 (white bold line). Upon reaching this level, an upward movement is possible with the target at the upper fractal 1.1497 (blue dashed line).

An unlikely scenario: from the support line 1.1350 (white bold line), work down with the target 1.1223, a pullback level of 38.2% (blue dashed line).

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Technical analysis of ETH/USD for 10/03/2020:

Crypto Industry News:

The pending bill could still halt the rise of cryptocurrency in India. The Indian Parliament has not yet decided on the "Act on the prohibition of cryptocurrencies and regulation of the official digital currency" from 2019, reports Business Insider.

If adopted, the bill will introduce a unique regulatory framework for virtual currencies, tool tokens and commodity-protected tokens - likely creating a complex legislative apparatus.

On March 4, the Indian cryptographic community rejoiced when the Supreme Court of India ruled that the ban on the Reserve Bank of India (RBI) was "disproportionate and unconstitutional.

The circular prevented financial institutions from providing banking services to companies operating on the basis of cryptocurrencies. The ban was in force from April 2018 and was addressed to companies offering "any services related to virtual currencies".

Less than 24 hours after lifting restrictions, several Indian cryptocurrency exchanges have already resumed fiat deposit services - including Unocoin, Wazirx and CoinDCX. In response to the repeal, HashCash consultants also announced that this year they would invest $ 10 million in the Indian cryptographic industry.

Despite the RBI ban on cryptocurrencies, a recent survey by Statista shows that the population of India has the highest per capita usage of Darknet platforms in the world. The report shows that 26% of the 23,227 respondents aged 16 to 65 used technology that facilitates access to the dark network - more than double the global average of 12%.

Technical Market Overview:

The ETH/USD pair trades around the level of $200 after the swing low has been made at the level of $190.31. There is no sign of the downtrend reversal despite the oversold market conditions, but the bulls are trying to bounce higher towards the level of $209.00. The next target for bears is seen at the level of $188.93 and $185.37.

Weekly Pivot Points:

WR3 - $280.41

WR2 - $266.81

WR1 - $233.00

Weekly Pivot - $218.78

WS1 - $185.21

WS2 - $170.40

WS3 - $159.54

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 10/03/2020:

Crypto Industry News:

The German financial regulator stops KKT UG from Berlin, which allows consumers to buy and sell cryptocurrencies at ATMs. According to the published BaFin statement, the owner, who runs KKT UG as managing editor, will cease cross-border trade in property rights.

On its website, the company advertises 24 Bitcoin machines for the purchase and sale of cryptocurrencies in Germany. What's more, its activities cover the whole of Europe.

According to BaFin, the company conducts commercial trading of property rights through KKT UG, which requires a BaFin license under the German Banking Act (Kreditwesengesetz, KWG). The operator apparently lacked the necessary permission.

ATMs with cryptocurrencies have so far had uncertain status in Germany. By January 2020, obligations in this area had not been fully clarified. In proceedings on September 25 last year against the Bitcoin-24 Bitcoin exchange operator, which was discontinued, the Berlin Court of Appeal (Kammergericht Berlin) ruled that commercial trading of Bitcoins without the explicit consent of the authorities is not punishable.

In 2020, the German government decided to introduce new anti-money laundering regulations. From next year, cryptocurrency-related companies, such as digital exchanges, trustees and portfolio providers will need a license issued by BaFin.

Technical Market Overview:

The BTC/USD pair has made a new swing low at the level of $7,640 and currently, BTC/USD trades around the level of $7,930 as it is trying to bounce higher. There is no sign of the downtrend reversal despite the oversold market conditions. The next target for bears is seen at the level of $7,581 and $7,474.

Weekly Pivot Points:

WR3 - $9,697

WR2 - $9,419

WR1 - $8,697

Weekly Pivot - $8,456

WS1 - $7,720

WS2 - $7,436

WS3 - $6,712

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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GBP/AUD now struggling to go up into Daily Rejection Block Area

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After GBP/AUD reached the 4-hour chart bullish vacuum block of 1.9592-1.9739, the price is going up, forming a Rejection Block in the Daily Chart. As we know, the overall bias of the pair is still bullish. At present, GBP/AUD is trapped in the Daily Rejection Block area of 1.9877-2.0780, although the pair still aims to hit the target at 2.0206. There is a probability that GBP/AUD will retrace downwards amid the pressure from the Daily Rejection Block. However, as long as the pair does not break out and closes below 1.9628, GBP/AUD still has a chance to raid the target at 2.0206.

(Disclaimer)

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Technical analysis of GBP/USD for 10/03/2020:

Technical Market Overview:

After the new local high was made at the level of 1.3199 the bears have managed to push the price lower towards the technical support located at the level of 1.3017. This move might be the start of a short-term counter-trend corrective cycle that may lead to a test of the level of 1.2939. Despite the overbought market conditions the momentum is still high and positive, so another leg up might occur shortly.

Weekly Pivot Points:

WR3 - 1.3258

WR2 - 1.3289

WR1 - 1.3204

Weekly Pivot - 1.2969

WS1 - 1.2881

WS2 - 1.2656

WS3 - 1.2581

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. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3512.

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Technical analysis of EUR/USD for 10/03/2020:

Technical Market Overview:

The EUR/USD bulls push the prices towards the level of 1.1497 and currently, the market is consolidating the recent gains in a narrow range between the levels of 1.1347 - 1.1406. Nevertheless, the series of Pin Bar candlestick patterns indicate a possible trend reversal or a temporary correction on EUR/USD. Moreover, there is a clear bearish divergence between the price and momentum oscillator in overbought market conditions, so the move down might occur any time now. Please keep an eye on the technical level located at 1.1361 - 1.1340.

Weekly Pivot Points:

WR3 - 1.1782

WR2 - 1.1563

WR1 - 1.1471

Weekly Pivot - 1.1255

WS1 - 1.1146

WS2 - 1.0916

WS3 - 1.0820

Trading Recommendations:

The downtrend was valid as long as it was terminated or the level of 1.1445 clearly violated, so now all upward moves will not be treated as local corrections in the downtrend, but as a new uptrend. The Ending Diagonal price pattern visible on the larger timeframes like weekly has been completed and the EUR/USD is developing a new wave up.

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Control zones of GBP/USD on 03/10/20

Yesterday, the pair tested the upper monthly control zone and formed a pattern of "false breakdown". This allowed them to enter the sale. The first goal of the short position is the Weekly Control Zone 1/2 1.3005-1.2986. This zone coincides with the upper boundary of last week's average course. The probability of fixing part of the profit at this mark is very high. The test zone can be considered for demand.

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The development in the downward direction remains corrective. A further decline will be confirmed only if the pair consolidates below the Weekly Control Zone 1/2 at today's US session. This will lead to the formation of an alternative pattern that will allow to keep part of the sales opened yesterday. Moreover, additional sales will be available tomorrow. The next goal of the decline will be the weekly control zone 1.2813-1.2775.

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A little below the Weekly Control Zone 1/2 is the zone of the average weekly move, which can serve as an obstacle for the pair to decline this week.

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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GBP/USD: plan for the European session on March 10. A commitment of traders (COT) report indicate the growth of long positions

To open long positions on GBPUSD, you need:

After yesterday's sharp rise in the pound and the update of annual highs, traders began to take profits, as the real prospects for further strengthening of the GBP/USD cause a lot of questions on the background of trade negotiations between the EU and the UK, which are still in a deadlock. However, players believe in the best, as evidenced by the COT report (Commitment of Traders) for March 3, where long non-profit positions increased from the level of 72,667 to 76,063, while short non-profit positions continued to decline and amounted to 40,901 against the level of 43,069 a week earlier. As a result, the non-profit net position also rose to 35,162 from 29,598, indicating the bullish market sentiment in the medium term. Given that important fundamental data is not published today on the UK economy, the market will continue to focus on the news on trade negotiations with the EU. Buyers of the pound in the first half of the day need to protect the support of 1.3043, and only the formation of a false breakdown on it will be the first signal to open long positions in the expectation of a return and consolidation above the resistance of 1.3095. Only after that, you can expect a second wave of growth of GBP/USD in the resistance area of 1.3143 and an update of the week's maximum in the area of 1.3192, where I recommend taking the profits. In the scenario of the pound falling under the support of 1.3043, which is likely, I recommend looking at long positions only after the test of the minimum of 1.2996 or buy the pound immediately for a rebound from the support of 1.2951.

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To open short positions on GBPUSD, you need:

The bears face the task of breaking through and fixing below the support of 1.3043, which will increase the pressure on the pair and lead to an update of the lows of 1.2996 and 1.2951, where I recommend fixing profits since large buyers will start acting in these ranges. However, a more interesting scenario for selling GBP/USD is a false breakdown at the level of 1.3095 or short positions immediately rebound from the maximum of 1.3143, where it will be possible to build the upper border of a new ascending channel.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates small problems for bulls with building a new upward wave.

Bollinger Bands

A break of the lower border of the indicator at 1.3043 will lead to a larger decline in the pound. Growth will be limited by the upper level at 1.3143.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages) Fast EMA Period 12. Slow EMA Period 26. SMA Period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • The total non-commercial net position is the difference between the short and long positions of non-commercial traders.
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Control zones for EURUSD on 03/10/2020

Yesterday, the pair's dew stopped at the resistance zone of the WCZ 1/2 1.1462-1.1455. This made it possible to consider a sell pattern, as the pair reached an average weekly move. Today's declines have already led to a test of the lower midrange zone. Just below the average weekly range is the weekly CZ 1.1452-1.1338, which has a 75% test probability.

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Working towards the continuation of the medium-term bullish momentum is the main one, so the weekly short-term price test should be considered as an opportunity to fix sales and search for a buy pattern.

An alternative model will be developed if the pair exits and gains a foothold below the weekly CZ. The current rate is far beyond the monthly CZ, which increases the probability of a return to it by up to 90%. The main target level is 1.1283. A return to this price will allow you to retain some of the sales that were opened yesterday and will allow you to get a favorable price for the purchase of the instrument in the future.

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

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

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

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EUR/USD: plan for the European session on March 10. A commitment of traders (COT) report. Traders are reducing short positions

To open long positions on EURUSD, you need:

Yesterday's surge in volatility, which led to the update of the 15th figure, is gradually decreasing, as the market is preparing for an important meeting of the European Central Bank and waiting for the next decisions of the Federal Reserve System. In the COT report (Commitment of Traders) for March 3, a sharp reduction in short positions for the euro was noted, but there was no strong growth in long positions. On the contrary, they also decreased, which indicates the caution of traders after such a large rise in the pair at the end of last month. The reduction in short non-profit positions occurred from the level of 271,608 to 238,607, while long non-profit positions decreased from the level of 157,587 to 151,904. As a result, the non-profit net position has grown significantly from its negative level of -114,021 to -86,703. All this suggests that speculative players are reconsidering their forecasts for the euro and it is likely that the market will turn in the longer term. At the moment, the bulls need to form a false breakdown in the support area of 1.1364, which will be a signal to open new long positions in the expectation of returning and fixing above the resistance of 1.1430, which will lead to a repeated update of the highs of 1.1459 and 1.1487, where I recommend fixing the profits. If there is a further downward correction in the first half of the day, it is best to look at long positions after testing the lows of 1.1338 and 1.1311.

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To open short positions on EURUSD, you need:

Sellers coped with active pressure from buyers of the euro and did not let the pair above the resistance of 1.1487. At the moment, the calculation will be based on data on the volume of industrial production in France and Italy and on the report on the GDP of the eurozone. Poor statistics are unlikely to significantly harm the euro, but fixing below the support of 1.1364 will lead to a larger downward correction in the area of the lows of 1.1338 and 1.1311, where I recommend fixing the profits, as larger buyers will start to act from there. In the scenario of a re-growth of the euro, the bears will expect to form a false breakdown in the resistance area of 1.1430, but it is best to open new short positions immediately for a rebound after returning to the upper limits of the side channel of 1.1459 and 1.1487. However, it is worth remembering that their breakthrough will lead to a new upward wave, so do not forget about stop orders.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 moving averages, but demand for the euro may return at any time.

Bollinger Bands

A break of the lower border of the indicator at 1.1364 will increase pressure on the euro. Growth will be limited by the upper level at 1.1480.

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Description of indicators

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

Forecast for EUR/USD on March 10, 2020

EUR/USD

In the last three weeks of growth, the euro corrected 38.2% of the fall from February 2018 to February 2020. Today, in the Asian session, the euro's fall is more than 70 points, which shows the clear intention of the price to close the gap on Monday. Next, we are waiting for the testing of the Fibonacci level at the price of 1.1200, which coincides with the top on December 13 (marked with a tick).

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Fixing the price below this level will direct the price to the support of the MACD line (1.1085). Fixing the price below it will confirm the market's intention to continue selling euros.

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As seen on the four-hour chart, the signal line of the Marlin oscillator went down sharply. This is a sign of the market's intention to move down. The support for the MACD line at 1.1200 coincides with the 23.6% Fibonacci level on the higher-scale chart. Accordingly, the level is strong and requires increased care.

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Forecast for GBP/USD on March 10, 2020

GBP/USD

Over the past five days of growth, the British pound corrected almost 61.8% of the previous 11-week uneven decline. The price failed to gain a foothold above the MACD line (blue indicator) on the daily chart and now, with the agreed reversal of the Marlin oscillator, it is slowly restoring a return to the downward trend.

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For a full recovery, the price must be fixed under the Fibonacci level of 76.4% (1.2913), which coincides with the minimum on December 23, then the price can reach the reaction level of 110.0% at the price of 1.2647.

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As seen on the four-hour chart, the MACD indicator line coincides with the Fibonacci level of 76.4% (actually 23.6%, since the grid is inverted). Anchoring it will confirm the market's ability to continue the decline.

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Forecast for AUD/USD on March 10, 2020

AUD/USD

Yesterday's range of the Australian dollar was an incredible 370 points. After a collapse of 320 points in the four hours since the market opened, the price subsequently soared up, blocked the gap, and today in the Asian session it again shows its intention to decrease.

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Computer indicators returned to normal. Yesterday's peak touched the balance line on the daily scale chart (red indicator). The Marlin oscillator is held in the zone of negative values – in the area of a decreasing trend. It is noteworthy that yesterday closed under the price channel line and today opened also under this line, near the corrective level of 76.4% (in fact, 23.6%, since the grid is inverted). We are waiting for a price drop to the lower embedded line of the price channel – in the area of the minimum of February 28 (0.6440).

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As seen on the four-hour scale chart, the price breaks under the MACD line (0.6565). Fixing below the level will serve as a signal for further decline. The signal line of the Marlin oscillator unfolds from the border with the growth territory.

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Forecast for USD/JPY on March 10, 2020

USD/JPY

On Monday, the US stock index showed the largest daily collapse in the last 12 years: Dow Jones -7.79%, S&P500 -7.60%, Russell2000 -8.97%. But already this morning, Asian markets are recovering: Australia's S&P/ASX200 +1.27%, China's China A50 +0.02%, Japan's Nikkei225 -1.67%. S&P500 futures are up 2.17%. This means that the US market will open higher today.

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The USD/JPY currency pair, which is sensitive to stock market movements, is also growing. The price is clearly headed for closing the gap, respectively, we expect the price to rise above the resistance of the embedded line of the price channel at 105.23, probably to 105.43 – by the top of January 2014. Fixing the price above the level of 105.43 will allow the price to continue the corrective growth to the embedded line of the price channel in the area of 107.13.

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According to the four-hour chart, the Marlin oscillator exits the oversold zone, helping the price to complete the nearest task of closing the gap. The MACD line is approaching the level of 105.43, thus increasing its importance. Failure of the price to gain a foothold above the indicated level may return the USD/JPY pair to a downward trend.

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Fractal analysis of the main currency pairs for March 10

Forecast for March 10:

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: 1.1503, 1.1419, 1.1359, 1.1280, 1.1242, 1.1183 and 1.1122. Here, we are following the local upward cycle of February 28. Short-term upward movement is expected in the range of 1.1359 - 1.1419. The breakdown of the last value will lead to a pronounced movement. Here, the target is 1.1503. We expect a pullback to the bottom from this level.

Short-term downward movement is expected in the range of 1.1280 - 1.1242. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 1.1183. 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. In this case, the goal is 1.1122.

The main trend is the local upward cycle of February 28

Trading recommendations:

Buy: 1.1421 Take profit: 1.1503

Buy: 1.1505 Take profit: 1.1660

Sell: 1.1280 Take profit: 1.1243

Sell: 1.1241 Take profit: 1.1184

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3195, 1.3154, 1.3113, 1.3055, 1.3026 and 1.2981. Here, we are following the development of the ascending structure of February 28. At the moment, we are expecting a movement in correction. The continuation of the movement to the top is expected after the breakdown of the level of 1.3113. In this case, the target is 1.3154. Price consolidation is near this level. For the potential value for the top, we consider the level of 1.3195. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 1.3055 - 1.3026. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.2981. This level is a key support for the top.

The main trend is the upward cycle of February 28, we expect a movement in the correction.

Trading recommendations:

Buy: 1.3113 Take profit: 1.3152

Buy: 1.3155 Take profit: 1.3193

Sell: 1.3055 Take profit: 1.3027

Sell: 1.3024 Take profit: 1.2981

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9423, 0.9372, 0.9330, 0.9266, 0.9211, 0.9178 and 0.9104. Here, we are following the local descending structure of March 4. The continuation of movement to the bottom is expected after the breakdown of the level of 0.9266. In this case, the target is 0.9211. Price consolidation is in the range of 0.9211 - 0.9178. For the potential value for the bottom, we consider the level of 0.9104. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 0.9330 - 0.9372. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.9423. This level is a key support for the downward structure.

The main trend is the local descending structure of March 4

Trading recommendations:

Buy : 0.9330 Take profit: 0.9371

Buy : 0.9373 Take profit: 0.9421

Sell: 0.9264 Take profit: 0.9211

Sell: 0.9177 Take profit: 0.9105

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For the dollar / yen pair, the key levels on the scale are : 105.12, 104.09, 103.40, 101.91 and 100.93. Here, we are following the development of the local descending structure of March 3. The continuation of movement to the bottom is possibly after the breakdown of the level of 101.91. Here, the potential goal is 100.93. We expect a pullback in correction upon reaching this level.

Short-term upward movement is possibly in the range of 103.40 - 104.09. The breakdown of the last value will lead to an in-depth correction. In this case, the goal is 105.12. This level is a key support for the downward structure.

Main trend: local descending structure of March 3

Trading recommendations:

Buy: 103.40 Take profit: 104.07

Buy : 104.12 Take profit: 105.12

Sell: 101.90 Take profit: 102.57

Sell: 102.53 Take profit: 100.95

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3848, 1.3778, 1.3717, 1.3634, 1.3593, 1.3520 and 1.3476. Here, we determined the subsequent goals for the top from the local ascending structure on March 9. The continuation of the movement to the top is expected after the breakdown of the level of 1.3717. In this case, the target is 1.3778. Price consolidation is near this level. For the potential value for the top, we consider the level of 1.3848. Upon reaching which, we expect a pullback to the bottom.

Short-term downward movement is possibly in the range of 1.3634 - 1.3593. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.3520. The range of 1.3520 - 1.3476 is a key support for the top, before which we expect the initial conditions for the downward cycle to be formed.

The main trend is the local upward structure of March 9

Trading recommendations:

Buy: 1.3717 Take profit: 1.3776

Buy : 1.3780 Take profit: 1.3846

Sell: 1.3632 Take profit: 1.3595

Sell: 1.3590 Take profit: 1.3525

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6824, 0.6701, 0.6649, 0.6574, 0.6540, 0.6496 and 0.6456. Here, we are following the formation of a medium-term upward structure from March 9. Short-term upward movement is expected in the range of 0.6649 - 0.6701. The breakdown of the last value should be accompanied by a pronounced upward movement. Here, the potential target is 0.6824. We expect consolidation, as well as a pullback to the bottom near this level.

Short-term downward movement is possibly in the range of 0.6574 - 0.6540. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 0.6496. The range of 0.6496 - 0.6456 is a key support for the top.

The main trend is the formation of the rising structure of March 9

Trading recommendations:

Buy: 0.6650 Take profit: 0.6700

Buy: 0.6704 Take profit: 0.6820

Sell : 0.6574 Take profit : 0.6540

Sell: 0.6538 Take profit: 0.6496

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For the euro / yen pair, the key levels on the H1 scale are: 118.51, 117.90, 117.53, 116.35, 115.81 and 115.27. Here, we are following the descending structure of March 3. The continuation of movement to the bottom is expected after the breakdown of the level of 116.35. In this case, the target is 115.81. Price consolidation is near this level. For the potential value for the bottom, we consider the level of 115.27. Upon reaching which, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 117.53 - 117.90. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 118.50. We expect the initial conditions for the upward cycle to be formed to this level.

The main trend is the descending structure of March 3

Trading recommendations:

Buy: 117.53 Take profit: 117.90

Buy: 117.93 Take profit: 118.50

Sell: 116.35 Take profit: 115.84

Sell: 115.78 Take profit: 115.30

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For the pound / yen pair, the key levels on the H1 scale are : 136.31, 135.55, 135.01, 133.26, 132.87 and 132.13. Here, we are following the local descending structure of March 2. Short-term downward movement is expected in the range 133.26 - 132.87. The breakdown of the last value will lead to movement to a potential target - 132.13. We expect a key reversal to the top from this level.

Short-term upward movement is possibly in the range of 135.01 - 135.55. The breakdown of the latter value will lead to the development of an in-depth correction. Here, the goal is 136.31. This level is a key support for the downward cycle.

The main trend is the local descending structure of March 2

Trading recommendations:

Buy: 135.01 Take profit: 135.53

Buy: 135.57 Take profit: 136.30

Sell: 133.26 Take profit: 132.88

Sell: 132.84 Take profit: 132.15

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 10, 2020

Will the decline of the dollar continue? Here's a comprehensive analysis of movement options of #USDX vs EUR/USD vs GBP/USD vs USD/JPY (DAILY) on March 10, 2020

Minor operational scale (daily time frame)

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US dollar Index

The movement of the dollar index #USDXfrom March 10, 2020 will continue depending on the development and direction of the breakdown range:

  • resistance level of 95.45 - final line FSL of the Minuette operational scale forks;
  • support level of 95.03 - minimum of January 10, 2019

If the FSL terminal line (resistance level of 95.45) of the Minuette operational scale forks is broken down, it will become possible to develop an upward movement of the dollar index to the final Schiff Line (96.50) and the equilibrium zone (97.00 - 97.45 - 97.95) of the Minuette operational scale forks.

In the event of a breakdown of the minimum update of January 10, 2019 - support level of 95.03 - the downward movement of #USDX can be continued to the goals:

- the upper boundary of the channel 1/2 Median Line ( 94.45 ) of the Minor operational scale forks;

- control line LTL (93.79) of the Minuette operational scale forks;

- 1/2 Median Line Minor (92.75).

The markup of the #USDX movement options on March 10, 2020 is shown on the animated chart.

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Euro vs US dollar

The single European currency EUR/USD was not able to break the maximum 1.1514 of January 31, 2019:

  • resistance level of 1.1425 - warning line UWL61.8 of the Minuette operational scale forks;
  • support level of 1.1365 - warning line UWL38.2 of the Minuette operational scale forks

The development and direction of the breakdown of which will determine the development of the movement of this instrument from March 10, 2020.

On the other hand, returning below the support level of 1.1365 on the warning line UWL38.2 Minute will determine the development of the downward movement of EUR / USD to the targets:

- the final line FSL Minuette (1.1280);

- equilibrium zones (1.1090 - 1.1040 - 1.0980) of the Minuette operational scale forks.

Alternatively, in case of a breakdown of the resistance level of 1.1425 on the warning line UWL61.8 of the Minuette operational scale forks, it will be relevant to resume the upward movement of the single European currency to the goals:

- maximum 1.1514 of January 31, 2019;

- warning line UWL100.0 Minuette (1.1520);

- the lower boundary of the 1/2 Median Line channel (1.1570) of the Minor operational scale forks;

- warning line UWL161.8 Minuette (1.1670);

- 1/2 Median Line Minor (1.1815).

The details of the EUR/USD movement options from March 10, 2020 are shown in the animated chart.

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Great Britain pound vs US dollar

Her Majesty's currency was unable to update the maximum of 1.3207 of January 31, 2020 and continues to remain in the 1/2 Median Line (1.2870 - 1.3155 - 1.3440) of the Minor operational scale forks. The development of the GBP/USD movement will become determined by the development and breakdown direction of this channel - the movement details within the 1/2 Median Line Minor channel are presented on the animated chart.

The breakdown of the lower boundary (support level of 1.2870) of the 1/2 Median Line Minor channel will make it possible to continue the downward movement of Her Majesty's Currency towards the goals:

- control line LTL (1.2790) of the Minuette operational scale forks;

- local minimum 1.2725;

- SSL start line (1.2290) of the Minor operational scale forks.

On the contrary, the breakdown of the upper boundary (resistance level of 1.3440) of the 1/2 Median Line channel of the Minor operational scale forks will determine the further development of the GBP / USD movement in the equilibrium zone (1.3355 - 1.3550 - 1.3725) of the Minuette operational scale forks.

The details of the GBP/USD movement on March 10, 2020 is presented on the animated chart.

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US dollar vs Japanese yen

The development of the currency movement of the "country of the rising sun" USD / JPY from March 10, 2020 will be determined by the development and the direction of the breakdown of the range:

  • resistance level of 102.75 (warning line LWL61.8 of the Minor operational scale forks);
  • support level 101.19 - minimum of November 09, 2016

The breakdown of the warning line LWL61.8 (resistance level of 102.75) of the Minor operational scale forks will direct the development of the currency of the country of the rising sun to the control line LTL (104.45) of the Minor operational scale forks and the equilibrium zone (104.90 - 106.15 - 107.45) of the Minuette operational scale forks.

In the event of a breakdown of the minimum update (support level of 101.19) of November 9, 2016, the downward movement of USD / JPY can be continued to the goals:

- the final line FSL Minuette (100.70);

- warning line LWL100.0 (99.95) of the Minor operational scale forks;

-minimum 99.04 on June 24, 2016;

- warning line LWL161.8 Minor (95.50).

The details of the USD/JPY movement on March 10, 2020 is presented 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 start date of the countdown - 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. March 9 results. Will the Fed and the Bank of England bring new surprises? Uncertainty in the market remains.

4-hour time frame

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Amplitude of the last 5 days (high-low): 194p - 111p - 103p - 107p - 103p.

Average volatility over the past 5 days: 106p (high).

The British pound began the new trading week with a gap. During the day, the GBP / USD quotes still increased, so the upward movement has remained and there is still no sign of the beginning of the correctional movement. Although the pound sterling does not rise in price against the dollar for as long or as much as the Euro currency, this movement also falls under the definition of "panic". It can't be otherwise, because the fundamental reasons for the growth of the pound sterling are now the same as the Euro. Thus, in general, nothing has changed on Monday, March 9. The pair continues to grow, traders continue to panic and get rid of the American currency, and there were no macroeconomic statistics on that day.

And of course, the coronavirus is also a key topic of the day in the UK. According to the latest data from the Ministry of Health, the number of cases increased to 319, with 3 casualties. The British government, led by Boris Johnson, is already preparing a bill in case of further spread of the epidemic. However, the key issue remaining on the agenda is: what actions will the Bank of England take at the next meeting? It can be recalled that most of the world Central Banks decided to lower their key rates. Regarding the Fed, there are rumors that monetary policy may be weakened even more, and at an emergency meeting again, without waiting for the planned one. If this happens, then the US dollar will have reason for an even greater collapse and will come close to the strength of monetary policy in time for Great Britain. Thus, formally, the dollar will lose the strongest support factor in the confrontation with the British pound. Who would have thought that such a situation would become a reality in 2020? Who could have imagined that an epidemic would start that would put so much pressure on the US currency? Now, returning to the British regulator. We believe that the Bank of England cannot remain distant, especially since there were enough reasons for lowering the rate even before the appearance and spread of coronavirus. The easing of monetary policy may provide temporary support for the US currency. However, first, the meeting of the British Central Bank will not take place soon, and secondly, it may be ahead of the fed, lowering rates even more. Due to this, we believe that the pound/dollar pair remains completely uncertain. In this situation, it is best to pay special attention to technical factors that clearly indicate the direction of the current trend and the absence of a correction. However, there is a danger here. Sharp reversals are possible, strong jumps up and down are possible. In general, now is not the best time to trade.

Against the background of what is happening, negotiations between the EU and the UK regarding an agreement on Brexit faded into the background. Although, this topic remains extremely important for the future of the country and its economy. However, all other problems will be considered secondary until the problem with coronavirus is resolved.

From a technical point of view, the GBP/USD pair has completed working up the first resistance level of 1.3150 today. Thus, a rebound from this target may trigger a round of downward correction. I could have, if not for the panic in world markets and complete uncertainty. A reversal of the MACD indicator can also indicate the beginning of a corrective movement, but at the same time, this requires a parallel price drop, since the indicator can simply be discharged.

Recommendations for short positions:

In the 4-hour time frame, the pound/dollar continues to move up. Therefore, traders are suggested to stay in longs with the goal of the resistance level of 1.3257 until the MACD turns down or other signs of a correction start appear.

Recommendations for long positions:

It is recommended to sell British currency no earlier than fixing the pair below the Kijun-sen critical line. It is this moment that will allow us to conclude that the trend is changing to a downward one. However, given the range of the price from this line, it is unlikely that this will be overcome in the near future.

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. March 9 results. Currency market calmed down a bit, but it may explode again at any moment

4-hour time frame

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Amplitude of the last 5 days (high-low): 157p - 119p - 92p - 125p - 143p.

Average volatility over the past 5 days: 128p (high).

If you try to describe everything that is happening now in the currency market in one word, then "panic" is best. However, we talked about this in recent days. There is panic (in the literal sense of the word) in the markets, respectively, there is currently no logic in the movement of the EUR/USD currency pair. It is impossible to predict how long the collapse of the US currency will last. Moreover, it's impossible to even say exactly why the collapse of the quotes of the dollar continues. We have already said that the collapse of the US stock market cannot be considered the only reason for the decline in the US currency. In the same way, it is impossible to consider the reason for such a strong decline in the dollar and a decrease in the key Fed rate. It can be recalled that rates remain much lower in the European Union, and moreover, the threat of the spread of the "coronavirus" is likely to lead to that the ECB will also cut the key rate in March. However, the European Central Bank has much less room for activity than the US Fed. Thus, we believe that the ECB will not be able to stimulate the economy as well as the Fed. This means that the European economy will continue to slow down at a much faster pace than the American one. And all these factors play again in favor of the US dollar. In addition, the collapsed oil market cannot be considered the reason for the decline in the dollar and vice versa too, since the price of oil is denominated just in dollars. And accordingly, if the dollar becomes cheaper, then oil should rise in price. However, we see that the dollar and oil collapsed simultaneously with the US stock indices. All this speaks only of what we have been repeating for the last few days. Panic. And that's it.

Meanwhile, "storm" continues not only in the United States, but also the European Union. Firstly, it is in the European Union that there are much more people infected with the Chinese virus than in the United States. Secondly, the EU economy is already much weaker than the US and no less tied to the Chinese, which so far suffers the most. Thirdly, in the European Union, particularly in Italy, the entire regions are already in quarantine. At the same time, according to recent reports, the ECB is considering whether to reduce the key rate. If this information is true, then we have a number of questions. First, is the ECB even able to somehow influence the rapidly approaching crisis and recession? Secondly, if the ECB does not see any reason to reduce the key rate due to 10,000 infected people, then perhaps, the US did not need to soften its monetary policy immediately by 0.5%? As we said before so far, no negative effects on the US economy have been observed. Moreover, recent macroeconomic reports suggest that everything is in order. The economy continues to grow, the labor market is growing, and inflation is above 2%. Here's also a very interesting question: if the ECB still lowers the rate, will the euro collapse after this? Logically, this is exactly what should happen. But at the same time, traders are now ignoring absolutely all reports and events related to macroeconomics. Thus, such a decision by the ECB can be completely ignored.

Further, we have the oil market. On the one hand, the collapse in prices indicates a sharp decline in demand due to the fact that global business activity is declining, due to quarantine as well as fears of an even stronger spread of the virus. At the same time, the virus is not fatal in 80-90% of cases. That is, even with the current set of drugs, it is quite possible to do without serious losses. The main thing is to localize the epidemic itself and prevent its further spread. For example, much more people die from AIDS every year, there is no cure for this disease, just like vaccinations. However, because of it, quarantine is not declared, stock markets do not fall, and panic does not prevail in the markets. Moreover, AIDS in 100% of cases leads to death. And if we look in more detail at all the most common diseases that end fatally, it becomes clear that coronavirus is not the main problem of mankind. Sooner or later, a cure will be found, a vaccine will be opened, and everything will return to normal.

Meanwhile, industrial production began to revive in Germany. In February, the increase in monthly terms was 3%, and the decrease in annual terms was -1.3%. Both indicators were higher than forecasted values. However, who is now interested in statistics from Germany? There were no more important publications during the first trading day of the week. From a technical point of view, there are still no signs of the beginning of correction. Thus, at any moment, uncontrolled upward movement can continue. The MACD indicator may begin to discharge. As a result, traders are still encouraged to follow the trend or stay out of the market.

Recommendations for short positions:

For eurocurrency sales, we recommend waiting for quotes to fix below the critical line. This is the minimum condition for shorts with minimum volumes with the goal of a support level of 1.1090.

Recommendations for long positions:

Eurocurrency purchases with the goal of the resistance level of 1.1470 can be held until the MACD indicator turns down (with a parallel decrease in the price). A reversal down can occur at any time, so you should be as careful as possible with any positions.

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

CAD is under pressure from oil's collapse, JPY targets level 100

The US employment report in February turned out to be unexpectedly strong and contained a further decline in the dollar, but the Fed is forced to respond to completely different factors. The collapse of the market will likely lead to a quick reaction of the majority of the Central Banks, which will be forced to introduce emergency measures. However, forecasts remain negative.

The main negative effect of the spread of COVID-19 has not shown itself yet; expectations on lowering the Fed rate at the March 18 meeting, since stopping the decline in inflationary expectations remains the main goal at this stage. The dollar will not be able to reverse the trend of weakening this week, the favorites will be traditional protective assets - gold, yen, franc and bonds.

USD/CAD

The CFTC report turned out to be neutral for the Canadian currency in general, as the majority of long contracts decreased slightly, but still exists, and as a result, the estimated fair price is still significantly lower than the current one. This means a rather unexpected forecast for the CAD - despite the fact that the Canadian dollar is a recognized commodity currency, its reaction to the massive collapse of the market is surprisingly restrained.

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Given that both the Bank of Canada and the Fed cut the rate almost simultaneously and by one amount, we must admit that the loonie does not look like a loser based on the results of the steps taken. The domestic indicators of the Canadian economy are noticeably better than those of the United States, the Ivey business activity index declined slightly in February to 54.1p, that is, it remains in a confident expansion zone, the average hourly wage growth is 4.33% y / y, which means that inflation expectations higher than in the USA.

Apparently, the market is starting to form the opinion that the Fed will act more aggressively this year than the Bank of Canada. The US dollar has noticeably weakened, Treasury yields have collapsed, stock market trends are negative, and the fact that yields in Canada are usually higher compared to the US suggests that the Canadian premium on the bond market will continue.

After USD/CAD went above the resistance line 1.3381, the trend became frankly bullish and technically attempts to develop growth are justified. At the same time, the estimated fair price is directed down and is at about 1.3120. Therefore, the chances of a technical correction look high and only the oil's collapse does not allow the Canadian currency to win back the massive weakening of the dollar.

USD/JPY

The yen is an obvious favorite when paired with the dollar, as its protective currency status has finally come forward. The collapse of oil and stock indices makes commodity currencies vulnerable, while countries that depend on imports of raw materials get a clear win, and the yen reacts as it should with an increase. Despite the fact that quotes declined to the level of 101.20, the chances of the pair developing lower remain high, since the estimated price is also falling steadily down, and you can only rely on consolidation near the lows with a look on another wave down.

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The situation is starting to put pressure on the Bank of Japan, and despite the fact that the measures taken by central banks in connection with the spread of coronavirus are temporary, we know that there is nothing more permanent than temporary measures. During the crisis of 2008/09, many "temporary" measures were also taken, which they did not manage to cancel.

The head of BoJ, Kuroda, made a speech on March 2. He promised to ensure sufficient liquidity and ensure stability in the financial markets through appropriate market operations and the purchase of assets. The conditions for a powerful monetary easing have already taken form, but they need to be formalized. In addition, the accelerating strengthening of the yen may require a quick reaction. As a result, one should expect the announcement of specific mitigation options by the meeting of the Bank of Japan on March 18-19. For example, expanding the purchase of ETFs, increasing lending to enterprises and expanding purchases of commercial bonds.

The yen is targeted at level 100, which may force the Bank of Japan to take decisive actions, for example, to intervene in order to restrain the strengthening of the yen. Meanwhile, correction to today's broken support level of 104.4 seems unlikely.

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

Finally, a real panic. Euro and pound rise due to expectations of Fed's unplanned moves

Russia's decision to turn down the deal's extension to reduce oil production under the OPEC + agreement caused a real blow in the financial markets. Such a violent reaction in response to generally an insignificant event indicates that global markets have reached a division point. Thus, the containment of a rapidly developing crisis is becoming unlikely.

The most obvious reason is a clear threat to the US oil and gas industry, which accounts for 7.6% of GDP. A sharp decline in the trade balance will be superimposed on the progressive budget crisis. According to the US Congressional Budget Committee, the budget deficit amounted to $ 625 billion for the first 5 months of fiscal year 2020, and there will be nothing to cover the deficit with the Trump government.

There is certainly some truth in such an interpretation. As can be understood from the graph below, the negative trade balance of the United States, by the 2008 crisis, increased to $ 70 billion per month. Following this, the negative balance decreased noticeably by 2010 after Obama began an attempt to implement a plan to create competitive advantages for producers in the USA at the expense of cheap energy resources.

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In 2012, there was a separation of real US production from hydrocarbon consumption. While domestic production was growing rapidly, the trade balance for other types of goods and services continued to decline further into negative. It is clear that the trade balance will go deep down and update records for 2006/08 if a drop in oil prices leads to massive bankruptcies of oil shale companies.

The situation repeated with the exception of one "but" - the Fed has run out of legitimate tools to influence the situation. The traditional methods have been used up – three waves of quantitative easing remained hanging on the balance sheet of the Fed, lowering the rate by half a percent will not give the desired effect.

The Fed's reaction to the collapse of the markets followed quickly - the New York Federal Reserve made a special statement even before the start of the working day, from which it follows that overnight liquidity will be increased from 100 to 150 billion, weekly repo operations from 20 up to 45 billion. It will be possible to reduce the volatility, but it is unlikely to stop the decline.

EUR/USD

The euro reached a 12-month high, as panic sales led to a mass exodus from the carry trade, net shorts on CME. According to the CFTC Friday's report, it drop 3.4 billion, and the estimated price at the opening of the US market on Monday is almost the same with spot.

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All this despite the fact that the Sentix indicator of investor confidence fell in March from 5.2p to -17.1p, which reflects a clear increase in panic regarding the prospects for the European economy. The euro growth was supported, among other things, by a positive report on industrial production in Germany, in January the growth was 3%, year-on-year the decline slowed from -5.3% to -1.3%.

Despite the obvious overboughtness of the euro, as follows from the chart, the impulse is very strong and, apparently, reflects not so much the strength of the euro as the growing danger to the dollar. Overbought may cause a correction, but deep correction requires strong steps on the part of the US financial authorities. In the meantime, we need to proceed from the fact that EUR/USD will try to develop success and will strive for 1.1570 in the long term.

GBP/USD

The pound is not growing as clearly as the euro. Nevertheless, it managed to get to the calculated level of 1.32 on Monday, which we designated as the possible target in the previous review. At the same time, the estimated price went to 1.34, and now, the benchmark is shifting to this level. The impulse is still strong, so a reversal is unlikely.

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Volatility may increase on Wednesday when several quite important releases are published. Unlike the Fed, an emergency meeting of the Bank of England is not yet expected, although everything may be – the yield on 10-year bonds declined today to 0.072%, i.e. more than 50% relative to Friday's level. Strong bond demand may reflect an unrealized distrust of the pound.

The probability of the decline of the nearest resistance 1.3200 and 1.3266 looks high in the coming days.

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