GBP/USD. Result of the week. The UK demands answers from China on the "coronavirus" and extends the quarantine measures for

24-hour timeframe


The British pound paired with the US currency moved almost identically to the euro/dollar pair last week. In fact, we are seeing much the same thing. Volatility falls, the activity of traders falls, the pair is caught between two lines going towards each other, which just shows the transition from a strong trend to quiet trading, or maybe even to a flat. All indicators on the 24-hour timeframe are now in the transition stage from a high-volatility movement to a calm one. We can see that the Bollinger bands indicator has been narrowing in recent weeks and still the distance between its upper and lower bands remains quite large. The Ichimoku indicator also has a huge distance between its lines. And most importantly, the highly volatile movement has ended, which means that the lines of the Ichimoku indicator also need to get closer to each other, which has not yet happened. Thus, we recommend conducting technical analysis on a 4-hour timeframe, without paying attention to the daily one.

In fundamental terms, everything was extremely simple for the British pound this week. We have already discussed the key macroeconomic statistics from overseas in the article on EUR/USD, and no reports were published in the UK this week. Thus, even theo6retically, traders had nothing to react to this week. In addition to the report on applications for unemployment benefits in the United States. However, the pound/dollar pair showed approximately the same direction of movement as the EUR/USD pair. The key topic of this week, in our view, was the resumption of negotiations between the British and European delegations, led by David Frost and Michel Barnier. According to the parties, the work on an agreement that will determine further relations between the European Union and the UK after Brexit is completed is ongoing. But since the "coronavirus" epidemic is raging throughout Europe, face-to-face meetings cannot be held now. Accordingly, the parties decided to hold three more rounds of negotiations in video mode before July 1, each of which will take a week. According to experts, these negotiations will be much more effective than face-to-face meetings. And given the fact that only 2.5 months remain until July 1 (when the parties must officially declare their decision to extend or not extend the "transition period"), there is very little chance of reaching any agreements in principle. Not to mention a full-fledged agreement. Moreover, Boris Johnson is on sick leave, and it is the Prime Minister who is leading the negotiation process and it is the Prime Minister who is categorically opposed to postponing the completion of the "transition period". So now the intrigue is, will London go for a one-or two-year transfer?

Meanwhile, the UK intends to review relations with China after the problem of the epidemic is resolved. This was stated by the acting Prime Minister of Great Britain Dominic Raab. Mr. Raab said that the relationship will not be the same and it will change for the worse. "After Britain has already lost more than 10,000 of its citizens, it is not possible to conduct normal business with China," Raab said. The British politician believes that China has accumulated a lot of questions about the "coronavirus" pandemic. "We will have to ask difficult questions about how this happened and how it could have been stopped earlier," Raab says. Earlier, similar rhetoric was voiced by the United States and France. French President Emmanuel Macron also said that there are "too many grey spots" in the history of the coronavirus. "Let's not naively assume that China has handled the epidemic much better than we have. We don't know for sure. Obviously, we don't know the whole picture," the French President said in an interview. Donald Trump has long accused Beijing of hiding the real facts about the epidemic, its real scale. This is what prevented the entire world from making correct and timely decisions regarding quarantine, which led to a worldwide infection (neither, of course, is the unprofessionalism of WHO). China, of course, rejected all the accusations. And we can only guess what really happened in China at the end of last year. And at the same time wonder why in China, with its one and a half billion people, the virus was able to be curbed the fastest? Is it because Beijing actually applied "draconian" quarantine measures, because China initially knew about the virus and was prepared for it before it spread, or because official figures are false?

At the same time, Dominic Raab said that the quarantine in the country is being extended for at least three more weeks, as another scenario threatens to increase morbidity and mortality. "Now there is light at the end of the tunnel, but we are at a critical stage in the development of the pandemic. Easing the quarantine measures too early may negate all progress in curbing the epidemic and all the sacrifices will be in vain. As a result, we will have to introduce a new quarantine due to a new surge in morbidity and mortality," said Dominic Raab. The politician also said that 5 conditions will be met at once in order for the quarantine in the Foggy Albion to begin to weaken. First, the national health system must fully cope with the number of incoming patients. Second, scientific research should show that the epidemic has become manageable. Third, the daily mortality rate should be reduced. Fourth, the entire population of the country should be provided with tests for "coronavirus" and means of protection. Fifth, there should be no risk of a repeat surge.

Thus, there were also no optimistic reports from the UK last week. So far, in general, the British currency continues to grow in price, but on the 4-hour chart, there has already been a change in the downward trend. At this time, we believe that neither the British pound nor the US currency has an advantage. However, everything will depend on the market itself. We recommend that traders, as before, pay close attention to the technical picture, since the mood and behavior of most traders can not be predicted now – there is no reaction to the foundation and macroeconomics now.

Trading recommendations:

On the 24-hour timeframe, the pound/dollar pair is trying to start a new downward movement. However, the more accurate picture is now on the 4-hour timeframe, which we recommend considering first. Turning the MACD indicator down on the current timeframe will confirm the intention of traders to start a new round of purchases of the US dollar.

The material has been provided by InstaForex Company -

EUR/USD. Result of the week. WHO falls under Trump's "hot hand", the EU and the US are going to weaken the quarantine, the

24-hour timeframe


Another trading week on the Forex market has ended, and we are summarizing its results. I just want to note that the whole week was held under the auspices of the celebration of Easter. First in the Catholic style, and then in the Christian style. Thus, it is possible that the volatility of the currency pair would be higher if it were not for the half-day Monday. And on the other days, we can not say that the euro/dollar pair broke records of activity. On the one hand, this may be due to the fact that the markets continue to calm down, and their activity falls accordingly. On the other hand, this week, there was quite a lot of interesting information and macroeconomic reports that deserve attention. Traders, as always, ignored most of them.

As usual, most of the fundamental news came from overseas, and the main news-maker was American President Donald Trump. At the beginning of the week, he said that he could stop funding WHO, and by the end of the week, he stopped it. The reason is simple – the US leader thought that the World Health Organization was spending too much American money on China. Trump's displeasure also concerned the high number of cases from the COVID-2019 epidemic in the United States and extremely low in China. Moreover, it's even difficult for us to say why Trump was more upset. However, WHO has become a "scapegoat", Donald Trump accused it of "a complete failure of the fight against coronavirus" and stopped its funding. At the same time, Trump set out to begin easing quarantine measures in the United States in early May. Even if the epidemic continues to rage, Trump will begin to "open" the states that are least affected by the epidemic. According to the US leader, such a strong and "best in the world" economy as the American one cannot afford to stand idle for a long time. This is the official version. Unofficial – Trump is losing trumps before the presidential election in November 2020, as the labor market has collapsed, unemployment rates are moving from 50-year lows to 90-year highs, and the economy has gone the opposite way to three-year growth in 2 months. I wonder what will happen if the second wave of the epidemic breaks out in the United States "thanks" to the opening of the economy? Who will blame Trump then? Although it is safe to say that "guilty" will be found.

In the middle of the trading week, ECB Vice-President Luis de Guindos spoke, who said that it is the Eurozone that can suffer more than the rest of the world. According to de Guindos, only in the first quarter of 2020, the German economy will lose about 10%, and France - about 6%. However, as we can see, the Chinese economy lost 10% in the reporting period, so the Eurozone does not yet look the worst affected. The ECB Vice-President also said that at least 1.5 trillion euro will be needed to help the European economy. In principle, both the EU and the United States are on the path of injecting multi-trillion tranches into their economies.

Also in the middle of the week, it became known about a very high reduction in US macroeconomic indicators as a result of the global pandemic crisis. And we are no longer talking about the labor market or unemployment, we are talking about industrial production and retail sales. The first indicator decreased by 8.7%, the second - by 5.5%. From our point of view, this is not such a big loss if you compare them with the Chinese. However, we should not forget that China has already overcome the pandemic and is beginning to recover. But in the United States, the epidemic is in full swing, which means that in April, the statistics may be no better.

The removal of quarantine measures was also announced this week by the head of the European Commission, Ursula von der Leyen. However, unlike Donald Trump, she does not need to be re-elected in November. Heiko von der Leyen has only recently taken up her position, so there is no need for her to rush anywhere. And the European plan to get out of quarantine looks wiser. The European Commission has compiled a list of recommendations for all EU member states, according to which the human lives and health of Europeans are put first. According to this list, any relaxation of the quarantine should be carefully analyzed, and the removal of the quarantine should take place in stages, always taking into account the possibility of the health system. The opening of internal and external borders in the European Union will be the last thing to happen. This is the main difference from Trump's plan, which wants to "make America accessible to the whole world and faster."

On Thursday, it became known that the number of Americans who lost their jobs in 4 weeks was almost 22 million. We have already said that this is a huge figure, and this is only for the first month of a severe epidemic in the United States. Given the fact that the number of infected people in America continues to grow and is already 700,000, there is every reason to assume that the number of unemployed people will increase. In any case, next week, we will find out whether the growth rate of job losses by Americans will continue or will even begin to slow down?

The International Monetary Fund also "pleased" on Thursday by publishing a document outlining its vision of what is happening in the world. According to this document, the world economy will not reach $ 9 trillion in 2020, which corresponds to 3% of world GDP. And the greatest losses are predicted for the United States and the European Union. 2020, according to IMF experts, will be the most disastrous since the Great Depression in the United States at the beginning of the last century. A comparison of the "coronavirus" crisis and the "mortgage" crisis is also provided. According to experts, the second crisis on the background of the first is not even a crisis. In 2008, the world economy lost just 0.08%. Moreover, the current negative forecast is based on the fact that in the first half of the year, "coronavirus" will be overcome (although not get rid of it forever) and in the second quarter, the economies of developed countries will begin to recover. However, according to representatives of the medical field, the creation of a vaccine according to the most optimistic forecasts will take several more months. Now the world has just started testing the first vaccines on humans. And it is not yet a fact that these vaccines will be successful. In general, doctors believe that the wait for industrial production of a vaccine against the COVID-2019 virus should not wait until the fall of 2020. That is, by that time, the world economy may have declined more than the IMF currently predicts.

Thus, there was no positive news during the past week. We believe that in these conditions, the US currency can continue to rise in price only if the second wave of panic or its similarity occurs. We believe that only because of the general belief in the US dollar, this currency can continue to strengthen, although there are no fundamental and macroeconomic reasons for this. We also continue to expect macroeconomic indicators for the European Union in March.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair continues to trade near the critical line. We still believe that it is best to trade using a 4-hour timeframe analysis since there is no trend in the current chart. We also highlighted the narrowing range with two red lines, according to which the pair's activity will continue to fall, and a pronounced trend may not be available. On the 4-hour chart, traders need to overcome the level of 1.0818 to expect further strengthening of the US dollar.

The material has been provided by InstaForex Company -