EUR/USD. Result of the week. How will "coronavirus" affect the results of the US presidential election in 2020?

24-hour timeframe

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Another trading week on the Forex market has ended, and we are summarizing its results. The EUR/USD currency pair spent most of the trading week trading with an increase, which led to the end of the week to overcome the critical Kijun-sen line and change the trend to an upward one. Given the fact that the pair has updated the previous local high and low over the past 7 trading days, we can assume that the consolidation process is complete and traders are ready to form a new trend. But what will it be like? Movements in the past week speak in favor of the formation of a new upward trend. At the same time, until the Ichimoku cloud is overcome, the Golden cross buy signal (which is not even formed yet) will remain weak. Moreover, even if you close your eyes to the entire fundamental and macroeconomic background, which in any case is ignored by traders, it is very difficult to find the fundamental reasons for the growth of the euro currency. Thus, we recommend that traders continue to adhere to the indicator readings on the 4-hour chart to determine the trend.

Meanwhile, market participants not only continue to ignore all macroeconomic reports but also have cooled down to the news on the topic of "coronavirus". If at the very beginning of the epidemic, markets were literally shocked by what is happening in the world, now no one is particularly surprised by almost 3.4 million cases of the disease, and many people again treat the "coronavirus" as seasonal flu, just more dangerous for humans. Despite 238,000 deaths from the epidemic worldwide (and this is just official statistics), many countries are beginning to relax quarantine measures and open up their economies. In fact, it is difficult to blame them for this, since there is still no vaccine and representatives of the medical field say that it should not be expected until the fall of 2020. And this is an extremely optimistic scenario. More realistic forecasts suggest that it will take from a year to 18 months to create a vaccine. It is impossible to imagine a "lockdown" that will last for another 18 months. Since after this period, there will be nothing to restore. Thus, many governments have taken a decision to relax quarantine measures to restart the economy and to function in the more loyal of quarantine measures. Most likely, in practice, it will look like this. Almost the entire business will open, but the rules of personal hygiene, mask mode, and social distancing will still apply. In the case of new outbreaks, the strict quarantine will be re-introduced. We can only evaluate how these actions of governments will be effective and correct.

Despite the fact that the ECB and the Fed held meetings last week, and GDP data were published, more interesting topics remain the investigation of the origin and causes of the COVID-2019 virus leak, possible sanctions from around the world (183 countries were infected) against China, as well as the US presidential election, which will be held in November this year. According to many media outlets, the current US President treated the possible infection with disdain and that is why now the United States is leading in the number of diseases and in the number of deaths. This opinion is indirectly confirmed by the early statements of Trump, where he flippantly declared in his own manner that "the coronavirus does not pose a threat to Americans" and "will not survive the warm season of the year." As it turned out, nothing has changed with the arrival of the warm season, and the number of Americans who "will not suffer from the virus" already exceeds 1.1 million. And, probably, these mistakes would have been forgotten, as well as many others, over time, if only this year there were no presidential elections coming up. As practice shows, when the population is faced with a choice, they prefer the candidate with whom there is less negativity. Joe Biden was not the President of the United States and did not dirty his reputation with dubious stories, was not involved in international scandals, and did not provoke trade wars. Thus, according to many polls, it is the Democratic candidate who leads in political ratings. Trump can only shift the responsibility for what is happening to others (WHO, China, the chief epidemiologist of the United States), in order to at least try to "bleach" before the election. Trump has already lost all three of his main trump cards (low unemployment, high employment, and high economic growth) thanks to an epidemic that he himself treated with disdain. Thus, it is not clear what he will say to the American population in the framework of the election campaign, in which it will be necessary not only to make new promises but also to take stock of his four-year reign.

But it will be much easier for the Democratic candidate, Joe Biden, to shape his election program. The former Vice President of the United States is free to criticize the current President. And there was much to criticize Trump for during his entire term of office. The US leader constantly provokes scandals, quarrels with the Democrats without hesitation, and calmly ignites international conflicts and trade wars. Thus, Biden just needs to draw the attention of Americans to Trump's discouraging actions and show that they did not bring any benefit to America. And the main topic that can help Biden become President is "coronavirus." Yes, unfortunately, the highest political circles in the United States believe that the politicization of "coronavirus" is absolutely normal. And Biden has already begun to act in this direction. More recently he stated: "The unpleasant truth is that Donald Trump has made America vulnerable to a pandemic. He ignored the warnings of experts in the field of health and intelligence, who instead trusted Chinese leaders. And now we are paying the price." Biden also focused the attention of Americans on the fact that Trump stopped funding the program for tracking epidemics and reduced by 60% the number of specialists on China in the centers for disease control and prevention. At the same time, Biden very competently bypasses the issues of WHO funding, which Trump refused, accusing the organization of failing to prepare for the pandemic and overly focusing its activities on China. If Biden had criticized Trump for refusing to fund WHO, then Trump could have accused Biden of approving taxpayer-funded organizations that treat the United States "unfairly."

Now, Trump, in fact, has only one way to go. He needs to get China and WHO to admit their guilt in the spread and failed attempts to contain the "coronavirus" so that he himself can appear before the American people completely innocent. Especially if the US population believes that if it were not for the current government, the human losses would be much higher. How the US President will do this is still unknown. But there are reasons to assume that through the mechanism of sanctions, threats and pressure already known to the whole world.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair continues to try to form a new upward trend. The nearest target is the Senkou Span B line, which almost coincides with the resistance level of 1.1086. However, on the 4-hour timeframe, which we continue to recommend using as the main one, a downward correction is expected on Monday and Tuesday. In general, the upward trend has already been formed and it can be rejected.

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

EUR/USD and GBP/USD. Results of May 1. Trump: the "crown" virus is out of control in the laboratory of China. The United

4-hour timeframe

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Average volatility over the past 5 days: 88p (high).

The EUR/USD currency pair continued its upward movement throughout the last trading day of the week after a similar even stronger movement on Thursday. As it turned out on Friday, the euro/dollar currency pair did not need correction. By the end of the day and week, the pair's quotes reached the second resistance level of 1.0985, and the trading ended there. We still need to understand what moved the European currency quotes up on May 1 and draw the appropriate conclusions.

It should be said at once that last Thursday, many traders could conclude that the markets began to react again to macroeconomic statistics and the fundamental background. From our point of view, this is not the case. Given the huge number of macroeconomic reports from overseas and the EU, the pair stood in one place for most of the day. And then, when it rushed up, there were just no special grounds for this. We do not believe that the expansion of the Fed's lending program by $ 500 billion (another 500 billion to support the economy) could trigger a strong fall in the dollar. Otherwise, we might expect something similar from every ECB or Fed statement about injecting another hundred of billions and trillions into the economy. However, until the day before yesterday, there was no reaction to these actions by the central banks and governments of the US and the EU. We also do not believe that on Thursday, market participants reacted with mass sales of the US currency to reports on changes in personal income and spending of Americans. Yes, the figures were very disappointing, but again, did anyone expect that the income and expenses of people, 20 million of whom lost their jobs, would grow? Or that they will be reduced moderately? After all, Americans not only lose their jobs, they also stay at home, and most businesses and firms are closed for quarantine, that is, there is no money, and even if they were, there is nowhere to spend them especially. Therefore, from our point of view, hardly anyone was very impressed by the fall in these indicators. As for the report on applications for unemployment benefits, which amounted to another almost 4 million, there is also nothing surprising or unexpected. Moreover, there is a tendency to reduce the number of new applications, as all those who could be dismissed, the American business has already dismissed. Previously, the US dollar has never responded to more impressive numbers with a fall. Thus, we believe that even if some traders reacted to the published statistics on Thursday, the reaction was mixed.

Thus, we can draw a similar conclusion on Friday. The growth of the European currency began in the morning when no new publications were published by that time. Moreover, in the European Union, no reports were scheduled for Friday. However, the euro currency continued to grow (at the same time, the pound has already started to adjust). In the second half of the day, when the indices of business activity in the US manufacturing sector were released, the strengthening of the euro currency stopped, although data from overseas were contradictory. On the one hand, the Markit business activity index was even worse than the preliminary value for April (36.9) and amounted to 36.1. On the other hand, the ISM index, which is considered more significant, fell not to 36.7, as predicted, but to 41.5. But what difference does it make if both of these values indicate a serious decline in production?

The last thing we would like to draw traders' attention to is the correction of the British currency. In the UK, the index of business activity in the manufacturing sector was also published on May 1, the value of which did not surprise anyone. However, the pound began to fall in price during the night and continued to do so throughout the trading day. Thus, there was no correlation between the EUR/USD and GBP/USD pairs on Friday. And if there was a strong fundamental background in the Foggy Albion or the European Union that could cause the pair to split, then there would be no questions. But there was no such background. Thus, we come to the same conclusion that traders still do not pay attention to news and macroeconomic data, and it is best for market participants to trade now using "technology".

And, of course, there's always Donald Trump, where a single day is not complete without his speech. Yesterday, the American President said that according to his information, the "coronavirus" was developed in the Wuhan laboratory, from where it broke free. Also, Trump said that the United States is now conducting investigations about the actions or inaction of China in the framework of countering the virus. "We are now finding out how this happened. We must get an answer, and it will determine how I will treat China in the future," the US leader said. Trump believes that China either failed to contain the virus or did not want to do so. The US President also said that he could impose new duties on imports from China, thus unleashing a new trade war with Beijing (since it is unlikely that China will not respond with mirror duties), if it is confirmed that it is involved in the deliberate spread or non-maintenance of the virus. Also, the American President issued a new forecast of mortality from the "Chinese pandemic" in the United States. According to the new opinion of trump, about 100,000 Americans will die.

4-hour timeframe

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Average volatility over the past 5 days: 120p (high).

The GBP/USD currency pair has been adjusted since May 1. On Thursday, as well as for the euro/dollar pair, the quotes soared up. There was little reason for this since there was no important news from Britain that day at all. The main event of the day was the meeting and its results of the European Central Bank, as well as a package of important macroeconomic statistics from the European Union. However, the pound also rose in price, and on Friday began to logically play this movement in the opposite direction. The pair's quotes are fixed below the critical line, so now we are even talking about a possible change in the trend to a downward one. However, according to the fundamental picture of things, there is still no advantage for either the dollar or the pound. We also once again draw the attention of traders to the fact that the pair's quotes on Thursday perfectly worked out the previous maximum and bounced off it. Thus, the probability of forming a new downward trend is growing.

Recommendations for EUR/USD:

For short positions:

On the 4-hour timeframe, the EUR/USD pair continues to strengthen its upward movement. Thus, the sale of the euro currency can be considered no earlier than the reverse fixing of the price below the Kijun-sen line with the first goal of the volatility level of 1.0862.

For long positions:

Long positions are currently relevant with targets of 1.1038 and 1.1073. A rebound from any target will signal the beginning of a downward correction.

Recommendations for GBP/USD:

For short positions:

The pound/dollar pair started to adjust. Thus, traders on Monday are recommended to consider selling the British currency with the aim of selling Senkou span B, but in small lots, since there is no "dead cross" yet, and the "linear regression channels" system does not yet signal a change in the trend.

For long positions:

Purchases of the GBP/USD pair will again become relevant with the goal of 1.2624 if traders manage to gain a foothold back above the critical line.

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