Inflation in US is likely to be better than expected. Euro and pound expected to remain under pressure

Today the most important news will be the report on inflation in the United States, which may turn out to be better than economists' forecasts. As a result, the euro and the British pound are likely to rise. If the data shows the first deflationary signs, the demand for the US dollar will probably only increase.

Signals for the EUR/USD pair:

The euro can increase to 1.0873 and 1.0923, if there is a breakthrough at 1.0819.

A breakthrough at 1.0771 can lead to a sell-off of the euro to 1.0728 and 1.0636.

Signals for theGBP/USD pair:

If the pair breaks through at 1.2358, the British pound can rise to 1.2425 and 1.2463.

A breakthrough at 1.2290 can lead to a sell-off of the British pound to 1.2250 and 1.2211.

Fundamental data:

  • US Consumer Price Index
  • The Federal Reserve officials are to deliver their speech.
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Elliott wave analysis of EUR/GBP for May 12 - 2020

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EUR/GBP took another stab at the minor resistance-level at 0.8814 and failed again. We think that the pair will try to break this resistance and the next attempt will be successful. It may lead to more upside pressure towards the real key-resistance at 0.8866. Only a break above here will release the energy for a much stronger rally towards and above the 0.9499 peak.

In the short-term, we will see support at 0.8752 and again at 0.8736, which might be tested before the pair fixes at minor resistance at 0.8814.

R3: 0.8866

R2: 0.8814

R2: 0.8788

Pivot: 0.8758

S1: 0.8736

S2: 0.8698

S3: 0.8670

Trading recommendation:

We are long EUR from 0.8765 with our stop placed at 0.8670

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Elliott wave analysis of GBP/JPY for May 12 - 2020

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GBP/JPY has stalled at the 50% corrective target of the decline from 135.45 to 130.63. It is likely to complete red wave i and a break below minor support at 131.85. It may indicate the onset of red wave iii/ towards at least 125.41 and possibly even closer to the 123.99 bottom. Ultimately we expect the 123.99 to be broken shortly to complete the long-term decline from 147.95. Once it is completed, a new impulsive rally is expected. Presently, we will be looking for a break below minor support at 131.85 to confirm the next downside pressure.

R3: 133.59

R2: 133.20

R1: 132.47

Pivot: 131.85

S1: 131.52

S2: 131.63

S3: 129.81

Trading recommendation:

We sold GBP at 132.07 and has placed our stop at 133.25

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Crude Oil Price Movement For May 12, 2020

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The Crude Oil on the 4-hour charts seems to be ready to reach $26.72, but the Weekly Liquidity Void seems to attract the #CL to break the SELL Stop Liquidity Pool at $22.59. As long as the #CL does not decline as low as $18.05, $26.72 will be the target level, so the price will continue the upside movement.

(Disclaimer)

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

Hot forecast and trading recommendations for EUR/USD on May 12, 2020

The single European currency stood still amid a completely empty macroeconomic calendar. Although this is not entirely true, since the single European currency was falling, the scale of the decline was rather symbolic. At the same time, such a sluggish movement, against an empty background, becomes another demonstration that the trend for strengthening the dollar is still maintained. Although, according to Kashkari, the worst is yet to come. And given that he represents the Federal Reserve, he spoke of course about the situation in the economy of the United States. And such encouraging statements clearly do not add to optimism. However, investors continue to assume that in other parts of the world, it will be at least as bad as in the United States. It's probably even worse. So the trend for strengthening the dollar is still maintained.

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Today, the focus is on the final data on inflation in the United States, which should fall from 1.5% to 0.5%. In itself, the decline in inflation, and its approach to deflation, clearly pushes the Fed To take new stimulus measures. Especially if we remember Kashkari's words, as well as the fact that Friday's report of the United States Department of labor was the worst in history, and we have nothing else to do but compare the current crisis with the Great Depression, it is obvious that we should expect a strong and deep deflation. So yes, the Fed could even reduce the refinancing rate to negative values. At least, such steps can be discussed.

Inflation (United States):

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From the point of view of technical analysis, we see low activity during which the quote managed to go down to the area of 1.0775, where a variable support was found near the control value.

In recent days, the quote shows special attention to the levels of 1.0775 and 1.0850, within which there is a fluctuation.

In terms of general consideration of the trading schedule, the daily period, a global downward trend is fixed, within which there is a series of consecutive cycles.

We can assume that trading forces are concentrated between the levels of 1.0775 and 1.0850 will continue to focus on the market participants, where the main goal is to resume the downward course, but for this, the quote needs to be consolidated below 1.0765/1.0775.

Specifying all of the above into trading signals:

- Buying positions are considered higher than 1.0820 towards 1.0845.

- We consider selling positions lower than 1.0765, towards 1.0700.

From the point of view of a comprehensive indicator analysis, we see a sell signal relative to hourly and daily periods. Minute intervals reflect a local rebound, signaling a purchase.

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Indicator analysis. Daily review on GBP / USD for May 12, 2020

Trend analysis (Fig. 1).

Today, an upward pullback is possible from the support line 1.2288 (presented in a red bold line) with the first target at 1.2400 - a 38.2% retracement level (presented in a red dashed line). If this level is reached, the upward movement will continue with the next target at 1.2447 - a 50.0% pullback level (presented in a red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

Today, the price may move upward with a target at 1.2447 - a 50.0% pullback level (presented ina red dotted line).

Another possible scenario is a downward trend from 1.2337 - a 23.6% pullback level (presented in a red dashed line) with a target at the lower fractal 1.2247 (presented in a red dashed line).

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Indicator analysis. Daily review on EUR / USD for May 12, 2020

Trend analysis (Fig. 1).

Today, the downward trend is likely to continue from the level of 1.0809 (closing of yesterday's candle) with a target at the support line 1.0786 (presented in a blue bold line). From this level, the price may begin to move upward with a target at 1.0864 - a 38.2% retracement level (presented in a blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - down;

- Weekly schedule - up.

General conclusion:

Today, the price may begin to move upward with a target at 1.0864 - a 38.2% pullback level (presented in a blue dashed line). Upon reaching this level, the upward movement will continue with the next target at 1.0895 - a 50% pullback level (presented in a blue dashed line).

Another possible scenario is a downward trend from 1.0827 - a 23.6% retracement level (presented in a blue dashed line) with a target at 1.0771 - an 85.4% retracement level (presented in a red dashed line).

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GBP/USD: plan for the European session on May 12. COT reports indicate an increase in short positions on the pound. Bears

To open long positions on GBP/USD, you need:

Yesterday, in my forecast, I advised opening long positions to rebound from the support of 1.2305, and even if not immediately, the market turned around, which led to a good upward correction of about 45-50 points and to the resistance of 1.2358. From this level, I also advised opening short positions in continuing the downward trend, and if you look carefully at the 5-minute chart, you will see how after the second attempt to grow, the bears regain control and arrange another sell-off of the pound in the area of 1.2305, which has now transformed into support for 1.2290. In the Commitment of Traders (COT) reports for May 5, as well as for April 28, there was an increase in short positions, which made the Delta even more negative, saying that most traders expect a further decline in the pound in the medium term, especially given the current situation of the UK economy. According to the data, during the reporting week, there was an increase in short non-commercial positions from the level of 38,147 to the level of 40,101, while long non-commercial positions decreased from the level of 31,466 to 28,096. As a result, the non-commercial net position became even more negative and ended up at the level of -12,001, against -6,681, which indicates the continuation of the bearish trend in GBP/USD. As for the intraday situation, the bulls need to protect the support of 1.2290 today, but there is very little hope for it, since, in fact, this will be the fourth test of this level, which may lead to a breakout. Therefore, in my opinion, the best scenario for opening long positions is a false breakout in the support area of 1.2250, or buying for a rebound after updating the lows of 1.2211 and 1.2169. However, it is worth remembering that you are going against the trend and expect a correction of more than 30-40 points from these levels is unlikely to be correct. An equally important task for the bulls will be to break through and consolidate above the resistance of 1.2358, above which the moving averages are located. Only this option will result in strengthening the pound and an update of the resistance levels 1.2425 and 1.2463, where I recommend taking profits.

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To open short positions on GBP/USD, you need:

Sellers of the pound will rely on weak fundamental statistics on the US economy today, and in particular on a poor report on inflation in the US, which will increase pressure on the British pound and return demand for the us dollar. A repeated test of support for 1.2290 will probably lead to a breakout of this range and a larger sell-off of GBP/USD to the area of the lows of 1.2250 and 1.2211, where I recommend taking profits. A longer-term goal for the middle of the week will be a low of 1.2169. However, a more suitable scenario for selling the pound will be an upward correction and forming a false breakout in the resistance area of 1.2358, where the moving averages also pass. If there is no pressure on the pound in this range, it is best to postpone short positions for a rebound to test the highs of 1.2425 and 1.2463 in the expectation of a correction of 40-50 points within the day.

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Signals of indicators:

Moving averages

Trading is below 30 and 50 moving averages, which indicates that the pressure on the pound will remain.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

A break of the lower border of the indicator in the area of 1.2290 will increase the pressure on the pound. Growth will be limited by the upper level of the indicator at 1.2358.

Description of indicators

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

USD/JPY Price Movement For May 12, 2020

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The 4-hour chart liquidity void (107.47-106.95) acts as a magnet area for the USD/JPY pair. As long as this pair does not break out and close above the buy stop liquidity pool at 107.78, it will continue to fill the next 4 hour chart liquidity void (106.79-106.36).

(Disclaimer)

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

Technical Analysis of BTC/USD for 12/05/2020:

Crypto Industry News:

The South Korean government plans to create a blockchain-based platform for storing and verifying the identity of digital independent vehicles in the city of Sejong, which is a testing ground for the introduction of new technologies.

Asian media has announced that South Korea's Ministry of Science and ICT, along with the national internet technology supervisory body, Korea Internet & Security Agency, will guide the development of an identity management and verification platform. Although autonomous vehicles are still far from the mainstream, Sejong has already started preparing to fight the crimes associated with these advances.

The LG Group technology wing, LG CNS and the Korean independent vehicle manufacturer will work with the authorities of the city of Sejong to develop a blockchain-based encrypted identifier, called a decentralized identifier or DID. This can help prevent illegal identity copying or hacking into independent vehicles. The report explains that the identity verification system will implement multiple layers of data encryption shared between cars and road objects using vehicle-to-everything or V2X communication.

Although previously the government was uncertain about crypto, it did show consistent efforts to legitimize cryptocurrencies and develop favorable regulations. It is worth recalling that the Bank of Korea has launched a pilot program for assessing the logistics of the digital currency of the central bank or CBDC

Technical Market Outlook:

The BTC/USD pair has dipped 15% just before the halving and now, after the halving is done, there is no sign of the shopping frenzy behavior. Still the key level of support is still seen at $7,943, but the nearest technical support is currently seen at the level of $8,464. Any violation of this level will deepen the correction towards the level of $7,934 which is a key short-term technical support for bulls. Weak and negative momentum supports the short-term bearish outlook about 13 hours before halving.

Weekly Pivot Points:

WR3 - $11,485

WR2 - $10,709

WR1 - $9,512

Weekly Pivot - $8,760

WS1 - $7,652

WS2 - $6,835

WS3 - $5,708

Trading Recommendations:

The recent rally in Bitcoin was made in anticipation of Bitcoin halving and it is a classic pump and dump scheme. The larger time frame trend remains down and as long as the level of $10,791 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred until the level of $10,791 is clearly violated.

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Technical Analysis of ETH/USD for 12/05/2020:

Crypto Industry News:

The digital lender, Capital on Tap, has published data that show that blockchain jobs offer the highest salary among all groundbreaking technology companies in the UK.

British blockchain companies offer an average annual salary of £75,000, or about £93,000. They also revealed that these projects provide 544 permanent jobs across the country. The study emphasizes that blockchain technology is becoming a significant force adhering to all industries, from virtual reality to 3D printing. The report emphasizes that the United States dominates the world thanks to the largest number of companies in all major breakthrough technologies, followed by India and the United Kingdom with second and third place respectively.

According to Capital on Top, the internet, augmented reality and progress in online learning have also changed the way schools engage in teaching. However, the education sector still ranks eighth among UK segments.

Technical Market Outlook:

The ETH/USD pair has tested the 61% Fibonacci retracement located at the level of $177.50 with a low made at $174.72 and then the Pin Bar candlestick pattern were made at the end of the move. The momentum remains weak and negative, so the next target for bears is seen at the level of $164.45. The immediate technical resistance is seen at the level of $188.86 and $193.78. Please bear in mind, that there is only 13 hours left to the halving, which is highly anticipated event for all cryptoenthusiasts.

Weekly Pivot Points:

WR3 - $241.59

WR2 - $228.78

WR1 - $204.66

Weekly Pivot - $191.03

WS1 - $168.45

WS2 - $154.83

WS3 - $130.49

Trading Recommendations:

The fear of the coronavirus consequences has decreased among the global investors on the financial markets, nevertheless the global investors are not so keen to invest in cryptocurrency, because they are being perceived as risky assets. The larger time frame trend on Ethereum remains down and as long as the level of $288 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred.

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Technical Analysis of EUR/USD for 12/05/2020:

Technical Market Outlook:

The EUR/USD bounce from the level of 1.0767 was very short-lived as the price were rejected at the level of 38% Fibonacci located at 1.0862. The bears are pushing the price towards the level of .0767 again. The bulls hasn't made a new local high yet, so the next target for them is still seen at the level of 38% Fibonacci retracement at 1.0862 and 1.0878. This level must be clearly violated in order to rally towards higher levels. The momentum remains neutral, but might turn positive any time now.

Weekly Pivot Points:

WR3 - 1.1136

WR2 - 1.1058

WR1 - 1.0936

Weekly Pivot - 1.0853

WS1 - 1.0718

WS2 - 1.0627

WS3 - 1.0520

Trading Recommendations:

The fear of the coronavirus consequences has decreased among the global investors on the financial markets. On the EUR/USD pair the main long term trend is down, but the reversal is possible when the coronavirus pandemic will be tamed. The key long-term technical support is seen at the level of 1.0336 and the key long-term technical resistance is seen at the level of 1.1540. Only if one of this levels is clearly violated, the main trend might reverse (1.1540) or accelerate (1.0336).

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Technical Analysis of GBP/USD for 12/05/2020:

Technical Market Outlook:

The GBP/USD pair is getting closer to the technical support located at the level of 1.2246 after bulls were rejected from 50% Fibonacci retracement on the way up. The momentum remains neutral as well, but due to the fact, that the price is trading below the short-term trend line resistance, the odds for another wave down might be higher. The nearest technical resistance is seen at the level of 1.2466 and the nearest technical support is located at the level of 1.2297.

Weekly Pivot Points:

WR3 - 1.2730

WR2 - 1.2608

WR1 - 1.2508

Weekly Pivot - 1.2380

WS1 - 1.2283

WS2 - 1.2157

WS3 - 1.2054

Trading Recommendations:

The fear of the coronavirus consequences has decreased among the global investors on the financial markets. On the GBP/USD pair the main trend is down, but the reversal is possible when the corona virus pandemic will be tamed. The key long-term technical support has been recently violated (1.1983) and the new one is seen at the level of 1.1404. The key long-term technical resistance is seen at the level of 1.3518. Only if one of this levels is clearly violated, the main trend might reverse (1.3518) or accelerate (1.1404). The market might have done a Double Top pattern at the level of 1.2645, so the price might move lower in the longer-term.

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EUR/USD: plan for the European session on May 12. COT reports. Buyers and sellers are building up their positions. Bears

To open long positions on EUR/USD, you need:

Yesterday, the bears still managed to gain a foothold below the 1.0819 level, which I did not revise, although I did not get a good signal from this range. Today, all attention will be focused on the US inflation data and it is likely that this report will set the direction of the market for this week, so be very careful. The Commitment of Traders (COT) reports for May 5 recorded an increase in both short and long positions, but the Delta continued to decline, which indicates some advantage for sellers of the European currency in the current conditions. Given the macroeconomic statistics that we expect in the near future, the pressure on the euro may continue. The report shows an increase in short non-profit positions from 87,583 to 92,973, while long non-profit positions also rose from 167,264 to 169,272. As a result, the positive non-commercial net position slightly decreased to 76,299, against 79,688, indicating a decrease in interest in purchasing risky assets even at current prices. As for the intraday strategy, the entire focus of buyers today will be shifted to the resistance of 1.0819, consolidating above which will be a good signal to open long positions in the expectation of updating the highs of 1.0873 and 1.0923, especially if the data on the consumer price index in the US will not be as bad as economists expect. If the pressure on the euro continues, then the bulls will have to protect the support of 1.0771. Forming a false breakout there will be a signal to buy EUR/USD. Otherwise, you can search for new long positions after the rebound from the April 24 low of 1.0728, counting on a correction of 30-35 points within the day.

To open short positions on EUR USD you need:

Sellers of the euro will wait for a weak report on US inflation and act when the pair approaches the resistance of 1.0819. Forming a false breakout will result in pulling down EUR/USD and updating the low of 1.0771. However, the longer-term target of sellers is still the area of April 24, 1.0728, as well as a larger support of 1.0636, which will return the euro to this year's lows. If there is no activity on the part of bears at the 1.0819 level, by analogy, as it was yesterday, it is best to abandon short positions in the euro and wait for updates to the more significant levels of 1.0873 and 1.0923, from where you should open short positions immediately for a rebound based on a downward correction of 30-40 points within the day.

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Signals of indicators:

Moving averages

Trading is below 30 and 50 moving averages, which indicates an attempt by the bears to return to the market.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

A breakthrough of the lower border of the indicator near 1.0794 raised pressure on the European currency. In case of an upward correction, the upper border of the indicator in the area of 1.0825, a breakout of which will cause the pair to sharply grow, will act as resistance.

Description of indicators

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

CADJPY showing a trendline breakout! Further push up expected!

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Trading Recommendation

Entry: 76.364

Reason for Entry: descending trendline support, 23.6% Fibonacci retracement

Take Profit : 77.417

Reason for Take Profit: -27.2% Fibonacci retracement

Stop Loss: 75.579

Reason for Stop loss: 61.8% Fibonacci retracement

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

GBP/USD bounced off support, potential for further upside

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Trading Recommendation

Entry: 1.23080

Reason for Entry: Ascending trend line, 78.6% fibonacci retracement

Take Profit : 1.23985

Reason for Take Profit: Horizontal pullback resistance, 61.8% fibonacci retracement, 100% fibonacci extension

Stop Loss: 1.22811

Reason for Stop loss: Horizontal swing low support

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

XAUUSD pulling back to trendline , potential bounce !

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Trading Recommendation

Entry: 1693.50

Reason for Entry: Horizontal swing low support , trendline pullback

Take Profit : 1710.77

Reason for Take Profit: 61.8% fibonacci retracement

Stop Loss: 1682.62

Reason for Stop loss: Horizontal swing low

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

Forecast for EUR/USD on May 12, 2020

EUR/USD

The euro fell by 32 points on Monday, visually showing a firm intention to begin a medium-term decline. A signal for this will be overcoming the May 7 low (1.0767), the immediate goal is to support the embedded line of the price channel in the region of 1.0590. The Marlin oscillator turned in front of the border with the growth territory. The price increase to the MACD line (1.0910) seems to be gone.

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The price has consolidated under the MACD line on the four-hour chart, Marlin is in the negative trend zone, the situation is completely downward. Formally, you can open short positions from current levels, but the letter of the law of trading requires you to wait for the price to overcome the signal level of 1.0767. Up to this point, price fluctuations up to the resistance of the MACD line are possible, up to 1.0820. Also, stop loss can be set at this level or higher. Take profit before 1.0590.

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Forecast for AUD/USD on May 12, 2020

AUD/USD

The Australian dollar no longer began to resist the general movement of the market, as it happened from May 4 to May 11, and accelerated down. The immediate goal of the aussie is the price channel line at 0.6358. The second goal is the MACD line at 0.6258, the third goal is to support the embedded line at 0.6138. The signal line of the Marlin oscillator is still in the zone of positive values, but is already close to the transition to the negative region.

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The price overcame the support of the MACD line on the four-hour chart, this is a signal to open a short position with the target of 0.6358 or lower with a strategy of longer profits. The signal line of the Marlin oscillator has penetrated into the territory of the downward trend.

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Forecast for USD/JPY on May 12, 2020

USD/JPY

The USD/JPY pair grew by 100 points on Monday amid the general strengthening of the dollar, uncertain stock market growth and optimism of investors on the occasion of the easing of quarantine in Europe and the US. The price reached the embedded line of the price channel and the MACD indicator line at their intersection on the daily chart, which is a strong technical resistance.

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The unfavorable situation in the stock market itself could be the reason for the price reversal. US indices closed mixed yesterday: S&P 500 0.01%, Dow Jones -0.45%, Nasdaq 0.78%, Russell 2000 -0.32%. The S&P 500 hit its highest growth on April 29 and has yet to overcome it. In the Asian session, Nikkei 225 loses -0.30%. Obviously, for confident purchases of the USD/JPY currency pair while aiming for 111.50, you should wait for the S&P 500 to leave the area above the April 29 high of 2954.86. The quote closed at 2930.19 on Monday.

The signal line of the Marlin Oscillator is slightly above the border with the growth territory. In case of a relatively small "crouch" of the price, Marlin can return to the negative zone, which will serve as the basis for the price to return to 106.60.

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The situation is completely increasing on the four-hour chart: the price is above the indicator lines, Marlin is in the growth zone. A condition for a decline will be for the price to decrease to 106.90 at the MACD line. There are no signs of a reversal on H4, but they are on the daily chart.

As a result, we have to wait - directly on the price chart, you need to wait for the exit to go up, above 107.78, or down to 106.90. And the price exit above 107.78 must be accompanied by overcoming the April 29 high in the stock market.

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Hot forecast and trading signals for the EUR/USD pair on May 12. US inflation report is unlikely to affect the pair's movement

EUR/USD. 1H

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Quotes of the euro/dollar pair resumed a downward movement to a long-term upward trend line on the hourly timeframe, from which the price has already rebounded several times. In addition, there is also a strong support area of 1.0762 - 1.0775 in the area of the trend line, from which the pair has also rebounded several times. Moreover, there are also two border lines of the side channel with a width of 250 points, which we did not even put on the chart, so as not to clutter it. The lower border of this channel is also in the 1.0750 - 1.0740 range, that is, very close to the support area and the trend line. Thus, until traders manage to overcome these three supports, it is not necessary to talk about forming a new downward trend and further movement down. Since there was an ideal development and rebound from the Senkou Span B line last Friday, the quotes failed to continue moving to the first resistance level of 1.0954 and the April 19 high of 1.0990. Thus, the priority option now is to reduce back to the trend line. In addition, a new downward trend line has been built, the last peak of which is near the Senkou Span B. line. This line acts as resistance for the pair.

As we have repeatedly said in fundamental reviews, the entire macroeconomic background is now ignored by market participants. In any case, the calendar of macroeconomic events of the United States and the European Union is almost empty on Monday and Tuesday. Formally, the US inflation report for April will be published today. However, in the current conditions, it does not matter, since market participants are primarily interested in indicators of unemployment, the labor market, and GDP decline. Inflation at the present time is of secondary importance. Judging by forecasts, the consumer price index in the US will slow down to 0.4% - 0.5% in annual terms, and in monthly terms - will decrease by as much as 0.8%. At the same time, core inflation in annual terms will be reduced to only 1.6% - 1.7% from March 2.1%. Thus, the main indicator of inflation will go down solely due to falling oil prices. Thus, we believe that traders will ignore this report today, or the reaction will be minimal.

Based on the foregoing, we have two trading ideas for May 12:

1) We expect quotes to fall to the trend line and the area of 1.0763 - 1.0775 on Tuesday, May 12. Those traders who are already in sell-offs after a rebound from the Senkou Span B line can support open sell positions with the target of 1.0775. It is recommended to open new sales for the pair only in case of overcoming the trend line, the support area. The potential to take profit is about 35 points.

2) The second option - bullish - implies either a rebound from a long-term upward trend line, or overcoming a downward trend line, as well as a support area of 1.0881 - 1.0894. In the first case, we recommend opening purchases of the euro with the aim of a downward trend. In the second case, we recommend trading on the rise with the goal of the resistance level of 1.0954. The potential to take profit in the execution of the first scenario is 60 points, the second - 55 points.

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

Overview of the GBP/USD pair. May 12. The UK is easing the quarantine. Unemployment in the US will exceed 20% in June.

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - downward.

CCI: -154.7020

The British pound spent the first trading day of the week in a fairly strong downward movement. However, on the approach to the lower border of the side 400-point channel, it again lost its position and began to correct. The Heiken Ashi indicator has not yet turned up, but it may do so in the near future. Thus, we do not expect to start forming a new downward trend before overcoming the area of 1.2207-1.2268. Most likely, the pound/dollar pair will again return to the moving average and again try to overcome it to continue moving to the upper border of the side channel near the Murray level of "7/8"-1.2634.

Also, as in the case of the euro/dollar pair, a large number of interesting news from the UK is not being received at the moment. However, this does not mean that there is no fundamental background, and traders have nothing to analyze. For example, despite the fact that the UK almost came out on top in Europe in the number of recorded cases of "coronavirus" (only Spain and Russia are higher), Boris Johnson is going to relax the quarantine measures from May 13, which were already far from the most stringent in the Foggy Albion, compared to other countries. However, in Spain, the epidemic is slowing down, and in Britain, it continues to rage at the same pace. In Spain and Italy, there are grounds for easing the quarantine, but in Britain there are none. But Boris Johnson understands that the longer the economy is idle, the more it falls down, already weakened by Brexit and the possible absence of trade deals with the United States and the European Union. Here, he is in solidarity with Donald Trump, whose states lead the world in terms of both the number of diseases and the number of deaths, but the American President is more interested in the work of the economy, and he considers 100,000 human losses among Americans "acceptable". At the same time, Boris Johnson said that in general, the quarantine will operate in the country, at least until June 1. "It's not time to cancel the lockdown yet," Johnson said at the weekend. Thus, from Wednesday this week, Britons will be officially allowed to go out for sports an unlimited number of times, will be allowed to travel, will be allowed to sunbathe, visit parks. However, the ban on meetings between people who do not live in the same house will continue to apply. Certain organizations that were not able to operate remotely will be able to resume operations if the rules of social distancing are strictly followed. At the next stage of lifting the quarantine, shops and schools may be opened, the British Prime Minister said. "However, if the epidemiological situation starts to deteriorate again, all the relief will be immediately canceled," Boris Johnson said. Thus, now the UK government is calling not to "stay at home", but to "be as vigilant as possible".

Also in the UK, a new threat system of infection with "coronavirus" was adopted, which includes 5 levels, from the first "green" to the fifth "red". According to this system, the country is now at the fourth level and moving to the third, thanks to the "lockdown". And of course, Boris Johnson's speech was immediately criticized. First Minister of Scotland Nicola Sturgeon, who openly dislikes Boris Johnson and is trying hard to get London's approval to hold a new referendum on independence, said that "the British population has not clearly understood what they can and can not do, and now everything has become even more vague." According to many experts, Boris Johnson will now try to return the country to normal life as quickly as possible, while trying to contain the "coronavirus" by methods of social distancing, introducing increased fines for violators. British opposition leader Keir Starmer, aka the new leader of the Labor party, commented on Boris Johnson's decision: "In fact, the Prime Minister allowed millions of Britons to return to work without providing a clear plan for ensuring safety, or clear recommendations on how to do it without using public transport."

Meanwhile, in the United States, many experts and members of the government believe that the current record levels of unemployment are not the maximum for the current crisis. White House economic adviser Kevin Hassett estimates that unemployment will be more than 20% in June. US Treasury Secretary Steven Mnuchin holds the same opinion: "The unemployment rate is likely to get worse before it starts to improve." Mr. Mnuchin also believes that further "downsizing" of the economy will cause irreparable damage. "We will open up very smart. So that people return to work safely and meet the requirements of social distance," the Finance Minister said. Mnuchin believes that the US economy will begin to recover in the third or fourth quarter of 2020, and calls the next year "remarkable". Asked if a premature and hasty exit from quarantine could lead to new outbreaks, Mnuchin said that the delay in "opening" the country after "lockdown" also carries high risks.

Well, Donald Trump is sad at the same time. According to the Washington Post, the American President is seriously concerned about falling political ratings due to the current "coronavirus" epidemic. Also, according to the publication, which refers to its own sources in the White House, Trump fears a new wave of the epidemic in the country if the quarantine is relaxed or canceled. The publication also characterizes Trump's condition as "gloomy" and states that "the US leader is shocked by the declining popularity among the American population." In addition, Trump is now focusing on the fastest and most possible recovery of the US economy, believing that only this can bring him victory in future elections. "In personal conversations, he tried to understand how his fate changed so quickly and dramatically: from the belief that he is on the way to a second term, to the realization that he is losing to the democratic candidate Joe Biden in almost all polls, including internal polls of his staff," the publication reports.

Also, Donald Trump was sharply criticized by his predecessor, Barack Obama, whom he likes to criticize very often. The former US President believes that Trump's opposition to the "coronavirus" can only be called "an absolutely chaotic disaster". It is also reported that Barack Obama himself supports the candidacy of Joe Biden in the election and agitates his supporters to support the Democrat. Naturally, representatives of Trump could not help but respond. White House spokeswoman Kayleigh McEnany said: "The reaction to COVID-2019 from Trump saved the lives of many Americans. While the Democrats were engaged in a "witch hunt", President Trump was shutting down travel from China. In that time, the Democrats promoted public meetings, and President Trump provides the country with means of protection, ventilation, and tests for coronavirus."

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The average volatility of the GBP/USD pair has increased slightly in recent days and is currently 120 points. For the pound, this is not too much, there are no signs of a serious increase in volatility yet. On Tuesday, May 12, we expect movement within the channel, limited by the levels of 1.2212 and 1.2450. Turning the Heiken Ashi indicator upward will indicate a new round of upward movement.

Nearest support levels:

S1 – 1.2329

S2 – 1.2268

S3 – 1.2207

Nearest resistance levels:

R1 – 1.2390

R2 – 1.2451

R3 – 1.2512

Trading recommendations:

The GBP/USD pair tried to resume its downward movement on the 4-hour timeframe. Thus, formally, short positions with the goals of 1.2268 and 1.2207 are currently relevant, but the downward momentum could have dried up yesterday. On the approach to the lower border of the side channel, we believe it is not advisable to sell the pair. It is recommended to buy the pound/dollar pair not before fixing the price above the moving average with the first goals of 1.2451 and 1.2512.

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

Overview of the EUR/USD pair. May 12. Italy is considering leaving the European Union. Eurosceptics are gaining popularity,

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - sideways.

CCI: -45.7434

On Tuesday, May 12, the EUR/USD currency pair starts with an attempt to resume its downward movement. Yesterday's attempt to overcome the moving average line was unsuccessful, so the movement to the upper border of the side channel 1.0750-1.1000 is still postponed. At the moment, the Heiken Ashi indicator signals a move down to the lower border of the channel. Thus, only overcoming this line can trigger the formation of a new downward trend. The volatility of the first trading day did not exceed even 50 points, which was completely expected. At the same time, we note that the markets seem to have finally calmed down and the currency pair has completely returned to normal. Thus, trading is now safer than a month ago. The only thing is that traders need to find new grounds for forming a new trend.

No important macroeconomic reports were scheduled for the first trading day of the week. No major fundamental events occurred during the day. However, this does not mean that nothing interesting is happening in Europe and the US right now. There are plenty of topics for discussion, and the culprit for the occurrence of 80-90% of them is "coronavirus". We have already said that the European Union, if it is not literally on the verge of collapse, then the contradictions between the countries are becoming more and more clear. And if there are contradictions that cannot be resolved, it can trigger a new referendum at any time (as in Britain in 2016). There are actually two options here. First, the current government of any country can decide to leave the European Union. Secondly, the government of any country can decide to hold a referendum for leaving the European Union. And, thus, everything will now depend on the number of opponents of European integration in the Parliament of a particular country. And the Parliament of any country is elected by the people. Thus, the more dissatisfied the population is with the current attitude of the "top" of the European Union to their country, the more likely it is that political forces that support breaking ties with the Alliance will vote in the next election. Not to mention that political parties that are already in power may start looking towards independence.

Now in times of pandemic, the issue of splitting the European Union is most acute. We have repeatedly written that several countries in the bloc have been hit by the pandemic much harder than others. By the way, one of these countries is the UK, but it has already left the EU, so it can't count on any help (I wonder if Boris Johnson regrets this?). However, in addition to the Kingdom, we are talking about Spain, Italy, and Portugal. You can also recall Greece, which has not yet recovered from the mortgage crisis of 2008-2009. All these countries require assistance from the EU leadership but do not receive it in the proper amount. The most pressing issue is the economic one. According to the forecasts of the European Commission, the Eurozone will lose 7.4% of GDP in 2020. And countries like Italy and Spain – about 10% of GDP. This will lead to an increase in the budget deficit, and unemployment is also rising. All this only exacerbates the crisis in Italy, which has been discussed in recent years. It all started with non-compliance with the European Union's budget deficit and maximum debt levels, and now with the arrival of the pandemic, Rome's deficits and debts have grown even more. The EU leadership, of course, has approved several packages of financial assistance to all the countries of the bloc, but this money is clearly not enough, and the pandemic continues, and with it the greatest crisis since the American Great Depression. The European Council has long wanted to implement the idea of "coronabonds" - debt securities that would be issued for placement outside the EU and on behalf of all countries, but the wealthiest EU countries (Germany, Austria, the Netherlands, Finland) did not agree to this option, not wanting to participate in the burden of additional debt obligations to save the less rich and more affected EU countries. Moreover, just a week ago, the German court decided to explain to the ECB the legality of buying securities through the central banks of the member countries of the Alliance in order to finance public debt. According to the German court, the ECB did not have the right to buy bonds, especially in disproportionate amounts, directly financing some countries. The ECB has already made a statement that the German court did not order it, but Berlin has made it clear that it will not at its own expense pull half of the Eurozone "from the other world". This means that you can definitely forget about "coronabonds", which means that the European Parliament will need to look for other sources of financing for troubled economies.

Meanwhile, dissatisfaction with the lack of aid in Italy is growing. According to the latest opinion polls, 67% believe that membership in the European Union is harmful to the country. And in Italy, according to everyone's opinion, just eurosceptics came to power last year, and they can try to initiate the country's exit from the EU. Also, Italy is completely dissatisfied with the fact that in addition to the lack of financial assistance, the wealthiest Germany and France banned the export of medical equipment as soon as the epidemic began. Thus, in Italy, the number of deaths from COVID-2019 was calculated, and hospitals were simply bursting with the influx of sick people. At the same time, ventilators and other equipment were "gathering dust" in warehouses in France and Germany.

It is also worth noting that Italy promoted the idea of "coronabonds" back in 2010, but even then this proposal was rejected by Germany. Instead of securities guaranteed to the entire EU, a rescue fund was created, which lent countries on special terms, which, first of all, meant a serious reduction in the costs of the countries being lent. Italy, Spain, Portugal, and Greece used the fund to recover from the 2008-2009 crisis and had to cut spending in many areas, including health care. Thus, Italy now has claims to Germany also of a health-care nature. Some political forces, such as the "Brothers of Italy" party, are already demanding an immediate exit from the EU. So far, their votes are few, but the more the economic crisis in Italy increases, the faster the number of eurosceptics will grow. And Italy's help may not come soon. The European Commission continues to develop a 2-trillion plan to help the European economy, which will be financed from the European budget and through capital markets for seven years. However, neither the sources of funding nor the total amount of funds needed have yet been approved by the European Council (a group of Finance Ministers from the EU Member States). Thus, according to experts, this plan will not be approved until June, and maybe even July and Italy will not receive assistance earlier than these months.

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The average volatility of the euro/dollar currency pair as of May 12 is 69 points. Thus, the indicator continues to decline and its value is characterized as "average". Today, we expect quotes to move between the levels of 1.0744 and 1.0882. Turning the Heiken Ashi indicator upwards may signal a new approach to the upward movement to the level of 1.1000.

Nearest support levels:

S1 – 1.0803

S2 – 1.0742

S3 – 1.0681

Nearest resistance levels:

R1 – 1.0864

R2 – 1.0925

R3 – 1.0986

Trading recommendations:

The EUR/USD pair failed to overcome the moving, so at the moment the downward trend is resumed, limited by the Murray level of "0/8"-1.0742. Thus, sales of the pair with targets in the area of 1.0750-1.0740 are relevant now again. It is recommended to consider buying the euro/dollar pair not before fixing the price above the moving average line with the goals of 1.0882 and 1.0925.

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