Trading idea for USD/JPY

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Good afternoon traders! Here is a trading idea for the USD / JPY pair.

After a month-long decline in April, quotes arose and broke 1,500 pips on May 8 and 11. Consider this impulse as wave A of the classic ABC structure, which can move the pair to area of the sellers' stops, located at the level of 108:

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The pair is currently trading in the pullback level of 61.8. The range between 61.8 and 38.2 (an average of 50) is an ideal zone for setting limit purchases, or searching for entry from lower time frames in order to hold positions up to 108.

Good luck in trading and control the risks!

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

Recession is getting worse; Overview of AUD and NZD

Fears that a too early exit from restrictive measures could trigger a new coronavirus outbreak led to renewed demand for protective assets, and US stock indexes closed in the red zone. Several factors contributed to the growing fears - U.S. health official Fauchi addressed the Senate Health Committee, Republican Senator Graham introduced a bill on sanctions against China, and three representatives of the Fed (Bullard, Kashkari and Harker) aggressively promoted the idea of negative rates.

The head of the Federal Reserve, Powell, is expected to speak this evening. If he also touches on the topic of negative rates, the markets will assume that a clear signal has been received, and the panic mood may noticeably increase.

Consumer prices in April fell by 0.8% in the US, which was in line with expectations, year-on-year inflation slowed to 0.3%, so the idea of negative rates gets additional reasons.

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The dollar looks neutral on Wednesday morning, demand for defensive assets, primarily for the yen, is expected to increase, commodity currencies will be under pressure, but it is still unlikely to go beyond the established trading ranges due to the lack of a clear strong impulse.

NZD/USD

According to the results of the meeting on monetary policy ended on Wednesday, the RBNZ left the rate at 0.25% without risking to go into the negative area, but at the same time significantly expanded the asset purchase program to $ 60 billion per month, compared with the previous limit of 33 billion. The rationale for such a decisive step is the decline in economic growth among the main trading partners of New Zealand, which will inevitably lead to a reduction in exports.

At the meeting, The RBNZ discussed three main scenarios for the further development of the situation, and even the most optimistic of them suggests an unprecedented decline in economic activity and employment. Kiwi expectedly responded by a fall.

The estimated fair price goes further down and pulls the spot price. According to the CFTC report, the net short position is increasing, that is, speculators see the main scenario as a threat of further weakening of the New Zealand dollar.

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The Minister of Finance of New Zealand made a wide report last week, who also confirmed that the government will experience a budget deficit for a long time and net debt will grow. Tomorrow, the Treasury will publish a preliminary estimate of the budget for next year. It may turn out to be very negative for NZD, in any case, banks actively operating in New Zealand (in particular ANZ and NAB) do not expect anything good from the publication and draw rather gloomy prospects.

Thus, the kiwi remains under pressure. An attempt should be expected to decline to support 0.5990/95 and further to 0.5910/20, where the medium-term prospects of the kiwi will be decided.

AUD/USD

NAB Bank has published an extensive study of the state of the Australian economy, which sees the first signs of a slowdown in the economic downward turn, and predicts a decline in GDP in the 2nd quarter. by 8.4%, and unemployment growth to 11.7%. Both indicators are not worse than those in the United States, the budget looks more balanced, that is, internal reasons for the sharp decline in AUD/USD are insignificant.

The Australian currency feels somewhat better than its counterparts in a number of commodity currencies, primarily because of the greater stability of the main trading partner - China, when compared with the economic prospects of the United States and Europe. This confidence received material confirmation – according to the CFTC report, speculators reduced the short position on the AUD on CME by 0.3 billion, while on the contrary, sales on kiwi, pound and Canadian dollar increased.

As a result, the estimated fair price has stopped declining, and the prospect for AUD/USD has stopped looking negative.

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The most likely scenario for the AUD in the coming days is trading in the range. An attempt to test the resistance zone of 0.6550 / 60 is possible if the bill against China does not receive support in the Senate, and the demand for risk returns to the markets. Meanwhile, exiting below the support zone of 0.6370/75 is only possible if a strong negative impulse appears.

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

Trading idea for AUD/NZD

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Good afternoon traders! Here is a trading idea for the AUD/NZD pair.

NZD declined after the Reserve Bank of New Zealand maintained the interest rate at 0.25. As a result, the AUD/NZD pair arose, so quotes are now above the level of 1.07500.

Use grid trading to short the pair.

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The chart above shows past works within this method.

Orders can be started now, and added further every 50-100 pips.

Close profits if the first order immediately gives +100 pips.

Use trader's calculator when setting grids, instead of increasing volumes in each new transaction.

Good luck!

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

Technical Analysis of EUR/USD for May 13, 2020:

Technical Market Outlook:

The EUR/USD was rejected for the second time at the level of 38% Fibonacci located at 1.0862 after a Shooting Star candlestick pattern was mad around the level of 1.0878. The bears are pushing the price towards the level of 1.0767 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 negative 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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The material has been provided by InstaForex Company - www.instaforex.com

Technical Analysis of ETH/USD for May 13, 2020:

Crypto Industry News:

The Vietnamese Ministry of Finance has agreed to set up a research group responsible for researching and presenting policy proposals on cryptocurrencies and virtual assets. The group will consist of nine members led by the vice-chairman of the State Securities Commission, Phama Hong Son.

Other members are other representatives of the national securities regulator, the General Tax Department, the National Institute of Finance of Vietnam, Vietnam Customs and the Department of Banking and Financial Institutions of the National Bank of Vietnam.

The research group will help the country keep abreast of news in the rapidly growing Blockchain sector, enabling Vietnam to respond to regulatory challenges with greater efficiency.

In August 2017, the Prime Minister of Vietnam approved a plan to supervise the development of the legal framework for cryptocurrencies until August 2018, indicating that cryptographic assets will be legally recognized in this country.

However, on April 11, 2018, Bitcoin was banned as a means of payment - meaning that although individuals and companies still had the freedom to invest in crypto, virtual currencies cannot be used to buy goods or services.

Two days later, a directive was issued ordering credit institutions to limit the provision of virtual currency services to protect against the risk of money laundering. Vietnam has informally updated its regulations since the introduction of directives two years ago, with the current lack of a regulatory framework for cryptocurrency exchanges in that country.

Technical Market Outlook:

The ETH/USD pair has bounced from the level of $177.50 (low was made at $174.72) after the Pin Bar candlestick pattern was made at the end of the move. The pair keeps trading inside of a narrow zone as the volatility is now limited. 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 second wave of 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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The material has been provided by InstaForex Company - www.instaforex.com

Elliott wave analysis of EUR/GBP for May 15 - 2020

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EUR/GBP is finally testing key-resistance at 0.8866. This key-resistance will likely be able to reject the first test for a minor corrective decline to support the 0.8777 - 0.8795 area from where the next attack on the key-resistance is expected. A break above will confirm that a new impulsive rally above the 0.9499 peak.

R3: 0.8912

R2: 0.8890

R1: 0.8866

Pivot: 0.8832

S1: 0.8795

S2: 0.8777

S3: 0.8759

Trading recommendation:

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

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

Elliott wave analysis of EUR/JPY for May 13 - 2020

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EUR/JPY has finally bottomed. After a minor pull-back to the 115.32 - 115.61 area we can see a new strong rally through resistance at 116.86 and more importantly through resistance at 117.77 for a rally back to at least 122.88 and in the longer-term all the way back to the February 2018 peak at 137.50.

The decline from February 2018 to the low at 114.37 has been a double zig-zag correction and the final decline from the beginning of 2020 has been extremely complex. Presently, we can look forward to a more clear-cut price-movements.

R3: 117.24

R2: 116.86

R1: 116.40

Pivot: 116.16

S1: 115.90

S2: 115.61

S3: 115.32

Trading recommendation:

We will buy EUR at 115.65 or upon a break above resistance at 116.86

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

EUR/USD Price Movement For May 13, 2020

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If we look at the 4-hour chart, we can see that the EUR/USD pair is now trying to break through the previous intraday low at 1.0845. If so, it may go to the nearest 4 hour chart liquidity void range between 1.0845 - 1.0811. As long as EUR/USD does not retrace above the 1.0885 level then the overal bias for the pair remains bearish. (Disclaimer)

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

Technical Analysis of BTC/USD for May 13, 2020:

Crypto Industry News:

Riot Blockchain, an American mining company, more than doubled the number of new generation Bitcoin miners they purchased, buying 1040 S19 Antminers from Bitmain.

Additional miners cost the company $ 1.9 million after Riot bought 1000 S19s Pro. Anticipating units to be shipped and deployed in the third quarter of this year, Riot expects the upcoming 2040 S19 units to increase the company's operational hashrate by 80% by 2021. In total, Riot predicts that it will manage a hashrate of 457 petahash per second, consuming approximately 16.5 megawatts of electricity. A spokesperson for Bitmain in North America said the company "has been working with Riot Blockchain for several years," as Riot "uses Antminer [Bitmain] products to operate its data centers."

The purchase of Riot occurred on the same day that the manufacturer ASIC admitted that it has problems with the recently sent lot S17 - miners report failures of up to 30% of units. The company is currently negotiating solutions with customers who have purchased faulty devices, encouraging affected users to contact them directly.

Technical Market Outlook:

The BTC/USD volatility has decreased after the pair has dipped 15% just before the halving. 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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The material has been provided by InstaForex Company - www.instaforex.com

Fractal analysis of the main currency pairs on May 13

Forecast for May 13:

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: 1.0975, 1.0945, 1.0922, 1.0886, 1.0835, 1.0812, 1.0766 and 1.0728. Here, we are following the development of the ascending structure of May 7. The continuation of the upward movement is expected after the breakdown of the level of 1.0886. In this case, the target is 1.0922. Short-term upward movement, as well as consolidation is in the range of 1.0922 - 1.0945. For the potential value for the top, we consider the level of 1.0975. Upon reaching this level, we expect a downward pullback.

A short-term downward movement is expected in the range of 1.0835 - 1.0812. This range is a key support for the top and the price passing this level will favor the development of a downward structure. In this case, the first potential target is 1.0766.

The main trend is the upward structure of May 7

Trading recommendations:

Buy: 1.0887 Take profit: 1.0920

Buy: 1.0923 Take profit: 1.0943

Sell: 1.0835 Take profit: 1.0813

Sell: 1.0810 Take profit: 1.0770

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2463, 1.2394, 1.2352, 1.2264, 1.2211, 1.2143 and 1.2093. Here, the price forms the potential for the downward movement of May 8. The continuation of the downward movement is expected after the breakdown of the level of 1.2264. In this case, the target is 1.2211. The breakdown of the last level will lead to a pronounced movement. Here, the goal is 1.2143. For the potential value for the bottom, we consider the level 1.2093. After which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 1.2352 - 1.2394. The breakdown of the latter level will favor the development of an upward structure. Here, the first potential target is 1.2463.

The main trend is the formation of the downward structure of May 8

Trading recommendations:

Buy: 1.2352 Take profit: 1.2392

Buy: 1.2395 Take profit: 1.2460

Sell: 1.2264 Take profit: 1.2213

Sell: 1.2209 Take profit: 1.2145

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9758, 0.9729, 0.9705, 0.9660, 0.9642, 0.9600 and 0.9573. Here, we are following the descending structure of May 7. The continuation of the downward movement is expected after the price passes the noise range 0.9660 - 0.9642. In this case, the target is 0.9600. For the potential value for the bottom, we consider the level of 0.9573. Upon reaching this level, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 0.9705 - 0.9729. The breakdown of the last level will lead to an in-depth correction. Here, the target is 0.9758. This level is a key support for the downward trend.

The main trend is the descending structure of May 7

Trading recommendations:

Buy : 0.9705 Take profit: 0.9727

Buy : 0.9732 Take profit: 0.9756

Sell: 0.9640 Take profit: 0.9606

Sell: 0.9598 Take profit: 0.9575

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For the dollar / yen pair, the key levels on the scale are : 108.29, 108.05, 107.76, 107.60, 107.33, 107.15 and 106.88. Here, we are following the development of the ascending structure of May 6. At the moment, the price is in correction. The continuation of the upward movement is expected after the price passes the noise range 107.60 - 107.76. In this case, the target is 108.05. Price consolidation is near this level. For the potential value for the top, we consider the level of 108.29. Upon reaching which, we expect a downward pullback.

Consolidated movement is possible in the range of 107.33 - 107.15. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 106.88. This level is a key support for the upward structure.

The main trend: the upward cycle of May 6, the correction stage

Trading recommendations:

Buy: 107.77 Take profit: 108.00

Buy : 108.05 Take profit: 108.26

Sell: Take profit:

Sell: 107.13 Take profit: 106.90

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.4189, 1.4150, 1.4094, 1.4065, 1.4006, 1.3971, 1.3933 and 1.3896. Here, we are following the formation of the upward potential of May 11. Short-term upward movement is expected in the range of 1.4065 - 1.4094. The breakdown of the latter value will lead to a pronounced movement. Here, the target is 1.4150. For the potential value for the top, we consider the level of 1.4189. Upon reaching which, we expect a downward pullback.

A short-term downward movement is possible in the range of 1.4006 - 1.3971. The breakdown of the last value will lead to an in-depth correction. In this case, the target is 1.3933. This level is a key support for the top.

The main trend is the formation of the upward potential of May 11

Trading recommendations:

Buy: 1.4065 Take profit: 1.4092

Buy : 1.4096 Take profit: 1.4150

Sell: 1.4006 Take profit: 1.3973

Sell: 1.3968 Take profit: 1.3935

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6671, 0.6628, 0.6608, 0.6571, 0.6547, 0.6435 and 0.6376. Here, we are following the development of the upward structure from May 7. At the moment, the price is in deep correction and is close to the abolition of the upward trend, which requires a breakdown of the level of 0.6435. In this case, the potential target is 0.6376. The continuation of the upward movement is expected after the breakdown of the level of 0.6508. Here, the first goal is 0.6547. Short-term upward movement is expected in the range of 0.6547 - 0.6571. The breakdown of the last value should be accompanied by a pronounced upward movement. In this case, the target is 0.6608. Price consolidation is in the range of 0.6608 - 0.6628. For the potential value for the top, we consider the level of 0.6671. Upon reaching which, we expect a downward pullback.

The main trend is the rising structure of May 7, the stage of deep correction

Trading recommendations:

Buy: 0.6508 Take profit: 0.6545

Buy: 0.6547 Take profit: 0.6570

Sell : 0.6435 Take profit : 0.6380

Sell: Take profit:

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For the euro / yen pair, the key levels on the H1 scale are: 117.81, 117.49, 117.00, 116.79, 116.18, 115.81 and 115.42. Here, we are following the development of the ascending structure of May 6. The continuation of the upward movement is expected after the price passes through the noise range 116.79 - 117.00. In this case, the target is 117.49. For the potential value for the top, we consider the level of 117.81. Upon reaching which, we expect consolidation, as well as a downward pullback.

Short-term downward movement is possible in the range of 116.18 - 115.81. The breakdown of the last value will lead to an in-depth correction. Here, the target is 115.42. This level is a key support for the top.

The main trend is the upward structure of May 6

Trading recommendations:

Buy: 117.00 Take profit: 117.47

Buy: 117.50 Take profit: 117.80

Sell: 116.15 Take profit: 115.84

Sell: 115.79 Take profit: 115.44

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For the pound / yen pair, the key levels on the H1 scale are : 135.08, 134.25, 133.78, 133.16, 132.48, 131.20, 130.47 and 129.67. Here, we are following the formation of the ascending structure of May 7. The continuation of the upward movement is possible after the breakdown of the level of 132.48. In this case, the first target is 133.16. Price consolidation is near this level, its passage will lead to a pronounced movement. In this case, the first goal is 133.78. Short-term upward movement and consolidation is in the range of 133. 78 - 134.25. For the potential value for the top, we consider the level of 135.08. Upon reaching which, we expect a downward pullback.

The level of 131.20 is a key support for the upward structure and its breakdown will lead to the development of the downward movement of May 11. Here, the first goal is 130.47. For the potential value for the bottom, we consider the level of 129.67. Upon reaching which, we expect an upward pullback.

The main trend is the formation of the ascending structure of May 7, the stage of deep correction.

Trading recommendations:

Buy: 132.50 Take profit: 133.15

Buy: 133.18 Take profit: 133.75

Sell: 131.20 Take profit: 130.50

Sell: 130.43 Take profit: 129.70

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

UK economic data is unlikely to save pound. Euro growth is limited.

Signals for the EUR/USD pair:

A breakthrough at the level of 1.0881 can lead to an increase in the euro in the area of 1.0923 and 1.0972.

A breakthrough at 1.0835 is likely lead to a sell-off of the euro in the area of 1.0787 and 1.0728

Signals for the GBP/USD pair:

If the pair breaks through at 1.2310, the British pound can grow in the area of 1.2370 and 1.2425.

A breakthrough at 1.2250 can lead to a sell-off of the British pound in the area of 1.2211 and 1.2169.

The following fundamental data is set for release during the day:

  • UK GDP and industrial production data
  • Euro area industrial production
  • US Producer Price Index
  • Fed's Chairman Jerome Powell will deliver a speech
The material has been provided by InstaForex Company - www.instaforex.com

GBP/USD: plan for the European session on May 13 (analysis of yesterday's deals). The pound still has problems, and the UK

To open long positions on GBPUSD, you need:

In my review for the second half of the day, I paid attention to sales after the pound returned to the support level of 1.2358, which should have led to a more powerful sale of GBP/USD. If you look at the 5-minute chart, you will see how after fixing above 1.2358 and several unsuccessful attempts to increase the pound in the first half of the day, the bulls left the market, and the bears took control of it, which led to a major sale in the support area of 1.2290. From this level, I recommended buying for a rebound, but there was no serious upward movement from it. The consolidation under this range at the end of the US session only confirmed the full strength of the bearish momentum, which led to a sale in the Asian session to the low of 1.2250, where I also recommended opening long positions. At the moment, the task of buyers is to save this level and only the formation of a false breakout on it in the first half of the day will be a signal to open long positions, which may lead to a small upward correction to the resistance area of 1.2310, where the moving averages are located. The longer-term goal of the bulls remains the test of yesterday's resistance at 1.2370, where I recommend fixing the profits. If the movement will continue to develop along with the trend, and the fundamental data on the UK economy will not please us, it is best to postpone long positions until the update of the lows of 1.2169 and 1.2030, and buy there immediately for a rebound, since it is hardly possible to seriously rely on the support of 1.2211.

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To open short positions on GBPUSD, you need:

Sellers will follow the trend, seeking a breakout and consolidation below the support of 1.2250, which will definitely increase pressure on the British pound and lead to a new wave of sales with an exit to the lows of 1.2211 and 1.2169, where I recommend fixing the profits. The longer-term goal of the bulls remains the area of 1.2030. However, a more acceptable scenario for opening short positions will be an upward correction to the resistance area of 1.2310, where the formation of a false breakout, together with a report indicating a serious reduction in UK GDP growth, will be the ideal signal to open short positions. If there is no activity in the resistance area of 1.2310, it is best to postpone short positions for a rebound to the test of the maximum of 1.2370 with the goal of a downward movement of 20-30 points within the day.

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Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving averages, which indicates a further decline in the pound on the trend.

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

Bollinger Bands

Growth will be limited by the upper level of the indicator around 1.2370. Breaking the lower border in the area of 1.2211 will lead to a larger sale of the pound.

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

GBP/USD: plan for the European session on May 13 (analysis of yesterday's deals). The pound still has problems, and the UK

To open long positions on GBPUSD, you need:

In my review for the second half of the day, I paid attention to sales after the pound returned to the support level of 1.2358, which should have led to a more powerful sale of GBP/USD. If you look at the 5-minute chart, you will see how after fixing above 1.2358 and several unsuccessful attempts to increase the pound in the first half of the day, the bulls left the market, and the bears took control of it, which led to a major sale in the support area of 1.2290. From this level, I recommended buying for a rebound, but there was no serious upward movement from it. The consolidation under this range at the end of the US session only confirmed the full strength of the bearish momentum, which led to a sale in the Asian session to the low of 1.2250, where I also recommended opening long positions. At the moment, the task of buyers is to save this level and only the formation of a false breakout on it in the first half of the day will be a signal to open long positions, which may lead to a small upward correction to the resistance area of 1.2310, where the moving averages are located. The longer-term goal of the bulls remains the test of yesterday's resistance at 1.2370, where I recommend fixing the profits. If the movement will continue to develop along with the trend, and the fundamental data on the UK economy will not please us, it is best to postpone long positions until the update of the lows of 1.2169 and 1.2030, and buy there immediately for a rebound, since it is hardly possible to seriously rely on the support of 1.2211.

analytics5ebb7a7d3b2d4.jpg

To open short positions on GBPUSD, you need:

Sellers will follow the trend, seeking a breakout and consolidation below the support of 1.2250, which will definitely increase pressure on the British pound and lead to a new wave of sales with an exit to the lows of 1.2211 and 1.2169, where I recommend fixing the profits. The longer-term goal of the bulls remains the area of 1.2030. However, a more acceptable scenario for opening short positions will be an upward correction to the resistance area of 1.2310, where the formation of a false breakout, together with a report indicating a serious reduction in UK GDP growth, will be the ideal signal to open short positions. If there is no activity in the resistance area of 1.2310, it is best to postpone short positions for a rebound to the test of the maximum of 1.2370 with the goal of a downward movement of 20-30 points within the day.

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Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 moving averages, which indicates a further decline in the pound on the trend.

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

Bollinger Bands

Growth will be limited by the upper level of the indicator around 1.2370. Breaking the lower border in the area of 1.2211 will lead to a larger sale of the pound.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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EUR/USD: plan for the European session on May 13 (analysis of yesterday's deals). Buyers of the euro need to stay above the

To open long positions on EURUSD, you need:

Yesterday's sharp rise in the euro after such weak fundamental data on the US economy was a surprise for me personally, but I have to measure reality. The market may be beginning to return to the right track and respond adequately to the data, which is worth paying attention to in the future. As for yesterday's deals, on the 5-minute chart, you can see sales from the resistance of 1.0873, from which I recommended opening short positions within the day immediately on the rebound, which brought about 25-30 points. It is still very early to say that buyers have coped with the market and dragged the blanket to their side. Today in the first half of the day, they need to protect the support of 1.0835, which simultaneously acts as the middle of the side channel. The formation of a false breakout on it will be a signal to open long positions in the expectation of continued growth of EUR/USD. However, the more important goal is to break through and consolidate above the resistance of 1.0881, which will lead to a more powerful bullish impulse with an exit to the highs of 1.0923 and 1.0972, where I recommend taking the profits. In a scenario of lack of activity from buyers at the level of 1.0835 and the more bad figures for industrial production in the Eurozone, it is best to postpone purchases of the euro to test the lower border of the sideways channel of 1.0787 or open a long position immediately on the rebound from a new local minimum of 1.0728 in the calculation of the upward correction in 30-40 points within the day.

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To open short positions on EURUSD, you need:

Sellers need to return to the market, and it will be possible to talk about control from their side only after the pair is fixed below the support of 1.0835 and returns to the moving averages. Only in this scenario, you can open new short positions in the expectation of a repeated decline in EUR/USD in the area of this week's minimum to the support of 1.0787, as well as its breakdown, which will increase pressure on the euro and lead to an update of the area of 1.0728, where I recommend fixing the profits. If the data on industrial production in the Eurozone is not as bad as expected, for sure, the bulls will attempt to increase to the resistance of 1.0881. You can open short positions from there only if a false breakout is formed, but it is best to sell EUR/USD on a rebound from the highs of 1.0923 and 1.0972, counting on correction of 25-30 points within the day.

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Signals of indicators:

Moving averages

Trading is conducted just above the 30 and 50 moving averages, which so far indicates the equality of buyers and sellers.

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

Bollinger Bands

A break in the upper limit of the indicator around 1.0881 may lead to a sharp increase in the Euro. A break of the lower border around 1.0835 will lead to a more serious decline in the pair.

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

AUDUSD bouncing off ascending trendline support! Further push up expected.

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Trading Recommendation

Entry: 0.64516

Reason for Entry: Ascending trendline support

Take Profit : 0.65364

Reason for Take Profit: 76.4% Fibonacci retracement, recent swing high

Stop Loss: 0.64333

Reason for Stop loss: Recent swing low, 78.6% Fibonacci extension

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Forecast for EUR/USD on May 13, 2020

EUR/USD

Yesterday, the euro added more than 40 points after a reversal from the lower limit of the accumulation range of 1.0767-1.0995. The signal line of the Marlin oscillator has penetrated into growth territory, but before the euro, if the single currency decides to continue growing, there are many strong resistances ahead. The first resistance is the indicator line of MACD on the level of 1.0900. A little higher, at 1.0930, is the price channel line, and even higher, at 1.0995, is the upper limit of the price range of a broad consolidation.

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The euro is complicated to grow; it needs strong fundamental conditions. The condition for the decline is that the price falls below the lower limit of the accumulation range of 1.0767. The first goal is to support the price channel around 1.0590.

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On the H4 chart, the price is higher than both indicator lines, and Marlin is in the growth zone. The return of the price under the MACD line (1.0820) is the first sign of the euro's desire to develop a downward movement. But we continue to wait for developments.

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Forecast for GBP/USD on May 13, 2020

GBP/USD

On Tuesday, the pound fell by 70 points and overcame the support of the MACD indicator line on the daily scale chart. The reason was the concern of investors about the reluctance of the UK to extend the transition period during Brexit, as the next round of negotiations has begun, and the parties have almost no concrete plans for today.

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The Marlin oscillator has entered the "bearish" trend zone. To consolidate the trend of today's session, it remains to close under the MACD line. The nearest target of the decline is the Fibonacci level of 200.0% at the price of 1.1935. It is followed by the second target for the Fibonacci level of 223.6% at 1.1750.

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On the four-hour chart, the price is already fixed under the MACD line. Marlin is developing in the area of the descending trend.

It is possible to open short positions on the market with a stop above yesterday's maximum.

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Forecast for AUD / USD on May 13, 2020

AUD / USD

The Australian dollar traded in the range of 105 points on Tuesday, closing the day with a decrease of 15 points. The immediate goal of the decline is the nested price channel line at 0.6355, and below it is the second goal along the MACD line, in the region of 0.6255. The signal line of the Marlin oscillator has not left the territory of growth yet, so perceive the decline with caution.

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On the four-hour chart, the Marlin oscillator has already penetrated the zone of the downward trend. However, the quotes were above the indicator lines, which indicates that the short-term trend is still upwards. Change will occur after a consolidation below the MACD line, but since it is close to yesterday's low, the direct signal for sales is the intersection of quotes at 0.6433. Movement below 0.6355 launches a medium-term reduction plan.

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Forecast for USD/JPY on May 13, 2020

USD/JPY

Yesterday's assumptions about the decline in stock markets were justified. The American S&P 500 index lost 2.05%, today, the Japanese Nikkei225 index declined by 1.15%, and the Chinese China A50 by 0.67%. The USD/JPY currency pair declined after the stock market by 52 points. The price appeared between two nearby lines of the price channel again, continuing to form a downward sloping consolidation. The signal line of the Marlin oscillator, with the exception of a slight "breathing indicator", moves along the border that separates the decline from the zone of falling trends. Now, moving the price below the lower line of the range 106.60 for the second time (hopefully, a more successful one) will launch the strengthening of the yen in the medium-term. The first goal here is the level of 105.10, followed by 103.95.

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The trend continues to increase on the four-hour chart: the price is above the indicator lines and Marlin is in the growth zone. The first attempt to attack the level of 106.60 will be pushing down the quote below the MACD line at 107.00. Perhaps, this will happen with the synchronous departure of the Marlin oscillator in the zone of negative values, which will strengthen the signal.

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An alternative scenario is the growth of the dollar against the yen, which will open with the price reaching the top of Monday 107.78 and consolidating above this level. In case that the growth of the currency pair is confirmed by the growth of stock indexes, we should expect the price at the resistance of the upper line of the price channel at 111.50.

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Overview of the GBP/USD pair. May 13. China may terminate the trade agreement with the US and finally bury all chances of

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 starts the third trading day of the week in a downward movement inside the same 400-point side channel, getting closer to its lower border. Thus, in the near future, the pound/dollar pair may be followed by an upward reversal with further movement to the area of the Murray level of "7/8"-1.2634. At the same time, the pair can overcome the lower border of the channel and thus leave it, starting the formation of a new downward trend. We note that the lower border of the channel has an indistinct price value and can fall down to the level of 1.2165 – the minimum from April 7.

Just yesterday, we reported that the mood of Donald Trump is characterized as "gloomy", according to sources of the Washington Post in the White House. Sources say that the American President is very upset that his ratings continue to fall, while the ratings of his main opponent, Joe Biden, are growing. His nervousness, however, is visible not only to the White House staff. As recently as today, Donald Trump held a regular briefing, during which he was asked why the US leader constantly talks about the number of tests conducted for "coronavirus" (according to Trump, the number of tests conducted in the US is the highest in the world, although we have already written that if we take the number of tests conducted per capita, the United States do not even enter the top five) instead of paying attention to the number of infected people and the number of deaths from the pandemic. Trump flared up and said the following: "Perhaps this is a question you should ask China. Don't ask me, ask China. If you ask them, you may get a very unusual answer." After that, the President interrupted the conference, not forgetting to call the question of the journalist of Asian origin "vile".

Meanwhile, the conflict between the US and China, despite the assurances of Steven Mnuchin, Liu He and Robert Lighthizer, continues to gain momentum. For example, according to the latest information, the US FBI plans to bring charges against China in an attempt to steal data on research "coronavirus". The message reads: "The PRC tried to gain secret access to valuable information protected by intellectual property rights, as well as data related to the development of a vaccine." The US Agency for Cybersecurity and Infrastructure Protection said it was investigating a series of cyberattacks on pharmaceutical companies, medical organizations, and universities.

At the same time, information came from China itself that Beijing is seriously considering canceling the trade deal with America, which was reached with great difficulty in January this year, after almost 2 years of a trade war. As a reason, Washington's too aggressive "anti-Chinese" position on the issue of the COVID-2019 virus pandemic is called. Beijing is going to terminate the previous deal and sign a new one on more favorable terms. It is reported that in the current version of the agreement, there is a clause "on force majeure", which Beijing is going to refer to. According to Chinese experts, the United States will not be able to resume the trade war with China now, given the depth of the recession in their economy. This information has already reached Donald Trump, who commented: "I also heard that they want to return to negotiations in order to reach a more profitable deal for themselves. However, we signed the agreement and the US is not going to review it."

If Beijing really goes to break the current agreement, then it will deal a blow not only to the American economy, which, as we can already see, will suffer much more than the Chinese one but also to Donald Trump personally. After all, in fact, Trump spent two years trying to negotiate more favorable terms of trade for America with China. Now, when Trump has already lost such trumps as a low unemployment rate, a strong economic recovery and a strong labor market, the termination of the deal with China may further lower his political ratings. What will Trump be able to say during his election campaign to Americans in this case? Just what he does throughout his entire presidential term. Blames former presidents, China, Jerome Powell, the Democrats, Joe Biden, and anyone else who comes along for America's troubles. However, any people can believe in this kind of information, but only for a certain time. Sooner or later, the question will arise, why exactly during the Trump administration had so much trouble, and instead of the promised economic growth, the country gets a second Great Depression? In any case, the American people just want to live well, just like any other people on the planet. If the current government does not cope with this task, then you need to vote for another candidate. Thus, it is China that can finally kill all of Donald Trump's hopes for re-election. Of course, while this is only a rumor, however, you will agree that "there is no smoke without fire".

On Wednesday, May 13, the UK is scheduled to publish GDP for March in monthly terms, preliminary GDP for the first quarter, as well as industrial production. It is easy to guess that all these indicators will collapse down, as well as many others, so traders should not wait for positive news today. According to experts' forecasts, the UK's GDP in March may decline immediately by 8%, and in the first quarter – by 2.1% in annual terms and 2.5% in quarterly terms. Industrial production may lose 9.3% y/y and 5.6% m/m in March. We believe that market participants will continue to ignore any macroeconomic information. At this time, it is also because it is equally bad in Britain and in the US. The US currency rose again against the British pound yesterday, despite a weak report on inflation in the United States. Thus, we believe that technical factors remain in the first place when determining the trend and forecasting further movement. It should be added that the UK officially came out on top in Europe yesterday in the number of "coronavirus" diseases, overtaking Italy and Spain, as well as the first place in the number of "deaths" in Europe, which clearly does not add to the optimism of buyers of the British pound.

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The average volatility of the GBP/USD pair has increased slightly in recent days and is currently 125 points. For the pound, this is not too much, and there are no signs of a serious increase in volatility yet. On Wednesday, May 13, we expect movement within the channel, limited by the levels of 1.2146 and 1.2396. A reversal of 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 resumed its downward movement on the 4-hour timeframe. Thus, technically, short positions with the goals of 1.2268 and 1.2207 are currently relevant, but the downward momentum may run out at any moment. 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 1.2450 and 1.2512.

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Overview of the EUR/USD pair. May 13. Angela Merkel intervened in the dispute between Berlin and Brussels. Legal proceedings

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 Wednesday, May 13, the EUR/USD currency pair will try to continue the upward movement after fixing above the moving average line. We still believe that the euro/dollar pair remains within the side channel and in the coming days will be aiming for its upper limit – the Murray level of "4/8"-1.0986. The volatility of the pair was quite high yesterday – as much as 100 points, although it was not provoked by macroeconomic statistics again. Although in principle, you can try to link the failed report on inflation in the US with the fall of the US currency. In any case, we do not yet have enough reason to assume that the markets have fully returned to their usual trading channel.

In recent articles, we have already paid attention to the conflict between Germany and the European Union, regarding the German court's decision calling into question the legality of the ECB to conduct a program of buying bonds of Eurozone countries in order to help the economy, and the European court's decision of 2018, which shows the legality of the ECB's actions. In fact, this decision is not the Central Bank of Germany or the German Constitutional Court. Germany has its own power, which has been opposed to providing assistance to southern countries since 2008, when the idea of issuing bonds on behalf of all EU countries first arose. You can understand the Germans in principle. Germany is the wealthiest country in the EU, and its economy is considered the engine of the entire Eurozone. At the same time, German pedantry and thrift allow the economy to withstand the most persistent and effective crises. This was the case in 2008, and it still is. It was Germany that suffered the least from the "coronavirus" epidemic in the EU. The number of deaths from the epidemic is only 7,667. For comparison, in Italy - almost 31,000, in Spain - almost 27,000, in France - almost 27,000. Thus, the Germans believe that the southern countries do not know how to save money, spend money, and in the event of a crisis, ask for help from the European Union. But since the EU Board is not an independent organization that can provide assistance to any country with its own resources, but, in fact, the cooperation of all EU member states, it turns out that the countries that have suffered the most from the next crisis are asking for help from the countries that have suffered the least. That is Germany in particular. In 2008, they saved Ireland and Greece, and now they need to save Italy, Spain, and Portugal. This is exactly what does not suit the Germans, who blocked further purchases of assets by the German Central Bank until the ECB proves the legality of buying government bonds in a disproportionate amount. It is obvious that this court decision calls into question the entire monetary policy of the ECB and expresses Germany's disagreement on the most important policy issues at this time. The European Commission has already threatened Berlin with penalties.

At this time, Angela Merkel intervened, clearly not without her participation, and the expression of disagreement with European policy was realized. The German Chancellor said that the dispute between Germany and the EU is easily resolved if Brussels demonstrates the need for a program to purchase government bonds. In fact, this position of the German Chancellor completely repeats the proposal of the court itself. Naturally, the opposite position is taken by the head of the European Commission, Ursula von der Leyen, who threatened Germany with legal proceedings on the fact of possible violations of European law by Berlin.

How can it all end? In the near future, Germany should respond to the position of the European Commission and correct the situation (if it wishes). The European Commission insists that the decision of the European Court of Justice in 2018 allows the ECB to conduct such programs to buy assets, which means that the ECB, in any case, should not explain anything to Germany. If Berlin refuses to comply with the rules of European law, then the procedure that precedes the judicial one is launched. Germany will again be given a chance, but within the framework of legal procedure, to comply with the ECB's decisions. If Berlin refuses again, a trial will be launched, which, according to many experts, may drag on for many years. We can only guess how this trial will end. The most negative option for the European Union is Germany's exit from it. We have already written that the same path can be taken by Italy, which believes that the EU should provide it with assistance, which is refused, in fact, by Germany. So far, these events do not have a strong impact on the euro currency. However, again in the long term, the euro may be under pressure if the prospect of losing two more EU member states increases.

Industrial production for March is scheduled to be published on the third trading day of the week in the EU. The forecasts are terrible and at the same time absolutely not surprising. Production is expected to decline by 12.4% year-on-year. Recall that production in the United States in March decreased by only 5.5%. Thus, we can slowly begin to compare the scale of losses of the American and European economies from the pandemic crisis. If it also will continue to develop, the euro could be under strong pressure from the part of market participants. Not only is the US currency itself often in demand, as the most stable and secure but also the EU economy can decline at a higher rate. Of course, in this situation, the investment will flow to America, not to the EU. And the dollar will again become more expensive in the long term. But if the EU will lose followed by the UK and even Germany or Italy...

In the States, Federal Reserve Chairman Jerome Powell is scheduled to speak today. The event is quite loud and important, but everything will depend on what topics the Chairman of the US Central Bank will address in his speech. Monetary policy is what interests traders. However, what new can the Fed offer now? The ed does not support negative rates. Thus, the maximum that Powell can declare is the launch of a new program to support the economy. Traders do not respond to such messages. Even later in the evening, ECB Vice-President Luis de Guindos will deliver a speech.

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The average volatility of the euro/dollar currency pair as of May 13 is still 69 points. Thus, the indicator continues to decline, and its value is now characterized as "average". Today, we expect quotes to move between the levels of 1.0783 and 1.0924. Turning the Heiken Ashi indicator down may signal a new round of downward movement within the side channel.

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 managed to overcome the moving, so at the moment the upward trend is resumed, limited by the Murray level of "4/8"-1.0986. Thus, purchases of the pair with targets near the level of 1.0986 are relevant now again. It is recommended to consider selling the euro/dollar pair not before the price is re-anchored below the moving average line with the goals of 1.0783 and 1.0742. It should be remembered that now the euro/dollar pair, in fact, there is a sideways movement. There is no trend.

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EUR/USD and GBP/USD. Results of May 12. Fed's members worry about a possible "second" wave of the COVID-19 pandemic if the

4-hour timeframe

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Average volatility over the past 5 days: 69p (average).

On Tuesday, May 12, the EUR/USD currency pair continued the upward movement in accordance with the hypothesis and the scenario of movement inside a wide side channel, limited by the levels of 1.0750 and 1.1000. Since yesterday, the pair was approaching the lower border of this channel and made a reversal near it. Thus, it can be assumed that now an upward movement awaits the euro/dollar pair. So it happened on Tuesday. At the moment, the upper level of volatility of 1.0882 has already been worked out, and the overall volatility of the day fully corresponds to the average volatility indicator at this time. Thus, traders made a second attempt to raise the pair to the psychological level of 1.10, which may be successful.

As for the macroeconomic background, only one important indicator has been published today - inflation in the USA. We have already said in previous articles that the inflation indicator at this time has moved into the category of secondary ones. In principle, today's trading only confirmed this hypothesis. First, the inflation report failed, becoming even weaker than already weak forecasts. Secondly, the growth of quotes of the pair (respectively, the fall of the US currency) began a few hours before the publication of the report, so the effect of this report on the mood of traders was very indirect and ambiguous. Thirdly, we said that the pair would grow without the inflation report in the USA. Thus, we believe that even today, when it would seem the macroeconomic background coincided in nature, and in time (almost) with the movement of the pair, we believe that it was not it who caused the strengthening of the European currency. Returning to the inflation report, the indicator in April amounted to only 0.3% in annual terms. In March, the value was 1.5% and in monthly terms, inflation was -0.8%. And the consumer price index excluding energy and food prices slowed down to 1.4%. Thus, there are several conclusions. Firstly, the price in the United States has declined mainly due to the global drop in oil, gas and other energy prices. Secondly, prices fell on some categories of goods due to a strong drop in demand for these goods (goods not essential). Thus, such low inflation is not surprising at all. And we believe that absolutely no one was upset or disappointed by such a value. The fact that inflation will recover very quickly as soon as the services and production sectors recover, workers will return to work, and unemployment will return to 50-year lows again. However, this is not expected in the near future. Thus, first the sectors of the economy that provide GDP should be restored, and only then should we worry about a systematic and stable price increase, which will spur the economy to growth. Now, there is no question of any growth. which will spur the economy to growth. Now, there is no question of any growth.

At the same time, the head of the Minneapolis Reserve Bank, Neel Kashkari, said the unemployment report released on Friday was probably "understated." The head of the Federal Reserve Bank believes that the real unemployment rate is already 17%, and will grow to 25% in the future. "This bad report actually downplays how great the damage has been done," Kashkari said. However, the head of the Federal Reserve Bank also expressed hope that the US government has learned from the Great Depression, so it will be possible to avoid economic depression or minimize the negative consequences of the coronavirus pandemic at this time. However, in any case, the economic recovery will be as gradual as possible until the vaccine against COVID-2019 is invented. Thus, Kashkari questioned all the predictions that said that recovery would be quick, but in 2021.

The head of the Federal Reserve Bank of Philadelphia, Patrick Harker, also believes that the economy should not be opened hastily, otherwise the second wave of the pandemic could break out in the country, which will "bury" the economy. According to him, "the way out of the crisis from the economy will be difficult, and even if the situation develops according to the most optimistic scenario, it will not be able to catch up before the end of this year." "A less optimistic scenario awaits us if we open the economy too quickly. In this case, we will witness the second wave of the COVID-19 pandemic. This will not only be a catastrophe in the field of epidemiology, but will also nullify any economic recovery," Harker concluded.

Thus, a certain number of high-ranking officials do not support Donald Trump and his intention to resume the economy as quickly as possible. Politicians and economists understand that if a hasty exit from quarantine results in a new wave of the epidemic, key indicators of the state of the economy will collapse even more. But at the moment they have not even stopped their fall due to the first wave.

4-hour timeframe

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

On May 12, the GBP/USD currency pair, unlike the European currency, rose quite sharply against the US dollar, but also fell sharply during the US trading session. In general, the quotes of the pair remained close to the lower border of the lateral 400-point channel, which we have repeatedly written about in recent articles. However, we consider the fact that the pound/dollar pair cannot begin to grow to the upper border of this channel, which lies near the level of 1.2650, as an alarming factor. Thus, the pair may try to exit through the lower boundary of the channel in the near future and begin the formation of a new downward trend. There are no fundamental grounds for such a scenario now. News and data are mostly negative from the United States, but nothing positive is happening in the UK either. We can say that now, in principle, traders do not receive any optimistic and encouraging information. Thus, we cannot say that the pound will rise in price on the basis of fundamental data, and the same for the US dollar. In addition, the problem lies just in the lower border of the side channel, which is quite blurry. One of the latest price lows is located at 1.2161, the other at 1.2246, the third at 1.2265. Thus, it is difficult to say which area the bears must break through in order to assume that the pair left the side channel.

Recommendations for EUR/USD:

For short positions:

The EUR/USD pair continues its upward movement on the 4-hour timeframe. Thus, it is recommended to consider new sales of Eurocurrencies with a view to the support level of 1.0745 in the event of returning the price to the area below Kijun-sen.

For long positions:

It is recommended to open new long positions with the target at the resistance level of 1.0954 when the price consolidates above the Senkou Span B line, which will strengthen the current signal to buy the Golden Cross.

Recommendations for GBP/USD:

For short positions:

The pound/dollar is trying to continue the downward movement again, but it has settled again around the level of 1.2300. Thus, it is recommended that traders sell a pair with targets of 1.2212 and 1.2164, in case of breaking through the level of 1.2283. But even in this case, sell positions are still associated with increased risk.

For long positions:

It is recommended that buying the GBP/USD pair be considered with a view to the Senkou Span B line and the level of 1.2450, but only in small lots if the Kijun-sen line is broken through again.

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EUR/USD. It's still risky to buy despite weak inflation report and Fed's negativity

The euro/dollar pair showed increased volatility today - if the price updated the low of this week in the morning, declining to the level of 1.0780, then during the American session, buyers were able to update the weekly high, rising a hundred points higher. Now, the eur/usd bulls are trying to consolidate above the level of 1.0850, where the middle line of the Bollinger Bands indicator passes, which coincides with the Kijun-sen line on the daily chart. If they manage to do this, then the probability of price growth in the area of the ninth figure will largely increase, despite the entire array of negative fundamental factors that accompany the European currency. That is, at the moment, the positional struggle between the bulls and bears of EUR/USD is still ongoing.

Today's growth of the EUR/USD pair is not only due to the release of data on the growth of US inflation – the comments of some Fed representatives also worsens the situation, putting pressure on the dollar. However, the main impulse of EUR/USD growth, of course, was inflation.

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Let me remind you that the previous March inflation indicators already reflected the presence of coronavirus in the US - on a monthly basis, the general index collapsed into the negative area (-0.4%), and it dropped to one and a half percent in annual terms. In April, the negative dynamics continued. The data published today came out in the "red zone" - all indicators were weaker than the rather pessimistic forecast values. Thus, the general consumer price index in monthly terms, while forecasting a decline to -0.7%, fell to -0.8%. On an annualized basis, experts expected to see the general CPI at around 0.4%, while the figure came out at around 0.3%. Core inflation indicators, excluding food and energy prices, showed relative stability in March, but April figures was disappointing. In monthly terms, the core index dropped to -0.4%, in annual terms - to 1.4%. All this suggests that the coronavirus crisis is hitting the US economy more than previously expected, and even quite pessimistic forecasts were not justified – the real figures were still worse.

Amid such a disappointing report, some Fed representatives also spoke, who put additional pressure on the dollar. In particular, Richmond Federal Reserve President, Thomas Barkin, suggested that the recovery of key macroeconomic indicators will most likely be slower than previously thought. A similar opinion was expressed by Neel Kashkari, who, by the way, has the right to vote this year. According to him, the authorities will not be able to stabilize the economy until the epidemic spreads uncontrollably. And although Kashkari opposed the introduction of negative rates, he noted that the regulator has other tools that "can and should be applied." The head of the Dallas Federal Reserve Bank, Robert Kaplan, also spoke about negative interest rates. However, he said he would not vote for this decision, because "the possible advantages of negative rates do not compensate for their disadvantages." At the same time, he also said that the crisis could be prolonged compared to previous forecasts. The consistent James Bullard, on the other hand, stated his pessimistic idea today. He said that further quarantine restrictions would lead to bankruptcies and economic depression.

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In other words, the Fed representatives in one interpretation or another say that the crisis is likely to be more prolonged than the initial forecasts, and further quarantine restrictions will only worsen the situation. Meanwhile, the United States continues to rank first in the world in the number of deaths and diagnosed cases of coronavirus – there are more than 1.3 million cases of infection. The incidence is increasing in States such as Mississippi, Minnesota and Nebraska, increasing the risk of a new COVID-19 outbreak. According to some scholars, too hasty actions of the authorities to open the economy can provoke a second wave of the epidemic in the country. It turns out to be a vicious circle: quarantine "kills" the economy, while a hasty lifting of restrictive measures can kill a large number of people, after which the country will return to the quarantine regime.

Thus, the dynamics of US inflation and the pessimistic statements of the Fed representatives put significant pressure on the dollar. But in the context of the EUR/USD pair, we can only talk about a correction so far. For further growth the bulls of the pair, firstly, it is necessary to consolidate above the level of 1.0850 (the middle line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on the daily chart), and secondly, to break through the level of 1.0890 (Tenkan-sen line on the same timeframe). In this case, it will be possible to consider long positions with the first upward target at 1.0950 (the upper line of the Bollinger Bands) and the second target at 1.1010 (the lower border of the Kumo cloud). If EUR/USD traders cannot settle above the level of 1.0850, they will fall back to the base of the eighth figure, with further testing of the seventh price level.

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