Technical Analysis of EUR/USD for May 20, 2020:

Technical Market Outlook:

The EUR/USD pair has broken through the level of 61% Fibonacci retracement at 1.0921 and rallied towards the level of 1.0951 which was the next technical resistance for bulls. The market has made a Doji candlestick at the top of the move at the level of 1.0976, just below the level of 1.0991. This level must be clearly violated in order to rally towards the swing high at 1.1017. The momentum is now strong and positive, but still no clear trend indication, but the larger time frame trend remains down.

Weekly Pivot Points:

WR3 - 1.0995

WR2 - 1.0945

WR1 - 1.0876

Weekly Pivot - 1.0824

WS1 - 1.0753

WS2 - 1.0693

WS3 - 1.0627

Trading Recommendations:

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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Indicator analysis. Daily review on GBP / USD for May 20, 2020

The pair traded upward on Tuesday and tested the support line 1.2269 (presented in a red bold line). Today, the price may continue to move up. Economic calendar news for the pound is expected at 13:30 UTC, and for the dollar at 14:30 and 18:00 UTC.

Trend analysis (Fig. 1).

Today, the upward trend is likely to continue from the level of 1.2252 (closing of yesterday's candle) with the target of 1.2293 - a 38.2% retracement level (presented in a red dotted line). If this level is reached, the upward movement is likely to continue with the next target of 1.2360 - 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 upwards with the target of 1.2360 - a 50.0% pullback level (presented in a red dashed line).

Another possible scenario is a downward trend from the resistance line 1.2275 (presented in a red bold line) with the target at the lower fractal 1.2077 (presented in a red dashed line).

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Fractal analysis of the main currency pairs on May 20

Forecast for May 20:

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: 1.1032, 1.1005, 1.0971, 1.0954, 1.0927, 1.0904 and 1.0877. Here, we are following the development of the ascending structure of May 14. The continuation of the upward movement is expected after the price passes the noise range 1.0954 - 1.0971. In this case, the target is 1.1005. For the potential value for the top, we consider the level of 1.1032. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is expected in the range of 1.0927 - 1.0904. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.0877. This level is a key support for the top.

The main trend is the upward structure of May 14

Trading recommendations:

Buy: 1.0971 Take profit: 1.1005

Buy: 1.1007 Take profit: 1.1030

Sell: 1.0925 Take profit: 1.0906

Sell: 1.0902 Take profit: 1.0878

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2414, 1.2361, 1.2325, 1.2272, 1.2226, 1.2192 and 1.2143. Here, we are following the formation of the initial conditions for the upward cycle of May 15. The continuation of the upward movement is expected after the breakdown of the level of 1.2272. In this case, the target is 1.2325. Short-term upward movement, as well as consolidation are in the range of 1.2325 - 1.2361. For the potential value for the upward movement, we consider the level of 1.2414. Upon reaching this level, we expect a downward pullback.

A short-term downward movement is possible in the range of 1.2226 - 1.2192. The breakdown of the last value will lead to an in-depth correction. Here, the target is 1.2143. This level is a key support for the top.

The main trend is the upward structure of May 15

Trading recommendations:

Buy: 1.2274 Take profit: 1.2325

Buy: 1.2327 Take profit: 1.2360

Sell: 1.2226 Take profit: 1.2194

Sell: 1.2190 Take profit: 1.2145

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9754, 0.9727, 0.9710, 0.9683, 0.9675, 0.9653, 0.9639 and 0.9617. Here, we are following the descending structure of May 14. The continuation of the downward movement is expected after the price passes the noise range 0.9683 - 0.9675. In this case, the target is 0.9653. Short-term downward movement, as well as consolidation are in the range of 0.9653 - 0.9639. For the potential value for the bottom, we consider the level of 0.9617. Upon reaching which, we expect an upward pullback.

A short-term upward movement is possible in the range of 0.9710 - 0.9727; hence, there is a high probability of a reversal and the subsequent development of a downward trend. The breakdown of the level of 0.9730 will lead to the formation of an upward structure. In this case, the potential target is 0.9754.

The main trend is the descending structure of May 14

Trading recommendations:

Buy : 0.9710 Take profit: 0.9725

Buy : 0.9730 Take profit: 0.9750

Sell: 0.9675 Take profit: 0.9655

Sell: 0.9650 Take profit: 0.9642

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For the dollar / yen pair, the key levels on the scale are : 108.43, 108.31, 108.09, 107.91, 107.67, 107.46 and 107.24. Here, we are following the development of the ascending structure of May 14. Short-term upward movement is expected in the range of 107.91 - 108.09. The breakdown of the last value should be accompanied by a pronounced upward movement. In this case, the target is 108.31. For the potential value for the top, we consider the level of 108.45. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 107.67 - 107.46. The breakdown of the latter level will lead to an in-depth correction. Here, the potential target is 107.24. This level is key support for the top.

The main trend: the upward structure of May 14

Trading recommendations:

Buy: 107.91 Take profit: 108.07

Buy : 108.11 Take profit: 108.30

Sell: 107.65 Take profit: 107.48

Sell: 107.44 Take profit: 107.25

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.4044, 1.4004, 1.3976, 1.3898, 1.3855, 1.3828, 1.3774 and 1.3732. Here, we are following the development of the descending structure of May 14. The continuation of the upward movement is expected after the breakdown of the level of 1.3898. In this case, the target is 1.3855. The price passing the noise range of 1.3855 - 1.3828 will lead to the development of pronounced movement. Here, the goal is 1.3774. For the potential value for the bottom, we consider the level of 1.3732, upon reaching which, we expect an upward pullback.

A short-term upward movement is possible in the range of 1.3976 - 1.4004. The breakdown of the latter level will lead to an in-depth correction. In this case, the target is 1.4044. This level is a key support for the downward structure.

The main trend is the downward cycle of May 14

Trading recommendations:

Buy: 1.3976 Take profit: 1.4002

Buy : 1.4006 Take profit: 1.4042

Sell: 1.3898 Take profit: 1.3855

Sell: 1.3828 Take profit: 1.3775

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6705, 0.6666, 0.6608, 0.6561, 0.6494, 0.6472, 0.6434 and 0.6401. Here, we are following the formation of the initial conditions for the upward cycle of May 15. The continuation of the upward movement is expected after the breakdown of the level of 0.6561. In this case, the target is 0.6608. Price consolidation is near this level. The breakdown of the level of 0.6608 will lead to the development of pronounced movement. Here, the goal is 0.6666. For the potential value for the top, we consider the level of 0.6705. Upon reaching which, we expect a downward pullback.

A short-term downward movement is possible in the range of 0.6514 - 0.6488. The breakdown of the latter level will lead to an in-depth correction. Here, the target is 0.6456. This level is a key support for the upward structure.

The main trend is the formation of initial conditions for the top of May 15

Trading recommendations:

Buy: 0.6561 Take profit: 0.6606

Buy: 0.6610 Take profit: 0.6666

Sell : 0.6514 Take profit : 0.6490

Sell: 0.6488 Take profit: 0.6456

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For the euro / yen pair, the key levels on the H1 scale are: 120.27, 119.86, 119.16, 118.68, 118.20, 117.51, 117.10 and 116.52. Here, we are following the development of the ascending structure of May 14. The continuation of the upward movement is expected after the breakdown of the level of 118.20. In this case, the goal is 118.68. The breakdown of which, in turn, will allow you to count on the movement to 119.16. Price consolidation is near this level. A pronounced upward movement is expected after the breakdown of 119.16. Here, the goal is 119.86. For the potential value for the top, we consider the level of 120.27. After which, we expect consolidation in the range of 119.86 - 120.27.

A short-term downward movement is possible in the range of 117.51 - 117.10. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 116.52. This level is a key support for the top.

The main trend is the formation of medium-term initial conditions for the top of May 14

Trading recommendations:

Buy: 118.20 Take profit: 118.66

Buy: 118.70 Take profit: 119.14

Sell: 117.50 Take profit: 117.15

Sell: 117.05 Take profit: 116.62

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For the pound / yen pair, the key levels on the H1 scale are : 134.28, 133.86, 133.16, 132.62, 131.90, 131.49 and 130.98. Here, we are following the development of the ascending structure of May 15. The continuation of the upward movement is expected after the breakdown of the level of 132.62. In this case, the target is 133.16. Price consolidation is near this level. The breakdown of the level of 133.16 should be accompanied by a pronounced upward movement. Here, the goal is 133.86. For the potential value for the top, we consider the level of 134.28, upon reaching which, we expect a downward pullback.

A short-term downward movement is possible in the range of 131.90 - 131.49. The breakdown of the latter value will lead to in-depth correction. Here, the target is 130.98. This level is a key support for the top.

The main trend is the upward structure of May 15

Trading recommendations:

Buy: 132.62 Take profit: 133.16

Buy: 133.18 Take profit: 133.86

Sell: 131.90 Take profit: 131.50

Sell: 131.47 Take profit: 131.00

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Reports of successful vaccine trials have sparked enthusiasm; Overview of CAD and JPY

The global markets experienced a surge of enthusiasm on Tuesday, which was based on a report on successful trials of a vaccine against the coronavirus of the American company, Moderna. Moreover, the positivity was supported by sharply higher oil prices, since any messages that can be interpreted as contributing to a way out of the global economy from a deep failure are expected to lead to an increase in consumption and a revival of trade.

At the same time, long-term expectations based on economic calculations do not give any reason for positive growth. The Congressional Budget Committee updated its economic forecasts to the end of 2021, from which it follows that the period of recovery from the recession will be lengthy and difficult.

According to the CBO, the unemployment rate in the third quarter will be 15.8%, but even by the end of the 4th quarter of 2021, only a part of the failure this spring can be compensated.

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The real production volume for the 4th quarter of 2021 is estimated to be 1.6% lower than in 2019. Interest rates will remain low and economic activity will remain low. CBO does not see any grounds for positive growth at this stage.

The comments of J. Powell and the Minister of Finance Mnuchin in front of the Senate Banking Committee did not have a noticeable effect on the market, both were cautious in their wording and did not essentially say anything new. Volatility can be added today by the publication of the minutes of the Fed meeting, for the time being it is necessary to proceed from the fact that there are few real reasons for the growth of enthusiasm, and you can try to use the growth of risky assets in the last two for sales from higher levels.

USD/CAD

Canadian markets were closed on Monday morning and in the absence of internal impulses, the loonie reacted mainly to external factors. At the same time, the economic situation in Canada remains stable, the failure in employment and real production turned out to be less deep than in the US, consumption has more solid reasons. An analysis of the dynamics of overdue credit cards shows that the share of overdue cards for 90 days (that is, before the pandemic) in the United States was 9 times higher than in Canada, and this gap is growing.

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A similar picture for mortgages - debt growth in Canada is lower than in the United States. This means that the failure of consumer activity is less deep, and the Canadian economy is more stable, even taking into account a strong drop in commodity prices.

The CFTC report for the Canadian dollar turned out to be neutral with a slight margin of negativity, the net short position grew by $ 9 million, but you need to pay attention to the fact that even under these conditions, the estimated price of USDCAD is slightly higher than the current one and has a downward trend. Perhaps, this is due to the fact that the real economic situation in Canada is better than in the US, and the way out of the crisis may turn out to be faster; therefore, investors keep the demand for Canadian assets at a relatively high level.

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The inflation report for April will be published today and on Thursday, the report on private employment from ADP. A sharp increase in USD/CAD should not be expected, even if sales of commodity currencies begin. The support zone 1.3845/65 to hold, and the decline to it can be used for purchases. Exiting from the consolidation zone is still early.

USD/JPY

The yen continues to trade in the range, the net long position on the CME increased last week, and the pullback of USD/JPY to the upper boundary of the range can be used for selling.

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The goal is the lower boundary of the range 105.80/106.

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Indicator analysis. Daily review on EUR / USD for May 20, 2020

The pair traded upward on Tuesday and almost tested 1.0983 - an 85.4% pullback level (presented in a blue dotted line) and after that, it went 52 points downwards. Today, the price may continue to move up. Economic calendar news for the euro is expected at 09:00 UTC, and for the dollar at 14:30 and 18:00 UTC.

Trend analysis (Fig. 1).

Today, the upward trend is likely to continue from the level of 1.0925 (closing of yesterday's candle) with the target of 1.0983 - an 85.4% retracement level (presented in a blue dashed line). From this level, the price may continue to move upward with the target at the upper fractal 1.1020 (presented in a blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, the price may continue to move upward with the target of 1.0983 - an 85.4% pullback level (presented in a blue dashed line).

Another possible scenario is a downward trend from 1.0983 - an 85.4% pullback level (presented in a blue dashed line) with the target of 1.0928 - a 23.6% pullback level (presented in a red dashed line).

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

EUR/USD. Powell's congressional speech and first criticism of Merkel's plan

The euro-dollar pair stayed within the ninth figure for the second day, although the bears made an attempt to counterattack yesterday, reducing the price to 1.0902. And yet, they failed to return the pair to its previous positions at the end of Tuesday, in the area of the price range of 1.0750-1.0890. This indicates that buyers are set for further price gains.

Yesterday, Federal Reserve Chairman Jerome Powell and US Treasury Secretary Steven Mnuchin addressed the Senate Banking Committee. The hearings were devoted to the fight against the negative consequences of the pandemic, the actions of the government and the Fed in the crisis. The rhetoric of the Fed chief made it possible for dollar bulls to stop the greenback's fall. At the same time, Powell was unable to turn the EUR/USD pair down: first, the theses he voiced were already familiar to the market, and secondly, the Fed chief was not so optimistic that the dollar felt confident in its abilities. By and large, traders were satisfied only by the fact that Powell did not raise the topic of negative rates. A few days before his speech to Congress, he already rejected this idea, calling on congressmen to simultaneously accept an additional package of anti-crisis assistance worth three trillion dollars. The house of representatives, controlled by Democrats, passed the bill – but Republicans and the White House criticized the document quite harshly. This means that the law will not be approved by the Senate, and, accordingly, will not be signed by Trump.

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Against the background of such events, the market has raised concerns about the Fed's further actions. After rejecting the idea of negative rates, Powell added that the regulator has "enough options in its arsenal to respond." But yesterday, the Fed chief outlined his next steps rather vaguely. According to him, the central bank is now "considering ways to help an additional number of borrowers." At the same time, the amount of funds issued at the moment is, according to Powell, "quite moderate". However, the regulator is exploring the possibility of providing additional funds to states with relatively small populations.

In other words, the Fed chief made it clear that the central bank is not ready to take active actions to ease monetary policy in the near future, despite the decline in key macroeconomic indicators. This relatively passive position provided support for the dollar, which, paired with the euro, was able to strengthen to the bottom of the ninth figure. However, this fundamental factor did not enable the dollar bulls to return to their previous positions, that is, to the area of the eighth figure. By and large, Powell did not say anything new, and in contrast to his vague wording about the Fed's future actions, he made it quite clear that the US economy will recover longer than previously expected. In particular, it allowed for an increase in unemployment to 25%, a decline in GDP by 20%-30%, and a significant decrease in economic activity. At the same time, he repeated the thesis that the economy's recovery may require additional government spending in excess of the three trillion already approved by Congress. This remark returned the US currency to a depressed state, given the hopeless prospects of the above-mentioned anti-crisis bill.

Thus, Powell did not fundamentally change the balance of power in the market: the greenback was still very vulnerable, especially against the background of a general decline in anti-risk sentiment.

In turn, the European currency still "lives on hopes". Let me remind you that Angela Merkel and Emmanuel Macron issued a joint statement, which states the need to create a fund for economic recovery in the European Union. They plan to borrow 500 billion euros for it, which will be given to lenders within 20 years. All 27 EU member states must support this initiative for this plan to become a reality. Ursula von der Leyen, head of the European Commission, has already called Merkel's idea "constructive", promising to develop a detailed plan for its implementation until May 27. ECB Chairman Christine Lagarde also supported the announced plan.

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However, some Northern European countries and Austria criticized Berlin's proposal. They emphasized that the funds under the proposal would be provided to the borrowing countries free of charge, and this would require increasing the contributions of member countries to the European budget. Representatives of the Netherlands, Sweden, Denmark and Austria were skeptical of this idea. Many EU countries have not yet announced their position on Merkel's plan, so the situation is in limbo. As some experts suggest, the EU leadership may "sweeten the pill" with the decision to lift restrictions on the budget debt of both EU member states and the European Commission. However, such proposals are still at the stage of backstage rumors. All this suggests that the future prospects of the euro will depend on the viability of Merkel's plan.

From a technical standpoint, bulls came close to the resistance level of 1.0950 – the lower border of the cloud Kumo coincident with the upper line of Bollinger Bands indicator on the daily chart, and it is the middle line of the Bollinger Bands indicator on the weekly chart. If buyers are above this target, they will be able to expect growth to the next resistance level, which corresponds to the 1.1060 level – this is the upper limit of the Kumo cloud on the daily chart, and the Kijun-sen line – on the weekly one. In other words, the pair's priority remains with the upward movement, but purchases can be considered when consolidating above 1.0950.

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GBP/USD intraday high and low for May 20, 2020

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Today's high and low from the Central Bank Dealer Range (CBDR) usually form at STDV 2-STDV 4 in the normal condition market. However, sometimes it can reach the STDV 5-STDV 6. Here's are today's levels:

STDV 10 - 1.2505.

STDV 9 - 1.2481.

STDV 8 - 1.2457.

STDV 7 - 1.2433.

STDV 6 - 1.2409.

STDV 5 - 1.2385.

STDV 4 - 1.2361.

STDV 3 - 1.2337.

STDV 2 - 1.2313.

STDV 1 - 1.2289.

CBDR - 1.2265.

==================

CBDR - 1.2241.

STDV 1 - 1.2217.

STDV 2 - 1.2193.

STDV 3 - 1.2169.

STDV 4 - 1.2145.

STDV 5 - 1.2121.

STDV 6 - 1.2097.

STDV 7 - 1.2073.

STDV 8 - 1.2049.

STDV 9 - 1.2025.

STDV 10 - 1.2001.

Pay attention to the level between today's & yesterday range at 1.2457, 1.2336, 1.2098 & the previous day high 1.2268 with the previous day low 1.2183. All these levels can be a potential turning point.

(Disclaimer)

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Elliott wave analysis of GBP/JPY for May 20, 2020

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GBP/JPY broke out of the falling channel to the upside, missing our forecast. However, a break above short-term key resistance at 133.19 will indicate an upward trend. If it comes true, we should expect a rise in wave iii towards at least 141.05 and more likely an extended rally closer to the 161.8% extension of a wave i at 148.32 in wave iii.

Only a break back below 129.63 will reconfirm our preferred bearish outlook. Now we must wait for a clear movement of the pair to decide which of the two scenarios is the correct one. The pair may break below 129.63 or above key resistance at 133.19.

R3: 133.67

R2: 133.19

R1: 132.53

Pivot: 132.05

S1: 131.73

S2: 131.46

S3: 130.76

Trading recommendation:

Our stop at 131.50 was hit for a small 38 pips gain. We will have to await a clear trade signal before re-entering this cross.

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Elliott wave analysis of EUR/JPY for May 20, 2020

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EUR/JPY has finally rallied. The pair may reach the 161.8% target for wave iii/ at 119.31. in the short-term, we will see some GO-Stop action in play as the final waves four and five sub-waves will complete wave iii/ at 119.31.

Short-term support is seen in the 117.37 - 117.48 support-zone which is expected to protect the downside for the next push higher to 119.31.

R3: 119.31

R2: 119.00

R1: 118.67

Pivot: 118.20

S1: 117.80

S2: 117.48

S3: 117.24

Trading recommendation:

We are long EUR from 115.65 and we will move our stop higher to 116.00

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GBP/USD: plan for the European session on May 20 (analysis of yesterday's trade). Pressure on the pound could return after

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

Nothing interesting happened for the pound yesterday afternoon. Buyers tried to go above the day's high in the area of 1.2260, but it did not lead to anything good. Today, the entire focus in the first half of the day will be shifted to inflation in the UK, as well as to the Bank of England's monetary policy report and the speech of Governor Andrew Bailey. Statements about the expansion of the bond repurchase program may indicate pressure on the pound, so it is best to open long positions in the support area of 1.2237 only after forming a false breakout there. Larger buyers will wait for a downward correction of the pound to the support area of 1.2185, as well as a test of the low of 1.2122, from where you can open long positions immediately on the rebound while expecting a correction of 30-40 points within the day. The bulls will also try to build the lower boundary of the new ascending channel from this area. If buyers do not hesitate and achieve a breakthrough of resistance 1.2291, and also gain a foothold on it, an upward correction in GBP/USD will result in an update of the highs of 1.2336 and 1.2370, where I recommend taking profits.

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

Sellers will count on weak inflation and the pound's return to the support level of 1.2237, consolidating below this range will raise pressure on the pair and lead to the demolition of stop orders of bulls with a further return to the low of 1.2185, where I recommend taking profits. The long-term goal of sellers will be to support 1.2122, but the movement in this range will depend directly on the statements made by the Bank of England Governor Andrew Bailey. In the scenario of GBP/USD growth in the first half of the day, and the absence of a false breakout along with active sales at the resistance of 1.2291, it is best to abandon short positions in the pair before the test of larger highs in the area of 1.2336, or sell immediately on the rebound from the resistance of 1.23709, which coincides with the high on May 12.

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Signals of indicators:

Moving averages

Trading is above 30 and 50 moving averages, which indicates the continuation of the bull 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 break of the lower border of the indicator in the region of 1.2237 will increase pressure on the pound. A break of the upper border at 1.2275 may trigger new purchases.

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 20 (analysis of yesterday's trade). Speeches by the Fed Chairman and US Treasury

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

Yesterday, I paid attention to short positions from the 1.0972 resistance, and if you carefully look at my forecast for the US session and the 5-minute chart, you can see that the test of the 1.0972 level turned into a wave of euro decline following the speech of Federal Reserve Chairman Jerome Powell, who expressed concerns about the pace of recovery of the US economy. The bulls tried to buy from the 1.0923 level several times, but this did not lead to a rapid upward movement. At the moment, the entire focus is on this range, since forming a false breakout there will be a signal to open long positions in the euro. It is important to note that in general, as long as trading is conducted above this range, we can expect a second wave of growth of EUR/USD in the area of yesterday's high. But bulls imperatively need to break through and consolidate above the resistance of 1.0972, which will open a direct path to new levels in the area of 1.1013 and 1.093, where I recommend taking profits. If the pressure on the euro gradually returns, and it will happen immediately after the break of 1.0923, which repeatedly rescued buyers yesterday, then it is best to open long positions after the downward correction in the area of the low of 1.0890, or just on the rebound from support 1.0855 with a growth target of 30-35 points within the day.

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

Important reports will be released today, this includes eurozone inflation, as well as the minutes of the April meeting of the Federal Reserve, which may negatively affect the European currency. Therefore, the main task of the bears for the first half of the day will be to return and consolidate EUR/USD below the 1.0923 level, since only then can we talk about the resumption of pressure, which will push the pair to the lows of 1.0890 and 1.0855, where I recommend taking profits. Also, sellers should not forget about protecting the 1.0972 resistance, but now I recommend opening short positions from there only after forming a false breakout, since the bulls could once again attempt to continue the upward correction after the data on inflation and other less important fundamental statistics for the eurozone are released. If you grow above the resistance of 1.0972, it is best to abandon short positions before updating the larger high of 1.1013, or sell the euro immediately on the rebound from the resistance of 1.093, in the expectation of a correction of 30-40 points within the day.

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Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which indicates a slowing of the bullish momentum.

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 region of 1.0920 will increase pressure on the euro, which will lead to another wave of decline in the pair. A break of the upper border of the indicator in the region of 1.0965, on the contrary, will lead to a new wave of euro growth.

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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Forecast for EUR/USD on May 20, 2020

EUR/USD

On Tuesday, investors continued to work on the news regarding the creation of a European anti-crisis fund worth 500 billion euros, and in addition to this, weak data on US construction provided the euro with support. The volume of construction of new houses in April reached 0.891 million against expectations of 0.927 million and 1.276 million in March. The volume of construction in the eurozone showed a contraction of 14.15% in March, while in the March reduction was 18.6% in the US. At the same time, the eurozone economic sentiment index for the current month increased from 25.2 to 46.0. We will see the US' response when the PMI for May will be released tomorrow.

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The euro has almost reached the upper limit of the 1.5-month trading range on the daily chart, the price is slightly above the price channel line this morning. The Marlin oscillator is in the growth zone. According to the main technical features, the euro is aiming to attack the upper border of the trading range of 1.0995 in order to try to reach the price channel line at 1.1140, but this idea may be misleading. Sand-colored ovals mark the price exits above the MACD indicator line, after which the price returned. The same pattern is being formed at the moment, and as with previous cases, with the output of the oscillator signal line to the growth zone.

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The situation is completely upward on the four-hour chart. We are waiting for the development of events.

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Forecast for AUD/USD on May 20, 2020

AUD/USD

The Australian dollar has been in a favorable environment for growth in recent days - commodities are getting more expensive and the Chinese economy is showing expansion. Unless, of course, a new episode of the trade war with the United States does not hinder it. Copper adds 0.33%, silver 1.27%, oil 0.64%, iron ore 1.42%.

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The price has consolidated above the price channel line on the daily chart, the signal line of the Marlin oscillator moves up after a reversal from the zero neutral line. The 0.6677 target is open.

The main danger to growth is the potential double divergence on the Marlin oscillator. But you just need to use yesterday's move for this price.

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The price is trying to overcome the signal level of 0.6562 on the four-hour chart for the second time, and there are no visible signs that it will fail.

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Forecast for USD/JPY on May 20, 2020

USD/JPY

The USD/JPY pair grew by 76 points yesterday, probably in an attempt to fulfill the initial growth target of 108.30. The attempt failed since sufficient external conditions were needed for this, while the US stock market lost 1.05% (S&P 500). There are hopes for growth today, since Asian indices are growing, except for Chinese ones: Nikkei 225 0.71%, Kospi SEU 0.41%. The Chinese China A50 index is losing 0.32%.

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The price is above the trend line of the price channel on the daily chart, while Marlin is growing in the zone of positive values.

The price has consolidated above the signal level of 107.78 on the four-hour chart, while Marlin is also in the growing trend zone. We expect growth to 109.50 (peak of November 7, 2019) if the price consolidates above the first target level of 108.30.

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AUDJPY close to ascending channel resistance and broke below trendline support

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Trading Recommendation

Entry: 70.777

Reason for Entry: Ascending trendline resistance

Take Profit : 69.535

Reason for Take Profit: Graphical overlap, 61.8% Fibonacci retracement

Stop Loss: 71.214

Reason for Stop loss: Ascending channel resistance, 100% Fibonacci extension

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USDJPY seeing potential for further upside!

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Trading Recommendation

Entry: 107.435

Reason for Entry: 50% fibonacci retracement, horizontal pullback support

Take Profit: 108.107

Reason for Take Profit: horizontal swing high resistance, 50% fibonacci retracement

Stop Loss: 106.987

Reason for Stop loss: 78.6% fibonacci retracement

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Control zones of USDCHF on 05/20/20

Work within the medium-term accumulation zone continues to be the main one. A favorable price for selling the instrument was received yesterday, as the pair tested the WCZ 1/2 0.9773-0.9755. It is possible to retain sales up to WCZ 1/2 0.9614-0.9597, which will enable you to obtain a favorable risk-to-profit ratio.

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It is important to understand that work within the framework of the flat requires you to partially consolidate the position during tests of weekly and monthly extremes and quickly transfer positions to breakeven.

An alternative growth option can only be considered if today's trading closes above the 0.9773 level. This will allow you to enter a long position before the end of the current week. Purchases from current marks are not profitable.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Control zones for USD/JPY on 05/20/20

The pair is re-testing WCZ 1/2 108.02-107.83 today. This makes it possible to consider selling the instrument from current levels. If today's trading closes below the specified zone, this will confirm the resumption of the bearish medium-term model.

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The fall will initially aim for the monthly low, which will enable you to get a very favorable risk-to-profit ratio when selling from current levels.

An alternative model will develop if today's trading closes above the WCZ 1/2. This will open the way for the pair to grow and cancel the bearish pattern. The growth target will be the weekly control zone of 110.11-109.72, which coincides with the zone of the average weekly move.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Control zones for USDCAD on 05/20/20

Work in the downward direction is the main one in the second half of this week. Yesterday's consolidation below WCZ 1/2 1.3988-1.3972 makes it possible for you to open sales of the instrument. The fall is aiming for the weekly control zone of 1.3837-1.3808. It is important to understand that there were two non-working priority models in the current month, which significantly increases the probability of testing the target zone.

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Work in the downward direction will enable you to take part of the position when the weekly control zone is undergoing a test, and transfer the rest to breakeven.

When selling a tool, it is necessary to take into account that there is the upper limit of the monthly control zone in May at the 1.3825 level. Its test may be the main obstacle to strengthening the Canadian dollar. When testing this mark within the current month, you can completely close all sales and expect a reversal pattern.

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Daily CZ - daily control zone. The area formed by important data from the futures market, which changes several times a year.

Weekly CZ - weekly control zone. The zone formed by important marks of the futures market, which changes several times a year.

Monthly CZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

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Hot forecast and intraday trading signals for the GBP/USD pair for May 20. COT report. Bulls need to confidently overcome

GBP/USD 1H

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The upward movement continued on the hourly chart for the pound/dollar pair on May 19, but within the downward channel. Traders managed to overcome the resistance area of 1.2196-1.2216 by the end of the second trading day of the week, and also work out the upper line of the downward channel. One can even conclude that the pair has consolidated above the descending channel, which currently means a change in the trend. However, so far the bulls are not able to continue moving up, so we recommend not rushing with purchases of the British currency. Perhaps a rebound will still be made from the top line of the downward channel.

GBP/USD 15M

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Two linear regression channels show a rather strong upward movement on the 15-minute timeframe. Thus, there are no signs of ending the upward movement in the short term. Quotes of the pair consolidated above the moving midline and show a willingness to continue moving up.

COT report.

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The latest COT report for May 12 shows that the total number of buy and sell transactions among large traders per week increased by 4,000, mainly due to purchases. However, the total number of transactions for the purchase remains only 16,000 more than transactions for selling. And such an imbalance persists for a long period of time, and it was not enough for the pair to begin forming an upward trend. In the reporting week, professional traders opened more new deals for selling (4539), which means that most of them are waiting for the British currency to fall again.

The fundamental background remains sharply negative for the British pound. We believe that the British economy as a result of the coronavirus pandemic will lose significantly more than the American one, since the "divorce" process with the European Union continues on Great Britain and the parties to the negotiation process cannot agree on the terms of a comprehensive agreement on which they would have to live, coexist and trade with each other after January 31 of the current year. It is not known why Boris Johnson, in spite of the pandemic, is so tough on his position about refusing to postpone the transition period, but the fact remains. Most likely, in 2021, the UK and the EU will trade under the terms of the WTO. An inflation report will be published in Britain today, but we believe that it will have no effect on the pound/dollar.

We have two main options for the development of the event on May 20:

1) The initiative for the pound/dollar pair remains in the hands of the bears, as the price could not clearly indicate its intention to leave the downward channel on the hourly timeframe. Thus, we recommend buying the British pound no earlier than consolidating the price above the Senkou Span B line at 1.2323 and the resistance level of 1.2325 with the first target as the resistance area of 1.2404-1.2422. The next goal, in case of overcoming the area, is the 1.2550 level. Take profit will be about 75 points in the first case and 120 points in the second.

2) Sellers currently have great chances to implement their trading ideas. It will be enough to return the price to the area below the Kijun-sen line and the 1.2196-1.2216 area to resume the pair's sales with the target of the support level of 1.1987. In this case, take profit will be about 190 points.

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Hot forecast and intraday trading signals for the EUR/USD pair for May 20. COT report. Bears are ready to push and return

EUR/USD 1H

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The EUR/USD pair continued to move upward on the hourly timeframe yesterday and worked out a new downward trend line based on the highs of March 27 and May 1. The closing quotes were not accurate, however, the pair could not continue to move up. Thus, now there is a rather high probability that a downward reversal will be made and a new round of downward movement to a long-term upward trend line will begin. We also recall that, in general, the euro/dollar continues to trade inside the 1.0750-1.0990 channel, so we can also assume that the downward movement has been completed near the top line of this side channel. Bulls do not yet have the necessary strength and desire to continue forming a new upward trend.

EUR/USD 15M

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We see a confident upward trend that has formed on the 15-minute timeframe in recent days. However, the lowest linear regression channel unfolds slowly downward, which means that the upward momentum could already be exhausted. Turning the minor channel down will indicate that an upward trend in the short term has been completed and is some way a confirmation of the rebound from the trend line on the hourly chart.

COT report

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The latest COT report dated May 12 showed a new decrease in the number of buy and sell transactions among large traders, by 4,781 and by 3,554. Thus, the general mood of large traders remains bullish (the total number of purchase transactions is higher, 549,000-521,000), in addition to this, traders still managed to stay above the trend line on the 4-hour timeframe. Also, purchase positions among entities engaged in professional activities in the foreign exchange market have increased (+4569 purchase transactions). Thus, the euro can continue the growth process for some time.

As for the fundamental background, it is almost neutral now for the EUR/USD pair. There is still a lot of news coming from both the European Union and the US, however, both countries are in more or less the same position, neither the dollar nor the euro has advantages. Yesterday, for example, US Treasury Secretary Stephen Mnuchin and Federal Reserve Chairman Jerome Powell spoke, but they did not tell the markets anything new and interesting. The macroeconomic background continues to be largely ignored by traders, as both economies are simultaneously declining due to the coronavirus epidemic. Today we recommend that you pay attention to the EU inflation report (low probability of its development), as well as the publication of the minutes of the last meeting of the US Federal Reserve Open Market Committee (also a low probability of market reaction to this event).

Based on the foregoing, we have two trading ideas for May 20:

1) It is possible for the pair's quotes to continue growing if the downward trend on the hourly chart and the resistance level of 1.0952 are overcome. This will mean that the pair can test the levels of 1,0990 and 1,1008, which can also be considered with some stretch in the area of the upper line of the side channel. We do not yet expect the pair to grow above the psychological level of $1.10. The potential to take profit is about 35 and 50 points.

2) The second option - bearish - is more likely. According to the option, it is already possible to sell the euro, since the quotes have already rebounded off the downward trend line and the resistance level. Of course, do not forget about the Stop Loss in case the bulls still continue to exert pressure on the US currency. However, a decline to the Senkou Span B line - 1.0893 is now very likely. And overcoming this line, the Kijun-sen line and the support area of 1.0880-1.0893 will allow you to open new lower positions with the target of 1.0810 (upward trend line). The potential to take profit while exerting this scenario will be 30 and 70 points.

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Overview of the GBP/USD pair. May 20. Jerome Powell and Steven Mnuchin fear a prolonged "lockdown" and call on the government

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: 83.1255

The British pound continued its upward movement on the second trading day of the week and continues it at the beginning of the third trading day. Thus, market participants continue to look favorably towards the British currency, but most likely, things are exactly the opposite. This demand for the US currency has decreased in recent days, so we are seeing a banal upward correction. We have repeatedly said that in the context of the global crisis, all countries are experiencing serious problems with the economy. However, in the UK, these problems are multiplied by questions related to Brexit and the lack of trade deals with the US and the European Union. Therefore, in the long term, we expect that the downward trend that began in 2014 will continue.

Last night, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin addressed the US Congress, naturally in the format of a video conference. We already said the day before that both of these speeches are unlikely to cause a serious market reaction since the main theses of both economists has already been repeatedly expressed. In the context of another and at the same time the strongest crisis since the Great Depression, Mnuchin and Powell generally speak very often, so market participants do not have to guess what actions their agencies are preparing to take. Steven Mnuchin at a speech before the banking committee said that the US will come out stronger after the crisis. He said that the Ministry of Finance has already provided about $ 250 billion to all those in need. However, Mnuchin believes that the threat of irreparable damage increases the longer the "lockdown" continues. Jerome Powell, in his part of the conference, said that the Ministry of Finance and the Federal Reserve should do more to help the economy. Powell has previously called on Congress to approve new aid packages, as the current ones are not enough. However, Republicans and Democrats once again quarreled and so far failed to push a 3-trillion-dollar package of financial assistance through Congress. "The feeling that the economic recovery may be slower than we would like is growing. This means that we need to do more," Powell said. The head of the Federal Reserve also noted that in a crisis, support for the unemployed is a key focus of the government and relevant agencies. "The authorities have taken large-scale measures, but it is not clear whether this is enough to stabilize the economic situation," Powell concluded. Thus, both of the country's top economists said they would do everything in their power and called for more funding for the hard-hit American economy. Nothing new.

At the same time, the US President again attacked the World Health Organization. This time, Donald Trump threatened to leave the organization in a month. Trump still believes that the WHO helped China hide real information about the "coronavirus" pandemic. The US leader again quotes statements from WHO representatives who approve the official position of the Chinese authorities that the COVID-2019 virus is not transmitted from person to person. However, according to Trump, at that time other information was already available that was opposite in meaning. In addition, the American leader is infuriated by the fact that the WHO criticized the United States for excessive border closures for Chinese visitors at a time when China itself has already been declared a strict quarantine. On March 3, WHO stated that "COVID-2019 is not spreading as effectively as flu". Thus, the head of the White House believes that the WHO, along with the PRC, is responsible for the fact that the epidemic has spread throughout the world. The US leader said that if within the next month WHO does not demonstrate detachment from China and reorganization in its work, the US will completely stop funding and consider withdrawing from this organization. "I cannot allow American taxpayers' money to continue to fund an organization that obviously does not serve America's interests," Trump concluded.

Today, the UK is scheduled to publish the consumer price index for April. As in the case of the Eurozone, we believe that this report will not have a strong impact on the mood of traders. However, in annual terms, inflation may slow down to 0.9%, and in monthly terms, it may reach -0.1%. Late in the evening, the minutes of the last meeting of the US Federal Reserve will be published. We remind you that no important decisions were made during this meeting. Therefore, the protocol itself is most likely not to be interesting. Moreover, in the past three days, Jerome Powell has spoken three times, and once - Steven Mnuchin. Markets already have all the necessary information about possible actions of the US government, the Treasury Department, and the Fed. Thus, we believe that traders will not learn anything new and interesting from this protocol.

From a technical point of view, the pound/dollar pair left the 400-point wide consolidation channel. However, on the 4-hour timeframe, the pair was fixed above the critical line on the Ichimoku indicator and above the moving average line on the "linear regression channels" trading system. Thus, the trend has already changed to an upward one. Therefore, a new upward trend may begin to form, but we are still inclined to the option with strong multidirectional movements.

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The average volatility of the GBP/USD pair remains stable and currently stands at 117 points. On Wednesday, May 20, thus, we expect movement within the channel, limited by the levels of 1.2130 and 1.2364. A downward turn of the Heiken Ashi indicator will indicate a possible resumption of the downward trend or a round of downward correction against the newly formed upward trend.

Nearest support levels:

S1 – 1.2207

S2 – 1.2146

S3 – 1.2085

Nearest resistance levels:

R1 – 1.2268

R2 – 1.2329

R3 – 1.2390

Trading recommendations:

The GBP/USD pair continues its upward movement on the 4-hour timeframe. Thus, it is now recommended to trade the pound/dollar pair for an increase with the goals of 1.2329 and 1.2364 before the Heiken Ashi indicator turns down. It is recommended to sell the pound/dollar pair again not before fixing the price below the moving average with the first goals of 1.2146 and 1.2130.

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Overview of the EUR/USD pair. May 20. Sweden, the Netherlands, Austria, and Denmark oppose the plan of Angela Merkel and

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - downward.

Lower linear regression channel: direction - sideways.

Moving average (20; smoothed) - upward.

CCI: 126.7690

On May 20, the euro/dollar currency pair starts with the quotes moving away from the upper border of the side channel, which we have been writing about tirelessly in recent weeks. Just in case, we remind you again: the euro/dollar pair has been trading exclusively within the channel of 1.0750-1.0990 in recent weeks. At the same time, both its borders are fuzzy, that is, reversals occur not only when working out the levels of 1.0750 or 1.0990, but also on the approach to these price values. For example, yesterday everything happened like this. The pair managed to grow to the level of 1.0976 during the day, but it did not have enough strength for more. Although there were enough events in the world in the first two trading days of the week, we believe that they did not have any impact on the movement of the currency pair. And still, market participants traded, paying more attention to technical factors, rather than to the "foundation". In favor of this, the technical factors themselves are banal, which signaled in favor of the growth of quotes to 1.0990 with an unsuccessful attempt to overcome 1.0750. Also, both the pound and the euro were growing synchronously, so if you put the "foundation" as the reason for these movements, it should have come from the United States. And in the United States, just on Monday and Tuesday, there were no macroeconomic publications. There were only regular portions of comments from Donald Trump on all sorts of topics, as well as speeches by Jerome Powell, which, however, did not surprise anyone, since their content was already known to everyone for a long time.

The key theme of the first two trading days of the week was, of course, the proposal by France and Germany to create a recovery fund to support the European economy and provide assistance to the states most affected by the "coronavirus". Many experts and analysts have written about this topic, but we would like to discuss it in more detail. The first thing we would like to note is that this is just a proposal by Emmanuel Macron and Angela Merkel. This is not a decision yet. Thus, like any proposal in the EU, it requires the approval of all 27 member states of the Alliance. Recall that the essence of the proposal of Macron and Merkel is to create a 500-billion fund at the expense of contributions from each EU member state, and give grants to the most affected countries and sectors of the economy. But everyone will have to "chip in". In other words, Italy, Spain, and Portugal will also have to spend several tens of billions of euros to this fund, from which they will then receive gratuitous grants. Initially, many thought that Germany and France intended to finance aid to the southern countries. However, there is nothing so generous and extraordinary in the offer of Paris and Berlin. Berlin, like many other Northern capitals, opposed any assistance to the "southerners", especially on a gratuitous basis. The northerners' position is simple. Southern countries should learn to budget and save more, so as not to ask for help later. However, even though this position is not devoid of logic, Berlin and Paris understand that without the help of the European Union, it can split. Why should Italy continue to stay in the EU if it does not receive any help from the EU when the crisis comes? We have already said that anti-European sentiment is maturing in Italy so that it could end up with a new independence referendum in a few years. Thus, the two largest EU economies have decided that it is better to help everyone with money now and preserve the integrity of the European Union than to lose one or more of its members later. At the same time, as we already understood, not only Paris and Berlin but all EU members will be "thrown off". It is assumed that the contributions to the fund will be determined by the size of the country and the size of its economy. "We are convinced that this is not only fair but also necessary. We must act to get out of the crisis normally," Angela Merkel said in a video of the press conference. French President Macron agreed with his counterpart and said that "at the beginning of the epidemic, the EU did not show solidarity." He also said that assistance would be provided in the form of grants, rather than loans that will need to be returned. However, it is already known that not all EU countries support the generosity of rich France and Germany. For example, Austria, the Netherlands, Denmark, and Sweden have already said that they are ready to help victims of the epidemic, but not with grants, but with loans. The Netherlands even pays special attention to the moral aspect of the issue: countries that failed to properly prepare financially for an emergency will receive money that will not need to be returned. Many believe that with this approach, Rome, Madrid, and Lisbon will learn nothing and will assume that in each crisis they will be saved by other EU countries at their own expense.

Thus, from our point of view, this Fund can also be buried in the archives of the EU, as well as the idea with "corona bond". Moreover, 500 billion is not such a big amount, it may not be enough for everyone in need. Moreover, the discussion of this proposal should begin no earlier than June. Thus, firstly, this event is not soon, and secondly, it is still "written with a pitchfork on water".

Based on all the above, we do not believe that this event could support the euro currency. Moreover, we believe that the pair may continue to trade in a narrow side channel of 1.0750-1.0990, respectively, in the coming days, the quotes may resume falling. Thus, technical factors remain in the first place for analyzing and predicting the movement of the euro/dollar pair. We can expect the continuation of the upward movement only when traders break the upper limit of the channel, that is, the area of the $ 1.10 level.

Today, the European Union is scheduled to publish the consumer price index for April, but we believe that this indicator will not cause any interest among traders. The forecast is 0.4% in annual terms and 0.3% in monthly terms. In the context of a pandemic, inflation is not an important or significant indicator.

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The average volatility of the euro/dollar currency pair as of May 20 is 80 points. Thus, the value of the indicator remains stable and is characterized as "average", despite a fairly active Monday. Today, we expect quotes to move between the levels of 1.0850 and 1.1010. The reversal of the Heiken Ashi indicator downwards may signal a turn of the downward movement within the channel of 1.0750-1.0990.

Nearest support levels:

S1 – 1.0925

S2 – 1.0864

S3 – 1.0803

Nearest resistance levels:

R1 – 1.0986

R2 – 1.1047

R3 – 1.1108

Trading recommendations:

The EUR/USD pair is fixed above the moving average line, so buy orders with targets near the level of 1.0990 are relevant now. The reversal of the Heiken Ashi indicator downwards indicates not just a round of corrective movement, but a round of downward movement within the side channel of 1.0750-1.0990. Thus, it is now possible to consider selling the pair with the goal of 1.0750 and buying only above the level of 1.1000 with the goals of 1.1047 and 1.1108.

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