Fractal analysis of the main currency pairs on May 25

Forecast for May 25:

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: 1.1009, 1.0961, 1.0935, 1.0912, 1.0876, 1.0836, 1.0789 and 1.0756. Here, the price registered the expressed potential for the downward movement of May 21. The continuation of the downward movement is expected after the breakdown of the level of 1.0876. In this case, the target is 1.0836. Price consolidation is near this level. The breakdown of the level of 1.0836 will lead to a pronounced movement. Here, the target is 1.0789. For the potential value for the bottom, we consider the level of 1.0756. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is expected in the range of 1.0912 - 1.0935. The breakdown of the last level will lead to an in-depth correction. Here, the target is 1.0961. This level is a key support for the downward structure.

The main trend is the formation of potential for the bottom of May 21

Trading recommendations:

Buy: 1.0912 Take profit: 1.0933

Buy: 1.0936 Take profit: 1.0960

Sell: 1.0874 Take profit: 1.0840

Sell: 1.0834 Take profit: 1.0790

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For the pound / dollar pair, the key levels on the H1 scale are: 1.2361, 1.2297, 1.2241, 1.2208, 1.2143, 1.2101 and 1.2069. Here, the price entered an equilibrium state: the upward structure from May 15, as well as the downward structure from May 19. The development of the downward movement is expected after the breakdown of the level of 1.2143. In this case, the first goal is 1.2101. For the potential value for the bottom, we consider the level of 1.2069. Upon reaching which, we expect consolidation, as well as an upward pullback.

A short-term upward movement is possible in the range of 1.2208 - 1.2241. The breakdown of the last level will lead to the formation of an ascending structure. Here, the first potential target is 1.2297. We expect the formation of local initial conditions to this level.

The main trend is the ascending structure of May 15 and the descending structure of May 19

Trading recommendations:

Buy: 1.2208 Take profit: 1.2240

Buy: 1.2244 Take profit: 1.2295

Sell: 1.2140 Take profit: 1.2103

Sell: 1.2100 Take profit: 1.2070

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9806, 0.9782, 0.9762, 0.9734, 0.9724, 0.9702, 0.9689 and 0.9672. Here, the price registered a pronounced upward potential from May 20. The continuation of the upward movement is expected after the price passes the noise range 0.9724 - 0.9734. In this case, the target is 0.9762. Short-term upward movement, as well as consolidation are in the range of 0.9762 - 0.9782. For the potential value for the top, we consider the level of 0.9806. We expect a downward pullback upon reaching this level.

Short-term downward movement is possible in the range of 0.9702 - 0.9689. The breakdown of the last level will lead to an in-depth correction. Here, the potential target is 0.9672. This level is a key support for the top.

The main trend is the upward structure of May 20

Trading recommendations:

Buy : 0.9734 Take profit: 0.9760

Buy : 0.9764 Take profit: 0.9780

Sell: 0.9702 Take profit: 0.9690

Sell: 0.9687 Take profit: 0.9674

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For the dollar / yen pair, the key levels on the scale are : 108.43, 108.31, 108.09, 107.91, 107.46, 107.24 and 106.77. Here, we are following the development of the upward structure from May 14. At the moment, the price is in the correction zone and has formed a pronounced potential for the downward movement from May 19. Short-term upward movement is expected in the range of 107.91 - 108.09. The breakdown of the last level 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 107.46 - 107.24. The breakdown of the last level will lead to the development of a downward structure from May 19. In this case, the potential target is 106.77.

The main trend: the upward structure of May 14, the correction stage

Trading recommendations:

Buy: 107.91 Take profit: 108.07

Buy : 108.11 Take profit: 108.30

Sell: 107.44 Take profit: 107.25

Sell: 107.20 Take profit: 106.80

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.4170, 1.4134, 1.4073, 1.4029, 1.3979, 1.3942, 1.3900 and 1.3863. Here, the price forms the potential for the upward movement of May 19. The continuation of the upward movement is expected after the breakdown of the level of 1.4029. In this case, the target is 1.4073. Price consolidation is near this level. The breakdown of the level of 1.4073 will lead to the development of a pronounced upward movement. In this case, the target is 1.4134. For the potential value for the top, we consider the level of 1.4170. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 1.3979 - 1.3942. The breakdown of the last level will lead to an in-depth correction. In this case, the target is 1.3900. This level is a key support for the upward structure and its breakdown will lead to the cancellation of this trend. Here, the first goal is 1.3863.

The main trend is the upward structure of May 19

Trading recommendations:

Buy: 1.4030 Take profit: 1.4070

Buy : 1.4075 Take profit: 1.4134

Sell: 1.3979 Take profit: 1.3944

Sell: 1.3940 Take profit: 1.3900

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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, 0.6514, 0.6488, and 0.6456. 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 upward structure 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, 118.57, 117.93, 117.59, 116.96, 116.39, 115.81 and 115.32. Here, we are following the development of the upward structure from May 14. At the moment, the price is in deep correction and has developed the potential for a downward movement from May 21. The continuation of the downward movement is expected after the breakdown of the level of 116.96. In this case, the target is 116.61. Price consolidation is near this level. The price passing the noise range of 116.61 - 116.39 will lead to a pronounced downward movement. Here, the target is 115.81. For the potential value for the bottom, we consider the level of 115.32, Upon reaching which, we expect an upward pullback.

A short-term upward movement is possible in the range of 117.59 - 117.93. The breakdown of the last level will have a further development of the upward trend. Here, the first goal is 118.57. We expect the formation of a local structure to this level, and it is also a key resistance for the subsequent development of the upward trend.

The main trend is the upward structure of May 14, the correction stage

Trading recommendations:

Buy: 117.60 Take profit: 117.90

Buy: 117.96 Take profit: 118.55

Sell: 116.94 Take profit: 116.61

Sell: 116.37 Take profit: 115.81

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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, 132.13, 131.49, 130.98 and 130.40. Here, we are following the development of the ascending structure of May 15. At the moment, the price is in the correction zone. The continuation of the upward movement is expected after the breakdown of the level of 132.13. In this case, the first goal is 132.62. The breakdown of which, in turn, will allow us to count on moving to 133.16. The price consolidation is near this leve. 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 130.98 - 130.40. The breakdown of the last level will have the downward trend. Here, the potential target is 129.24.

The main trend is the upward structure of May 15, the stage of deep correction

Trading recommendations:

Buy: 132.13 Take profit: 132.60

Buy: 132.64 Take profit: 131.12

Sell: 130.96 Take profit: 130.44

Sell: 130.30 Take profit: 129.30

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Activity of investors in the markets will be affected by weekends in the US, UK and Singapore (a local decline in EUR/USD

On Monday, investor activity in Asian trading remains fairly low, on the one hand, this is due to weekends in Singapore, Britain and the United States, and on the other hand, with a wait-and-see attitude that they began to take against the escalation of the crisis between Washington and Beijing.

As we previously expected, there is a side range in the main currency pairs in the currency market. There are still two reasons - this is a smooth exit of economically developed, and therefore influential countries from strict quarantine measures amid falling economic activity and strong unemployment, as well as the lack of a vaccine against COVID-19. It is assumed that it will already appear by the end of the summer in Europe and the United States. It is its appearance that will become the trigger for the growth in demand for risky assets. However, this will only happen if the US-China confrontation does not develop into a serious trade war with the robbery of the States and Europe of China. But this is another most important problem.

As the American presidential election approaches, D. Trump will, in our opinion, actively use the "Chinese" card in the domestic political struggle, shifting precisely to Beijing all his miscalculations related to the coronavirus epidemic in America. If this struggle remains only at the level of claims and economically insignificant injections on both sides, then this will lead to an increase in demand for risky assets and a dollar turn down to major currencies, accompanied by the departure of major currency pairs from the side ranges.

As before, we believe that this scenario is most likely. Our forecast for commodity currencies remains the same. We look forward to continued growth in the rates of Canadian, Australian, New Zealand dollars, and the Norwegian krone.

The euro/dollar and pound/dollar pairs seem to balance in the "sides" and beyond, which is associated with internal problems of a political and economic nature both in the eurozone and in Britain. The issue of Brexit and the high economic inequality in the eurozone, which causes the growth of centrifugal forces, which can cause the destruction of the current economic and political order in the region, is relevant here.

Forecast of the day:

The EUR/USD pair remains in the side range of 1.0770-1.1000. A decline and consolidation below the level of 1.0885 will lead to a decline in prices to 1.0770.

The GBP/USD pair is consolidating above the level of 1.2160. It is possible that it will remain in a narrow range of 1.2160-1.2280 today, but if it breaks through the level of 1.2160, it will rush to the recent local minimum of 1.2075.

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Fed may be preparing a surprise for June 10 meeting; Overview of EUR and GBP

The CFTC report, published on May 22, showed an increase in demand for the dollar, which led to a decline in the overall short position to 6.574 billion. At the same time, it should be noted that demand decline in demand occurred against the background of the first reports of a decrease in the spread of COVID-19 and a gradual exit from quarantine restrictions, which was regarded as preparation for a large-scale positive impulse.

However, both the minutes of the FOMC meeting and the speeches of Fed Chairman J. Powell were too careful to ignore the general tone. Apparently, the Fed is preparing for a large-scale decline in GDP, which may require not a reduction, but an expansion of QE and prolongation of support measures further in time at least until the end of 2021. Atlanta Federal Reserve publishes an updated forecast for GDP for the 2nd quarter, according to which the decline in GDP can be 41.9%, and emphasizes in red and white that the forecast is based solely on mathematical data and does not reflect the impact of COVID-19.

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If so, we must proceed from the following. Regardless of the speed of exit from the quarantine measures, the US economy is in such a bad state that the probability of QE expansion is growing. If the Fed starts a policy of targeting yields, this will lead to an increase in the markets, but to a fall in the dollar, the US economy may need this scenario to get out of the recession.

EUR/USD

The net long position in the euro declined by 0.688 billion, the estimated fair price tends to decline.

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So far, trends in the euro indicate a low probability of accepting Merkel-Macron's plan to create a fund of 500 billion euros. The lack of an agreed positive agenda puts pressure on the euro, which increases the probability of EUR/USD getting out of the range down. The resistance level of 1.1017 has survived, so now you need to wait for the support 1.0760 / 70 to be tested.

GBP/USD

Against the background of cautiously optimistic data from the US and the eurozone, British statistics look frankly bad. Gfk's consumer confidence index fell from 33p. up to 34p., the volume of public sector borrowings increased more than 4 times in April, while the forecast was significantly exceeded (61.4 billion against 35 billion), which inevitably leads to a faster growth of the budget deficit, the retail sales failure was also deeper than forecasts, which will automatically lead and a drop in GDP, and a decline in tax collection.

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The pound's downward trend continues and there are no signs of a reversal yet. According to the CFTC report last Friday, the net short position of the pound increased by 405 million to $ 1.454 billion, speculators are set for further sales, the estimated fair price is already lower than the spot price and has a tendency to further decline.

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The most obvious scenario for the UK economy is that economic activity will increase after lifting quarantine restrictions, but a return to normal levels of economic activity may be delayed. The latest NIESR forecast suggests that it may take the UK 18 months to restore production, but there is no guarantee that this period will be enough.

Moreover, attempts to increase the pound on May 17-19 are due solely to external factors. Negotiations on Brexit are at a dead end, the Bank of England is hinting at the probability of introducing negative rates and the expansion of QE, the probability of the last step is growing amid falling consumer activity and falling budget revenues.

The economic calendar for the pound this week is empty, Monday is a bank holiday, so the probability of moving to the side increases. At the same time, the overall position remains negative, the probability of moving to 1.2075 is high, consolidation below the level of 1.2150 will facilitate further sales of the pound. Selling is recommended.

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EUR/USD Gapped Through Support!

EUR/USD is trading at 1.0889 level and it continues to be under some bearish pressure after another false breakout above the near-term major resistance levels. It has opened with a minor gap down signaling that the bears are determined to push the rate down in the short term. The global economy is struggling to recover after the lockdown, even if the COVID-19 threat remains high.

The pair is trading in the red, the bias is bearish, as the US Dollar Index tries to climb higher after the last drop. USDX is trading at 99.87, most likely it will pass above the 100.00 psychological level again, so the EUR/USD could resume the downside movement. The dollar index has rebounded after the previous week's good US data, so a further increase will boost the USD, which will dominate the currency market.

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EUR/USD has been trading sideways, within an extended range, it has dropped below the Monthly Pivot Point (1.0905) level, a valid breakdown will confirm a drop at least till the 1.0777 static support.

The bearish pressure is still high as long as the price is holding below the median line (ML) of the black descending pitchfork. You can notice that EUR/USD has registered only another false breakout above the median line (ML) on Thursday signaling another bearish momentum.

EUR/USD has retested the Ichimoku cloud, the outlook is bearish as long as the price stays below this cloud. The next downside obstacle is seen at the 1.0777 level and at the S1 (1.0772) level, only a valid breakdown will validate a larger drop towards the lower median line (LML).

  • EUR/USD Trading Tips

The false breakout above the 1.1 level and above the median line (ML) along with the Stochastic overbought has signaled another drop towards the 1.0777 range support. If you take a look at the H4 chart, you will notice that the price has confirmed the breakdown below the PP (1.0905) level by retesting this level, so a further drop is expected as long as the price stays below this broken downside obstacle.

A major drop will be confirmed after a valid breakdown below the 1.0777 static support and below the Monthly S1 (1.0772) level, the next targets are see at 1.0653, at the S2 (1.0592), and lower at the lower median line (LML). Ichimoku indicator could give us a selling signal if the Tenkan Shen (red) line will cross below the Kijun Sen (blue) line as long as EUR/USD is trading below the Ichimoku cloud.

EUR/USD larger drop could be invalidated by a valid breakout above the median line (ML) of the descending pitchfork. A valid breakout above the median line (ML) will signal a valid breakout above the 1.1000 level and a larger increase towards the upper median line (UML).

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Indicator analysis. Daily review on EUR / USD for May 25, 2020

The pair continued to trade downwards on Friday after breaking through 1.0917 - a 23.6% pullback level (presented in a red dotted line) and then tested the 21 average EMA at 1.0885 (presented in a black thin line) then went up. Today, the price may continue to move down. Economic calendar news for the euro is expected at 08:00 UTC.

Trend analysis (Fig. 1).

Today, the downward trend may continue from the level of 1.0904 (closing of the Friday afternoon candle) with the target of 1.0860 - a 61.8% retracement level (presented in a red dotted line). From this level, an upward pullback is possible with the target of 1.0924 - a 61.8% retracement level (presented in a blue dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

Today, the price will continue to move downwards with the target of 1.0860 - a 61.8% retracement level (presented in a red dashed line). From this level, an upward pullback is possible.

Another possible scenario is a continuous downward trend from 1.0860 - a 61.8% rollback level (presented in a red dotted line) with the target at the support line 1.0821 (presented in a blue bold line).

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AUD/USD. Aussie under pressure: aggravated political conflict between US and China

The Australian dollar, coupled with the US currency, continues to trade within the narrow-range flat - having opened the week with a small downward gap at around 0.6534, The aussie closed it almost immediately. The AUD/USD pair rose to the price level of 0.6551 during the Asian session on Monday, but could not gain a foothold above, dropping into the area of the opening price.

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If we consider the situation in a broader aspect, then we are now seeing a downward pullback after an unsuccessful test of the resistance level of 0.6600 (the upper line of the Bollinger Bands indicator on the daily chart). The aussie tried to gain a foothold in this price area last Wednesday, but, having failed, gradually began to slide down. However, it cannot be said that the bears are now in full control of the pair's situation: the downward dynamics looks uncertain, and is accompanied by upward impulses. But in general, bulls clearly lost the initiative amid the contradictory fundamental background. It is worth noting that the Australian dollar has been amazingly strong for quite some time - traders have virtually ignored Australia's key macroeconomic reports over the past few weeks, which reflected the negative effects of the epidemic and lockdown.

For example, the latest release of data on the growth of the Australian labor market went almost unnoticed - the pair formally decreased by several tens of points, after which it quickly recovered. Although the unemployment rate in the country rose to 6.2%, and the growth rate of the number of employees showed an anti-record: it plunged by almost 600,000. Full employment decreased by nearly 230,000, part-time by more than 370,000. The share of the economically active population fell to 63%. But, the Aussie practically did not suffer despite such a significant slowdown in the labor market, and a few days later resumed the upward trend.

The Reserve Bank of Australia was also unable to reverse the upward direction of the aussie, despite the controversial rhetoric of the regulator. The minutes of the last meeting, published last week, indicates that the central bank is ready to increase the volume of purchases of government bonds "if necessary." At the same time, RBA members voiced an extremely pessimistic medium-term forecast: according to their estimates, the country's GDP is expected to decrease by more than 10% in the first half of the year. The main blow of the crisis will be in the second quarter: in particular, unemployment should rise to its peak values, that is, to about 9-10%.

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But market participants here decided that "the glass is still half full than empty", focusing on the positive aspects of the May meeting. First, the RBA announced that it was keeping a wait-and-see position amid rumors of expanding incentives. Secondly, the regulator, again contrary to rumors, announced a reduction in the volume and frequency of bond purchases. In addition, both the accompanying statement and the RBA's quarterly report indicate that the country's key economic indicators should recover in the second half of the year, and the pace of this recovery will depend, in particular, "on how long restrictive measures remain." At the same time, Australia began quarantining in early May, planning to complete this process by the end of July. Therefore, traders decided to "close their eyes" to the current economic downturn, focusing on forecasts of quick recovery. The aussie's additional support was provided by news from the front of the fight against coronavirus: US company Moderna reported its first significant successes on May 18 - specialists were able to produce antibodies in the tested people.

Nevertheless, despite such a "margin of safety", the aussie could not storm the 66th figure. The main reason is the growth of geopolitical tensions. US President Donald Trump continues to express dissatisfaction with China's reaction to the outbreak of coronavirus, while Beijing, first, rejects the charges against it, and secondly, accuses the United States of "spreading lies and attacks on the PRC." Washington's accusations sound tougher and tougher - for example, Trump's national security adviser Robert O'Brien recently compared China's actions after the outbreak of coronavirus with concealing the disaster at the Chernobyl nuclear power plant in 1986. Foreign Minister Wang Yi, in turn, said that the White House is pushing Beijing toward the start of a "new cold war."

Earlier, State Department chief Michael Pompeo accused China of concealing data on the spread of coronavirus, after which Senator Lindsay Graham introduced a bill allowing President Donald Trump to impose sanctions on China for refusing to cooperate in identifying the causes of the pandemic. In response to the introduction of this bill, Beijing threatened "retaliatory measures", without specifying, however, what exactly is being discussed.

Hong Kong is another "fault line". The United States has supported the anti-Chinese movement protest of the Hong Kong people throughout the past year, causing Beijing's logical irritation. Now, Beijing itself has acted as a kind of irritant in this matter. The fact is that the Parliament of China will consider the adoption of a new law on national security in Hong Kong this week. If approved, it will provide the Chinese authorities with enhanced opportunities to intervene in the affairs of the former British colony. This issue is included in the agenda of the session of the All-China Assembly of People's Representatives, which began on May 22 and will last until May 28. This initiative was opposed not only by the United States, but also by the European Union, Canada, Great Britain, and also Australia. However, according to some analysts, Beijing is very likely to adopt the bill, provoking retaliatory sanctions from Washington.

Thus, the growth of anti-risk sentiment in the foreign exchange market is justified. The Cold War between the United States and China will obviously slow down the process of restoring the global economy after the coronavirus crisis. And this scenario, apparently, is becoming increasingly believable.

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The aggravation of the political conflict between the US and China will put additional pressure on the pair, as the US currency will be used as a protective asset. Inside the day, the pair mayThe pair could fall to the 0.6520 level (the lower border of the Kumo cloud on the 30-minute chart) within the day, and even lower to the bottom of the 65th figure. If we look at medium-term prospects, then a decline to the 0.6440 level is likely - this is the Kijun-sen line on the daily chart. In conclusion, it is worth noting that US trading floors are closed today - they are celebrating Memorial Day in the United States.

The aggravation of the political conflict between the US and China will put additional pressure on the pair. Meanwhile, another fault line appeared in the relationship between the superpowers.

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Technical Analysis of GBP/USD for May 25, 2020:

Technical Market Outlook:

The GBP/USD pair has been testing the upper main channel boundary all weekend long, but still did not definitely returned back to it. So far the bears has pushed the price to the technical support located at 1.2165, but the bounce was shallow and the bearish pressure is still visible. The momentum remains neutral-to-negative, but there is still a room for another downside wave. The last swing low and technical support is seen at the level of 1.2072. On the other hand, the nearest technical resistance is located at the level of 1.2246.

Weekly Pivot Points:

WR3 - 1.2499

WR2 - 1.2389

WR1 - 1.2274

Weekly Pivot - 1.2176

WS1 - 1.2057

WS2 - 1.1949

WS3 - 1.1823

Trading Recommendations:

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

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Trading plan for EUR/USD on May 25, 2020. Coronavirus updates from around the world. An important news for the US.

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Coronavirus updates from around the world (official data as of the morning of May 25): There's an improvement in the US. Brazil shows signs of a slowdown.

In the US, daily deaths finally fell below 1,000, and the daily increase of new cases remains at almost 20 thousand per day. The premature lifting of quarantine measures by the US authorities led to the protracted pandemic and unjustified deaths.

The world is actively working on a vaccine. The first successful testing of it was in the US, under a company called Moderna Inc, which reported a successful trial with human volunteers. Meanwhile, in Russia, clinical trials of a vaccine will most likely occur no later than September.

Most countries are opening their economies. Japan and Europe have reportedly removed quarantine restrictions already, especially since Europe already observes the retreat of the pandemic. Even the most affected countries such as Italy and Spain have opened their economies. In the UK, however, the number of new cases is still relatively high, with about 2,400 new cases per day. Mortality, meanwhile, remains low.

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EUR/USD: The quotes are returning to its previous range. The attempt to start an upward trend last week failed.

Keep holding buy positions from 1.0855, but it is likely that the positions will go to a breakeven.

In such a case, work on a breakout of 1.1000.

Open sell positions at 1.0770.

US News: The Fed is scheduled to publish the Beige Book on Wednesday, which will reveal the real state of the US economy. Unemployment in the US has already reached a whopping 25 million. At the same time, the US and China are exchanging tough statements, with the US threatening China with new sanctions for tightening the political regime in Hong Kong.

The weekly US unemployment report will be published on May 28, and the news on household income and expenses in the US will be published on May 29. The two data are important for the market.

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Technical Analysis of EUR/USD for May 25, 2020:

Technical Market Outlook:

The EUR/USD pair has made a temporary high at the level of 1.1010, but after the Bearish Engulfing candlestick pattern was made, the bears took over the market and pushed the price towards the 50% of Fibonacci retracement located at 1.0887. The market conditions are still in their favor, so does the weak and negative momentum. In that case, the next target for bears is seen at the level of 1.0858, which is 61% of the Fibonacci retracement or at the next technical support at 1.0850.

Weekly Pivot Points:

WR3 - 1.1206

WR2 - 1.1107

WR1 - 1.0997

Weekly Pivot - 1.0901

WS1 - 1.0789

WS2 - 1.0688

WS3 - 1.0567

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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Technical Analysis of ETH/USD for May 25, 2020:

Crypto Industry News:

According to an announcement from the Banque de France, France became the first country to successfully try the digital euro operating on Blockchain after calling for new technologies to support such progress.

The bank claims that on May 14, it tested the sale of securities for central bank digital currencies (CBDC), signaling the launch of more detailed testing. Although the bank's announcement was not very detailed, it indicated that the current pilot program focused on wholesale rather than retail for the digital euro. Retail CBDC would be open to ordinary consumers through Bitcoin or Apple Pay. The latest pilot issue of securities in exchange for the digital euro was based on the software received after the March 27 call for proposals. According to today's announcement, the bank will devote the next few weeks to conducting similar tests for other applications received under the same initiative.

Banque de France is particularly active in the development of the digital euro. By the time Great Britain leaves, France will become the second largest economy in the euro area after Germany.

Technical Market Outlook:

The ETH/USD pair has bounced from the level of $190.55, but did not manage to make a new high above the level of $217. After the Shooting Star candlestick was made at the level of $209.89 the Ethereum rate begin to move lower. The bulls had all the weekend to push the prices higher, but they failed and now the market is very close to the key short-term trend line support located around the level of $196.30. Any violation of this level will open the road towards the next technical support located at the level of $193.78 and $188.88.

Weekly Pivot Points:

WR3 - $234.40

WR2 - $228.76

WR1 - $216.85

Weekly Pivot - $204.00

WS1 - $192.21

WS2 - $178.64

WS3 - $166.85

Trading Recommendations:

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. The next key technical support is seen at the level of $174.82.

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Technical Analysis of BTC/USD for May 25, 2020:

Crypto Industry News:

Just before halving, Bitcoin's Hash Rate has almost reached its new ATH. Unfortunately, shortly after halving (as expected by many analysts) we saw drastic drops. Citing data provided by blockchain.com, the 7-day average HR value of the BTC network increased for the first time since May 11. Admittedly, a small reflection of only 1% may suggest slow stabilization of this very important indicator.

May 22 Hash Rate fluctuated at 94.6 million H / s, the previous day the value was 93.6 H / s, which is an increase of 1.11%. Just before halving, the new ATH was at hand, but unfortunately everything indicates that we will have to wait for the new record.

Drastic drops in the power of the BTC network have caused concern among many analysts. Many claimed that Hash Rate fell into a "spiral of death" and fell to the bottom. A ray of hope gives the last positive reading.

After halving, as expected, many miners capitulated. Reducing the mining prize by half has pushed many out of the market.

The decrease in Hash Rate also had an impact on the amount of adjustment of the difficulty of digging BTC. This, in turn, fell from 16.1 T to 15.1 T. From a miner's point of view, this is a good signal, as it may encourage some of them to return.

Technical Market Outlook:

The BTC/USD pair has broken through the key trend line support located around the level of $8,800 and made a new local low at the level of $8,567. The next technical support is seen at the level of $8,464 and $8,357. On the other hand, the nearest resistance is located at the level of $8,919 and $9,013. The momentum remains weak and negative, so the odds for another wave down are high.

Weekly Pivot Points:

WR3 - $10,568

WR2 - $10,245

WR1 - $9,478

Weekly Pivot - $9,098

WS1 - $8,333

WS2 - $7,968

WS3 - 7,231

Trading Recommendations:

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. The key mid-term technical support is located at the level of $7,897.

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Hot forecast and intraday trading signals for GBP/USD on May 25. COT report. Bears held the pair in their hands and are ready

GBP/USD 1H

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The downward movement resumed on the hourly chart for the pound/dollar pair last Friday. The general technical picture is now very simple. The price rebound from the Senkou Span B line, that is, not overcoming the Ichimoku cloud, is visible with the naked eye. Accordingly, buyers did not manage to pass the first serious resistance on the way to a new upward trend. Thus, if something unexpected does not happen fundamentally, then we believe that the downward movement will continue with the May 18 low of 1,2073 as the target. It should also be noted that the bears, unlike the bulls, successfully crossed the Kijun-sen line and the support area of 1.2196-1.2216, which increased the chances of a further fall of the pound/dollar pair.

GBP/USD 15M

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Both linear regression channels turned around and turned down on the 15-minute timeframe. Therefore, the trend is clearly downward in the short term. The lower channel begins to unfold upward, and traders failed to overcome the 1.2165 level on Friday. Thus, there are certain grounds for assuming an upward pullback. At the same time, we expect the pound to continue falling.

COT Report

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The latest COT report for May 19 shows that the total number of buy and sell transactions among large traders per week increased by 29,000, and in equal proportions. Thus, big traders began to actively trade the pound, which, however, is not particularly noticeable on the pair's movement chart, the volatility remains the same, not too high for the pound. Nevertheless, professional traders in the reporting week continued to actively sell British currency (+8303 sales contracts) and they were much less active in acquiring purchase contracts (total +4313). Thus, from our point of view, the mood for the GBP/USD pair remains more downward.

The fundamental background for the British pound remains negative. Despite the fact that macroeconomic statistics come in equally negative from the US and Great Britain, we believe that the British economy continues to experience much more serious problems than the American one. In the near future, the Bank of England can expand the program of quantitative easing by 100 or 200 billion pounds and even introduce negative rates, which indicates a strong decline in the economy, which needs more support. But there is no positive news from the UK. Negotiations between Brussels and London, which are important, first of all, for the British pound, are still at a standstill. As we already figured out on the weekend, Britain does not seek to sign an agreement on the terms of the European Union. Perhaps this is the right decision in the distant future, but in the long term the next 2-3 years, it can finish off the British economy, which already suffers from Brexit for three years, and now also suffers from the coronavirus crisis.

We have two main options for the development of the event on May 25:

1) The initiative for the pound/dollar pair remains in the hands of the bears. Thus, we recommend buying the British pound not before consolidating the price above the Senkou Span B line - 1.2270 and above the resistance level of 1.2280 with the first target resistance level of 1.2399. Take Profit will be about 110 points in this case.

2) Sellers are currently more likely to implement their plans. Bears have already returned to the area below 1.2196-1.2216, which is enough to resume selling the pair while aiming for the May 18 low at 1.2073. In this case, take profit will be about 100 points.

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Hot forecast and intraday trading signals for the EUR/USD pair for May 25. COT report. Traders still believe in the dollar

EUR/USD 1H

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The EUR/USD pair continued the downward movement that started after a rebound from the levels of 1,1008 and 1,0990 during the last trading day of the past week on the hourly timeframe. Recall that these levels are resistances, which are also located near the upper border of the side channel 1.0750-1.1000, in which the pair has been trading in recent weeks. Thus, since traders did not succeed in reaching the upper limit, now everything speaks in favor of the downward movement. At the moment, quotes have reached the support area of 1.0881-1.0892, from which the pair has previously rebounded repeatedly. Therefore, there may be some delay near this area before the pair continues to move down. An upward trend line is still in action, supports trading on the increase, and this is the ultimate goal for the current movement.

EUR/USD 15M

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We see that the upward trend is complete on the 15-minute timeframe, both linear regression channels are directed down, and the price is below the moving average line. Thus, we clearly have a downward trend in the short term.

COT report.

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The latest COT report of May 19 showed that big traders who engage in professional activities with the aim of earning exchange rate earnings continued to reduce purchases of euro currency and increase sales in the reporting week. The growth of the latter was small, only 1257 contracts, but in aggregate with -3425 contracts for selling, we have a serious deterioration in the mood of traders regarding the euro. The total number of purchase contracts also decreased by 294 units, and the number of Short-deals increased by 970 units. Thus, we see that the mood of traders remains bearish and only increases. Therefore, we can even count on overcoming the upward trend on the hourly chart and forming a new downward trend.

The fundamental background for the pair remains neutral at this time. It is because of it that there has been a movement in the side channel in recent weeks (unlike, for example, the GBP/USD pair). Traders regularly receive certain messages, news and news regarding top officials of the United States and the European Union, possible actions on the international arena of these countries, changes in monetary policy, the consequences of the pandemic crisis, and so on at their disposal. But the problem is that the nature of the news is approximately the same for both countries. Like macroeconomic statistics. The economy continues to contract in both the European Union and the United States, the Federal Reserve and the European Central Bank require Congress and the European Commission additional monetary incentives, which are blocked in the first case by Democrats, and in the second - by the inability of 27 countries to come to a common opinion on the sources of financing for the new aid package and its volume. The calendar of macroeconomic events is generally empty today, so volatility may decrease, however, we are waiting for continued downward movement, according to the technical picture.

Based on the foregoing, we have two trading ideas for May 25:

1) It is possible for quotes of the pair to increase if the price rebounds from the area of 1.0881-1.0892, however, we would not recommend traders to process this signal, since it can be false. If the bulls show a desire to buy the euro again, then it can be determined by consolidating the price above the critical line Kijun-sen. In this case, we recommend buying the pair with a target of 1.0990. Potential to take profit in this case will be about 40 points.

2) The second option - bearish - is more likely. You are advised to sell the euro after overcoming the area of 1.0881-1.0892 with the targets of 1.0847 (Senkou Span B line) and an ascending trend line, around which the future fate of the euro/dollar pair will be decided. Potential to take profit in executing this scenario will be from 30 to 70 points.

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Elliott wave analysis of EUR/JPY for May 25, 2020

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EUR/JPY only climbed to118.53 before a deeper correction was seen. This correction dipped to a low of 116.96, which was a bit deeper than we expected. However, it doesn't alter our bullish count with more upside pressure towards the 161.8% extension target at 119.31. If our bullish view should remain viable, we would expect minor resistance at 117.56 to be broken soon, and more importantly we would expect a break above resistance at 118.08 to confirm the rally towards 119.31.

Only a break below minor support at 117.08 will delay the expected rally higher for a dip 116.62 before a new attempt to break through resistance at 117.56 should be expected.

R3: 118.08

R2: 117.70

R1: 117.56

Pivot: 117.20

S1: 117.08

S2: 116.62

S3: 116.17

Trading recommendation:

We are long EUR from 115.65 with our stop placed at 116.00

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GBP/USD: plan for the European session on May 25 (analysis of yesterday's trade). Pound remains in the side channel, preparing

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

Nothing has changed from a technical point of view. The bulls tried to get above the upper border of the side channel of 1.2190 last Friday afternoon, nothing came of it, which resulted in an even greater decrease in volatility. At the moment, the main task of buyers is to consolidate above the resistance of 1.2190, which may lead to a larger upward correction to the area of a high of 1.2245, and the bulls will aim for 1.2293, where I recommend taking profit. Given that no important fundamental statistics are planned to be released today, a repeated decrease to a low of 1.2162 will most likely lead to its breakout and the pound's further decline in order to form a new trend. Therefore, it is best to look at long positions after updating a larger level of 1.2122, counting on a correction of 30-35 points within the day, or you could buy GBP/USD immediately for a rebound from the low of 1.2074.

To open short positions on GBP/USD you need:

Sellers need to keep the pair below resistance 1.2190 in the first half of the day, with which they successfully coped last Friday. The bearish momentum will continue as long as trading is carried out under this range, and another false breakout will convince sellers of the big buyers' lack of desire to return to the market. A repeated test of the low of 1.2162 will probably result in a sell-off of GBP/USD to the support area of 1.2122, and then to the test of the May low of 1.2074, where I recommend taking profits. In the scenario of a larger upward correction above the 1.2190 level, then it is best to return to short positions on the pound only to rebound from the high in the area of 1.2245, or even higher, in the area of a large resistance of 1.2293 while expecting a downward correction of 30-40 points within the day.

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Signals of indicators:

Moving averages

Trade is conducted in the region of 30 and 50 moving average, which indicates the lateral nature of the market.

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

Bollinger bands

A break of the upper border of the indicator at 1.2190 will lead to a larger growth of the pound. A break of the lower border of the indicator in the region of 1.2162 will increase the pressure on 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
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Elliott wave analysis of GBP/JPY for May 25, 2020

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At this point we have no reason to cast away the alternate bullish count. That said, this count only becomes our favored count if resistance at 133.19 is broken. We have seen a small corrective decline from 131.78 and the sub-waves are equal in length which gives this count credibility. However, we will need a break above minor resistance at 131.95 and a break above resistance at 133.19 to confirm that this is a correct count and look for more upside in weeks ahead.

R3: 132.67

R2: 131.95

R1: 131.35

Pivot: 130.56

S1: 130.19

S2: 129.77

S3: 129.25

Trading recommendation:

We buy at a break above 131.95 or sell at a break below 129.25

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EUR/USD: plan for the European session on May 25 (analysis of yesterday's trade). European Central Bank plans to expand asset

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

I drew attention to the 1.0889 level in my forecast for Friday afternoon, which has already been tested by the bears and on which the pair's further direction depended. If you look at the 5-minute chart, you will see how the bears failed to break below this range from the second test, which led to forming a false breakout and a slight rebound upward. However, a larger upward momentum could not form from there. At the moment, bulls still need to defend support 1.0887, and forming the next false breakout there will be a signal to open long positions. Otherwise, I recommend buying EUR/USD now only for a rebound from a low of 1.0855. An equally important task for the bulls is the return of EUR/USD to the resistance of 1.0928, where the moving averages also pass. Whether the upward trend will continue or not will depend on this. Consolidating above this range, along with good data on the German economy, or rather, according to expectations from the IFO, can lead to a breakthrough and consolidation above this range, which will open a direct path to the highs of 1.0966 and 1.1006, where I recommend taking profits.

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

Bears are taking advantage of the news that the European Central Bank may increase the asset buyback program at its June meeting despite the confrontation between Germany and other Nordic countries on this issue. The bears need to consolidate below the support of 1.0887, which will lead to a further downward correction of EUR/USD already in the area of lows 1.0855 and 1.0808, where I recommend taking profit. However, do not forget that the IFO will release reports on the German economy today, which may contain sufficient positive data, which could slightly strengthen the euro in the morning. In this scenario, I advise you to postpone short positions until the resistance of 1.0928 is updated and a false breakout has formed there, which will be the first sell signal. In the absence of activity among bears at this level, it is best to wait for a test of a high of 1.0966 and sell the euro from there immediately for a rebound while expecting a correction of 30-40 points within a day.

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Signals of indicators:

Moving averages

Trade is conducted below 30 and 50 moving averages, which indicates a possible further decline in the euro.

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 1.0887 will increase pressure on the euro, which will lead to another wave of decline in the pair. A break of the upper boundary in the area of 1.0905 will lead to a more powerful strengthening of 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
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Forecast for EUR/USD on May 25, 2020

EUR/USD

The euro was down 64 points at one point last Friday, precisely testing the support of the MACD line on the daily chart. The signal line of the Marlin oscillator is slightly above the border with the territory of the negative trend. There is not much time left for the price and marlin to go downward in a coordinated fashion. The first target of the movement is the lower border of the trading range of 1.0767-1.0995. Overcoming the level opens the target along the line of the price channel - 1.0578.

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The price was also precisely marked on the MACD line on the four-hour chart. Accordingly, the 1.0885 level is strong and acts as a signal level, overcoming which unfolds a downward movement to the first target of 1.0767. The Marlin oscillator on the territory of the bears.

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Forecast for GBP/USD on May 25, 2020

GBP/USD

The British pound overcame the support of the MACD line on the daily chart. The Marlin oscillator has been in the zone of negative values since May 11 - the downward trend is strengthening. The first target of the bears is 1.1935 is the Fibonacci level of 200.0%. The prospect of a decline of 1.1500 is the support of the embedded line of the price channel in the region of the Fibonacci level of 261.8%.

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The price found moderate support at the signal level of 1.1265 on the H4 chart. Consolidating under the support will set the basis for a new momentum for the British pound's downward movement. We are waiting for the main events tomorrow, since it is a public holiday today in the US and Great Britain.

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Forecast for AUD/USD on May 25, 2020

AUD/USD

The Australian dollar continues to reverse from they May 20 peak, realizing the technical potential of the double divergence on the Marlin oscillator on the daily chart. The closest support is the embedded price channel line at 0.6482. Overcoming the level opens the possibility of a decline to the next line to the area of 0.6335. The MACD line is located just below this mark - the area of the second target acts as strong support.

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The price overcomes the support of the MACD line on the four-hour chart, the Marlin oscillator is falling in the negative area. We look forward to continued price reductions, but the main development may be tomorrow, since it is a public holiday today in the US and Great Britain.

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Forecast for USD/JPY on May 25, 2020

USD/JPY

The Japanese yen is consolidating between the support of the trend line of the price channel (107.42) and the resistance of the balance indicator line with the growing line of the Marlin oscillator for the fourth session. This is a sign of continued price growth at the end of the current consolidation. The first growth target of 108.30 is the February 3 low. Consolidating above the level will continue to grow to the second target level of 109.50. This is the main scenario.

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The price has more work to do to develop the downward movement: overcome support 107.42 and MACD 107.20 line. In this case, the decline may increase to 106.45.

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The price is developing above the indicator lines on the four-hour chart, the Marlin oscillator is already in its growing half. Consolidating will likely continue today, because it is a public holiday in the United States and the United Kingdom.

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GBP/USD. Preview of the week. 90% probability of no deal with the EU. Britain is waiting for an economic disaster

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The British pound continues to experience self-inflicted market pressure against the US dollar. We have repeatedly noted that if the EUR/USD pair is trading in the side channel and this is logical and justified by technical reasons and a common fundamental background, then the British currency is not in demand due to the huge number of problems that the UK has already encountered and will certainly face in the near future. In the euro/dollar article, we noted how important the issue of choosing a government is, because the life of the country and its citizens in the coming years will depend on it, and the consequences of the government's mistakes can be seen for a decade. So, we recall that Boris Johnson won the election at the end of last year, when the British did not care who to vote for, if only the saga with Brexit ended quickly. As it turns out six months later, this was not the wisest decision of the British. The person who won the post of prime minister is not the person who thinks for the future, who very carefully and responsibly approaches every step and decision, won the "mini copy of Donald Trump" in the British version. That is, the promises and loud statements of Johnson really made him believe that he was able to withdraw the country from the EU after three years of failure. However, at what cost? The British pound has become cheaper against the dollar since 2014, and over the past three years has accelerated the pace of decline. The UK economy is losing a hundred billion pounds annually "thanks" to Brexit, and the absence of a trade and general agreement with the European Union puts London, not Brussels, in the first place, uncomfortable. The European Union is not even considered in this article. Even if both the EU and Britain suffer from a lack of agreement, the British economy will suffer again in addition to all previous falls and problems. And in comparison with the dollar, the pound will continue to fall, since the only problem in the US is caused by the pandemic, and in the UK - the crisis, Brexit and the absence of trade agreements.

Thus, the situation for the British pound will simply not change either in recent months, or even in recent years. Obviously, not a single currency can continuously fall. Therefore, the British currency also has periods of growth, which usually end in a new and stronger fall. Formally, negotiations with Brussels continue, but at the beginning of this year we repeatedly focused our readers' attention on the fact that it took 7-8 years for the European Union to conclude agreements similar in scope and scale with Canada or Australia. Thus, those ten months that Johnson had allotted for negotiations from the very beginning fueled, if not laughter, then skepticism. As you can see now, all the skeptics were right. Three rounds of negotiations were completed, and the parties did not advance in resolving key issues and differences. Experts stick with their opinion: the parties will not be able to come to an agreement either on July 1 or December 31.

Alex De Ruyter, a professor at the University of Birmingham, also, like many, believes that there will be no deal. "I do not think that there are chances to conclude an agreement before the end of 2020. It took Canada nine years to negotiate a free trade agreement with the EU and Japan. In our case, we have a country - not a member of the EU with an economy that is closely integrated with the European one. It will take years to resolve all legal issues related to this integration. And if you listen to the opinion of Michel Barnier, then at least three years," said the professor. The professor also believes that the option with the absence of a deal is the most probable, however, there are still low chances to extend the "transition period". De Ruyter also points out that key issues to come to an agreement on are fisheries in British waters, labor law, the judiciary and environmental standards. Many EU countries simply will not agree to an option in which their fishing vessels do not gain access to British waters. Therefore, London needs to make concessions. "I'm not convinced that the British government wants to make a deal: for ultra-right Brexit supporters who insist on an open market, Brexit itself has always been what was used to achieve a different regulatory environment from the EU. For them, I think, a break without an agreement would be preferable," says de Ruyter. As for the forecasts, Professor Birmingham believes that an agreement with the European Union like the Canadians will still bring London losses by 6%, the absence of an agreement - a loss of 9% of GDP. "If we take into account the problems caused by COVID-19, then all this is likely to destroy the British industrial production and agriculture," the professor said.

Thus, the prospects for the pound remain far from bright. There will be virtually no major macroeconomic events and news in the UK next week. The calendar of macroeconomic events for the UK is completely empty. Thus, traders can only pay attention to data from the United States, which will not be too much next week. However, the macroeconomic background now in any case continues to be ignored by traders. We can say that only a general fundamental background now has some significance. And he, as we have already figured out, remains not in favor of the pound. Thus, the technical picture now reflects a downward trend, which coincides with the fundamental background. Over the past week, traders were unable to adjust the pound/dollar pair even to the upper border of the Ichimoku cloud. Thus, buyers now have practically no strength. So, the likelihood of continuing the downward track is extremely high. Over the next several weeks or months, we believe that the pair may fall to March 20 lows at around $1.14.

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In technical terms, the pair resumed the downward movement, as evidenced by all indicators of both trading systems, the Ichimoku (consolidating below the critical line) and linear regression channels (overcoming the moving average). Therefore, the highest that the pound can count on is just correctional growth. The potential for its fall is almost unlimited. The most likely target is the March 20 low at 1.1411.

Recommendations for the pair GBP/USD:

As the pound/dollar continues a new downward trend, we recommend that we continue to sell the British currency, using mainly the 4-hour timeframe. Volatility remains the same, about 100-130 points per day, there are no signs of a new panic. The first goals for short positions are levels 1.2085 and 1.1985.

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EUR/USD. Preview of the week. US GDP, Donald Trump's new policy and his confrontation with China, the side channel of the

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A new trading week will begin, as often happens, with a few practically empty days, in terms of macroeconomic statistics. However, closer to the end of the week, interesting and important news and reports will begin to be available to traders. Recall that everything revolves around the upcoming US presidential elections in November 2020 now in the world and in the foreign exchange market, as well as about a possible new confrontation between China and the US. Many traders underestimate the topic of US elections, considering it not too significant. However, we do not think so. The issue of choosing power in many countries where power at least sometimes changes is a very, very serious question. A striking example is the United Kingdom. Despite the fact that the conservatives after the last parliamentary elections and the prime minister remained in power, that is, in fact, nothing has changed, nevertheless, it was Boris Johnson's figure that greatly influenced many national and national processes. It will also affect the future of Great Britain. The most commonplace that comes to mind is the issue of the coronavirus pandemic in Britain, the issue of extending the transition period (especially during the epidemic), the issue of trade negotiations with the European Union and the United States. Indeed, these topics, in which Johnson has shown and is showing himself and his government are far from the best side, can go around with the British people for several years. Already, many experts note that a black hole is forming in the country's budget, which will need to be covered with something. And how to cover it? Only by credit money or tax increase. That is, in any case, ordinary Britons will pay for decisions or mistakes of the government. Approximately the same picture is observed in the United States. This is not to say that America under Donald Trump lived poorly or in a fundamentally different way than under other presidents. If not for the pandemic, Trump would really have something to boast at the end of his first presidential term, and the chances of re-election would have been much higher than 50%. However, Trump, from our point of view, made one serious mistake. He forgot that speaking from a position of strength and threats is possible and this is effective with those who cannot fully respond. America's ties with China are so strong that it is impossible to influence him with blackmail and threats. China simply has something to answer. And he answered this year, as no one in the world had expected. We, of course, do not say that Beijing intentionally released the virus into the wild, at that time itself was ready for this, therefore, with relatively small victims, it localized the epidemic. But if you do not consider this issue, but just look at the situation as a whole, then China dealt a blow to all its main competitors. In the European Union and the United States. The European and American economies will contract by record numbers in 2020, and that if there are no new waves of the epidemic, which cannot be ruled out either. The Chinese economy will also lose a few percent, as it depends on both the American and the European, but, nevertheless, at the end of the year will show minimal growth. Thus, it turns out that China will lose "a little" GDP, and the US and the EU with "a lot". Much more than the 200 billion for which Beijing is obliged to buy products in America, according to the January phase one trade agreement. China dealt a blow not only to the United States, but also personally to Donald Trump, who initiated a trade war with China two years ago.

Now Trump's chances of not being re-elected are low, and the president himself makes statements every day that blames not only China, but everyone who succeeds in all mortal sins, forcing the media, Americans and everyone in the world to take his words less seriously. Thus, much for both the United States and the global economy will depend on Trump's further actions. Understanding that he will lose the election, Trump can go all-in, and what this will mean for China, the USA and the entire world economy, I do not want to think about it ...

As for the ordinary macroeconomic statistics, the first quarter GDP and several indexes from the IFO Institute will be published on Monday in Germany, which reflect business optimism, economic expectations and an assessment of the current situation. GDP in Germany should fall by 2.3% in annual terms and this is one of the smallest reductions in the European Union. Unfortunately, this will not be of particular importance for the euro currency. In general, in the eurozone, a reduction of at least two times higher is expected in the first quarter.

There will be no important publications in the European Union on Tuesday; several minor issues, such as the housing price index or consumer confidence level, will be released in the United States. Wednesday, May 27, will be even more boring, as the calendar of macroeconomic events on this day will be empty in the United States and the EU.

More or less significant data will begin to be available to traders on Thursday. An inflation report will be released that day in Germany, which may slow down in May to 0.6% in annual terms. However, we have repeatedly said that the inflation rate at this time does not have much significance for market participants. In the United States on this day there will be data on orders for durable goods, which, after the disastrous March values, may continue to decline. It is expected that the main indicator will lose another 18.1%, and orders for goods excluding transport will be reduced by 14%. Next, annual GDP data for the first quarter will be published and, according to forecasts, the indicator will decrease by 5%. The next report on applications for unemployment benefits may show an additional two million unemployed Americans, and the total value of secondary applications may exceed 25 million.

Reports on retail sales in Germany, inflation in the European Union and personal income and expenses of the American population are planned on the last trading day of the week. These reports are frankly secondary in these conditions and are unlikely to cause any reaction from traders. Not a single important and significant speech has been planned for this week, however, the heads of the central banks of the EU and the US have acted quite recently, market participants are fully aware of their possible actions and plans. No one is going to lower bets in the near future.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the price worked perfectly and rebounded from the upper border of the side channel near the $1.10 level. Thus, now we expect continued downward movement with the target near the lower border of the channel, the 1.0750 level. All support and resistance levels will be rebuilt on Monday, but even without this, the goals are now clear and obvious. The most interesting thing is that despite the euro's decline, the Ichimoku indicator has not yet formed a new sell signal. However, this is the normal behavior of technical indicators in flat conditions. They are late and generate false signals. There may be several turns of upward correction during the downward movement to 1.0750.

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