EUR/USD. Beijing and Washington put on pause the verbal sparring, new aid packages for the American and European economies

4-hour timeframe

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Another trading week on the Forex market has ended, and the euro/dollar currency pair has gone into a dead flat. During the past trading week, the pair's quotes were traded in a narrow side channel despite a large number of macroeconomic statistics, important news, and messages. Thus, we can only once again focus the attention of traders on the fact that the markets remain rather alarming due to all the events of 2020. And we are talking primarily about the "coronavirus crisis", which continues to harm the world economy and confronts investors and traders with absolute uncertainty. Thus, at the very beginning of the coronavirus epidemic, the markets were in an absolute storm, and now – in absolute calm.

As we have already noted, there were a lot of events in the past week. Even if you didn't take into account the secondary reports, there was a lot of information. For example, on Wednesday, data on unemployment in Germany were released, which showed that at the end of June, this figure increased to just 6.4%. The number of newly unemployed in the country increased by only 69 thousand, and the index of business activity in the most important sector of the economy – manufacturing – rose to 45.2. Thus, the data from Germany were very optimistic, better than the forecast values. Business activity in the European Union increased in production to 47.4, meaning that we are seeing a rapid recovery in this indicator. On the same day in America, data on the change in the number of employees from ADP in the private sector, which showed an increase of only 2.4 million instead of the projected 3 million. However, business activity indices were even more optimistic than in Europe. The ISM manufacturing index was 52.6, and the Markit manufacturing index was 49.8. Thus, we can say that both indices signal growth in the US manufacturing sector, and not a slowdown in the fall. Unfortunately, all these figures are relative. They are usually relative to the previous month. And if the economy of any country has been seriously shrinking for several months in a row, now these "optimistic figures" are just a small improvement after an absolute collapse. Also on Wednesday, July 1, the head of the European Central Bank, Christine Lagarde, spoke via videoconference at a forum in France. The topic of her speech concerned changes in the world economy as a result of the coronavirus pandemic. According to Lagarde, the changes in the economic system will be extremely profound. They particularly affect the sphere of production, as well as labor and trade. The head of the ECB believes that the crisis and the pandemic will lead to the expansion of the use of digital technologies, to an increase in the scale of automation and robotics in the manufacturing sectors. Also, according to Lagarde, the volume of trade via the Internet should significantly increase. Well, the minutes of the last meeting of the Federal Reserve reflected information about the need for long-term support of the American economy. Thus, in general, we can say that despite the macroeconomic data, both economies of interest to traders continue to remain in a weak position and recover very hard, as noted by the top officials of the Fed and ECB.

On Thursday, July 2, there was again plenty of macroeconomic information. In the European Union, the unemployment rate was published, which, like in Germany, rose slightly, but not too much, to just 7.4%, which in the context of the global crisis can not be considered a failure value. In America, unemployment has fallen to 11.1%. The Nonfarm Payrolls report was also quite strong. Although this indicator of the state of the labor market for several months showed negative values for millions of jobs, at the end of June, the number of people employed in the non-agricultural sector increased by 4.8 million. However, the number of applications for unemployment benefits increased again, this time by almost 1.5 million. The total number of secondary applications for benefits increased to 19.3 million. In general, all these statistics can be interpreted in absolutely different ways. On the one hand, it can be called strong, because it showed high absolute increases and values exceeding forecasts, on the other – contradictory. We believe that after the severe collapse of the American and European economies, these figures do not matter much now. We must wait for the time when the crisis will be completely behind us, and the "coronavirus" will be defeated and will no longer have a destructive impact on the economy. Only after this, any growth in any macroeconomic indicator can be considered seriously and not be afraid that a new quarantine will be introduced in a month or the COVID-2019 virus will break free again. It seems that the majority of large investors and traders now believe approximately the same since most of the macroeconomic reports continue to be ignored. Well, in such conditions, ordinary traders are still not very comfortable to trade. We believe that increased attention should still be paid to technical factors.

And technical factors are now also disappointing and do not contribute to active trading. We can say that the trend movement ended on June 10. Since then, in the first days, the pair still corrected, and then completely went into absolute flat. At the moment, it is limited to approximately the levels of 1.1200-1.1320. It is difficult to say when and under what conditions traders will be able to withdraw the pair from this channel. The key themes for the euro/dollar currency pair remain unchanged. And the lack of news on these topics may be the real reason for the flat in recent weeks. After all, traders may now be interested in the prospects of the American and European economies. After a strong downturn, everyone is interested in recovery. Therefore, the topics of the "US-China" conflict, as well as the provision of new stimulus packages to the EU and US economies, can greatly concern market participants. However, Washington and Beijing decided to put their bickering on pause, and the adoption of new financial aid packages is still stuck in Congress and the European Council. Thus, traders are deprived of new information on these important topics, and do not force events, preferring to wait for the necessary information.

Trading recommendations:

On a 4-hour timeframe, the euro/dollar pair trades inside a side channel, without even trying to work out its upper and lower lines. Thus, we now recommend that traders wait for the pair's quotes to exit this channel, and only then resume trading, according to the new trend. Purchases are recommended to be considered above the level of 1.1320, sales – below the level of 1.1200.

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

Weekly Bitcoin analysis

Bitcoin has been trying since May to break above the key resistance area near the February highs. Price is mostly moving sideways. Resistance is key here at $9,500-$10,000 area. A rejection could push price back towards $7,500.

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Red line -weekly resistance trend line

BTCUSD is trading below our red resistance trend line. As we explained above there we find key long-term resistance. Bulls need a break above the $9,500-$10,000 area in order to move higher towards $12,000-$13,000 area. The longer it takes to break the resistance, the higher the chances of a rejection at current levels. A pull back towards $7,500 is justified.

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

Weekly EURUSD analysis

EURUSD has tried several times the past few weeks to recapture the 1.13 level. Each time price managed to push through it but sellers were stronger and price never managed to make a weekly close above it. This price action signals the importance of the resistance in that level.

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Red rectangle - resistance area

EURUSD has major horizontal resistance in the area around 1.13-1.1350. A major reversal and top in the first quarter of the year and four attempts since May to recapture 1.13 has been unsuccessful. I prefer to be bearish below key resistance like this. In case of a new rejection combined with a break below 1.12, this would lead to more downside towards 1.11-1.1075 area and possibly even lower. A weekly close above 1.13 will change my view to bullish.

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

Comprehensive analysis of movement options for #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on July 2020

Minor operational scale (Daily)

The "top" of the summer - options for the development of the movement for #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on July 6, 2020.

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US dollar index

From July 6, 2020, the movement of the dollar index #USDX will be determined by the development and direction of the breakdown of the boundaries of the equilibrium zone (96.90 - 97.40 - 97.90) of the Minute operational scale fork - see the animated chart for details of working out these boundaries.

In the breakdown of the support level of 96.90 in the lower border ISL38.2 equilibrium zone of the Minute operational scale fork, with subsequent breakdown of the final Shiff Line Minute (96.50), it will be possible to update local minimum of 95.72 and the achievement of the dollar index of the channel borders 1/2 Median Line Minute (95.20 - 94.80 - 94.40) and equilibrium zone (94.40 - 93.20 - 92.00) of the Minor operational scale fork.

Sequential breakdown of the resistance level of 97.20 on the top border ISL61.8 equilibrium zone of the Minute operational scale fork and the initial line SSL (98.10) of the Minor operational scale fork will do the actual continuation of the upward movement #USDX to the starting line SSL Minute (99.55) and warning line UWL38.2 (100.56) of the Minor operational scale fork.

The layout of the #USDX movement options from July 6, 2020 is shown on the animated chart.

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Euro vs US dollar

The single European currency EUR/USD from July 6, 2020 will continue to develop its movement depending on the development and direction of the breakdown of the borders of the 1/2 Median Line channel (1.1195 - 1.1250 - 1.1320) of the Minute operational scale fork - details of movement inside the channel 1/2ML Minute are shown on the animated graph.

The breakdown of the resistance level of 1.1320 at the upper border of the channel 1/2 Median Line in the Minute operational scale will determine the development of the upward movement of the single European currency to the goals:

  • initial SSL line (1.1380) of the Minute operational scale fork;
  • maximum 1.1422 - 1.1495.

In the breakdown of support level of 1.1195 at the intersection of the lower border of the channel 1/2 Median Line Minute with the Median Line Minor (1.1195) will make possible the development of the downward movement of the EUR/USD to the lower border ISL38.2 (1.1095) equilibrium zone of the Minor operational scale fork with prospect of a continuation of this movement in the zone of equilibrium (1.1095 - 1.1000 - 1.0950) of the Minute operational scale fork.

The EUR/USD movement options from July 6, 2020 are shown on the animated chart.

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Great Britain pound vs US dollar

The development of the movement of Her Majesty's currency GBP/USD from July 6, 2020 will be due to the development and direction of the breakdown of the range:

  • resistance level of 1.2465 - the lower border of the channel 1/2 Median Line of the Minute operational scale fork;
  • support level of 1.2380 - upper bound of ISL38.2 balance zone of the operational scale fork Minute.

Breakdown of the resistance level of 1.2465 - the development of the movement of Her Majesty's currency will occur inside the 1/2 Median Line channel (1.2465 - 1.2560 - 1.2635) of the Minute operational scale with the prospect of achieving goals:

  • UTL control line (1.2690) for Minor operational scale forks;
  • local maximum 1.2812;
  • UTL Minute control line (1.2910).
  • with the ability to reach the warning line UWL61.8 Minor (1.3110) and maximum 1.3199.

The breakout of ISL38.2 Minute - support level of 1.2380 - will determine the further development of the GBP/USD movement already in the equilibrium zone (1.2380 - 1.2260 - 1.2160) of the Minute operational scale fork with the prospect of updating the local minimum 1.2073 and reaching the boundaries of the channel 1/2 Median Line (1.2025 - 1.1815 - 1.1595) of the Minor operational scale fork.

From July 6, 2020, we look at the GBP/USD movement options on the animated chart.

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US dollar vs Japanese yen

The development of the movement of the currency of the "Land of the Rising Sun" USD/JPY from July 6, 2020 will be determined by the development and direction of the breakdown of the range:

  • resistance level 107.80 - lower border of the channel 1/2 Median Line Minute;
  • support level 107.20 - upper bound of ISL38.2 equilibrium zone of the Minute operational scale fork.

The breakdown ISL38.2 Minute - support level of 1.2380 - will determine the further development of the movement of USD/JPY in the zone of equilibrium (107.20 - 106.50 - 105.90) trading recommendations of the achievement of the channel borders 1/2 Median Line (105.70 - 104.40 - 103.10) of the Minor operational scale fork.

Breakdown of the resistance level 1.2465 - the development of the movement of the "Land of the Rising Sun" will occur inside the 1/2 Median Line channel (107.80 - 108.30 - 108.65) of the Minute operational scale with the prospect of achieving the goals:

  • SSL Minute start line (108.90);
  • upper bound of ISL61.8 (109.55) equilibrium zone of the Minor operational scale fork;
  • local maximum 109.86.
  • UTL control line (110.10) for Minute operational scale forks;
  • local maximum 111.72.

The marking of USD/JPY movement options since July 6, 2020 is shown on the animated chart.

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The review is compiled without taking into account the news background, the opening of trading sessions of the main financial centers and is not a guide to action (placing "sell" or "buy"orders).

Formula for calculating the dollar index:

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

Where the power coefficients correspond to the weights of currencies in the basket:

Euro - 57.6 %;

Yen - 13.6 %;

Pound - 11.9 %;

Canadian dollar - 9.1 %;

Swedish Krona - 4.2 %;

Swiss franc - 3.6 %.

The first coefficient in the formula brings the index value to 100 on the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

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