Hot forecast and trading recommendations for EUR/USD on 10/02/2020

Yesterday was extremely busy and the foreign exchange market was thrown from side to side. Although the single European currency looked relatively stable. The scale of fluctuations in it was much smaller than in the pound. Although, initially the euro's fall was associated with the pound. The market has been set in motion after news that the European Union is launching litigation with Britain over the UK Internal Market Bill, which violates the Brexit deal. This step came as a complete surprise. Moreover, no one has said anything about it at all for the last couple of weeks. EU representatives even stated that they are ready to put this issue aside for the sake of reaching a compromise. The head of the European Commission, Ursula von der Leyen, generally expressed confidence that a trade deal between London and Brussels would be signed. And now the case goes to court. The negotiations fell through. It is clear that the pound immediately plunged down. And the euro as well. The market experienced a shock.

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Nevertheless, the euro began to grow after a couple of hours and completely won back the fall. The primary reason was the data on the labor market and producer prices in Europe, which came out better than forecasts. The unemployment rate rose from 8.0% to 8.1%. But they were expecting a rise to 8.2%. Also, the rate of decline in producer prices should have slowed down from -3.1% to -2.6%. In fact, they slowed down to -2.5%. Nevertheless, the data itself is not so upbeat, as it shows a gradual deterioration in the economic situation. However, they are still better than predicted.

Unemployment rate (Europe):

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Afterwards, the revision of previous data on applications for unemployment benefits in the United States was released. Naturally, the report was revised towards an increase in the number of applications. However, as soon as the data was published, the euro tumbled with renewed vigor. The number of initial applications for unemployment benefits fell from 873,000 to 837,000. It's all about repeated applications, the number of which decreased from 12,747,000 to 11,767,000. And of course, the data came out much better than forecasts.

Repetitive Unemployment Insurance Claims (United States):

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The euro is currently trying to win back some of yesterday's losses. But it looks more like an elementary technical rebound. Most likely, the euro will fall again quite soon. When the preliminary data on inflation in the euro area is released, which should show that the rate of decline in consumer prices accelerated from -0.2% to -0.3%. That is, deflation in Europe is only increasing. And investors do not like such things.

Inflation (Europe):

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But the content of the US Department of Labor report will undermine the euro's position even more. The unemployment rate is expected to fall from 8.4% to 8.3%. It turns out that the labor market is recovering in the United States, while unemployment is only growing in Europe. In addition, unemployment in the United States should continue to decline, since 915,000 new jobs can be created outside of agriculture. So there will be fewer and fewer unemployed. And this favorably distinguishes the dollar from the euro.

Number of new jobs created outside agriculture (United States):

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The euro/dollar pair, as before, follows the correction trajectory from the local low of 1.1612, where the 1.1755/1.1770 area is the resistance level. The price consistently rebounding from the area where trading forces interact indicates a possible resumption of the downward interest that was set in the market during the first days of September.

If we proceed from the quote's current location, we can see a fluctuation between the values of 1.1700/1.1755.

A local slowdown is recorded relative to the market dynamics, but we expect a quick acceleration, taking into account the current information and news background.

Considering the trading chart in general terms (daily period), we see the quote returning to the boundaries of the previously passed flat, but taking into account the downward move from September 1, there is still a prospect for a further decline.

We can assume a temporary price fluctuation in the 1.1700/1.1755 range, where there is a high probability of acceleration, which will lead to a breakdown of one or another border. The breakout method will be the best trading tactic, and the points of the highest concentration are 1.1685/1.1775, relative to which it is worth entering the market.

From the point of view of a complex indicator analysis, we see that the indicators of technical instruments on the minute and hour periods have a variable signal (buy/sell). The daily period, as before, signals a sell, reflecting the scale of the September decline.

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Brief trading recommendations for EUR/USD and GBP/USD on 10/02/20

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The EUR/USD pair continues to move at the conditional peak of the corrective course set by the market at the beginning of the trading week from the local low of 1.1612. Approaching the resistance level of 1.1755 consecutively led to the fact that the corrective course slowed down. It was replaced by an amplitude of 1.1700/1.1755, and the quote has been moving within it for more than 60 hours.

A slowdown expressed in a sideways move may signal the end of the correction, while at the same time, it may signal an upcoming acceleration in the market, which will be expressed in a local price jump relative to the breakdown of a particular border.

Based on the obtained data, we can get various possible market development scenarios. I propose to consider them below:

The first scenario is based on the logic of resuming the downward trend that has prevailed in the market since September 1. In this case, the lateral amplitude of 1.1700/1.1755 will be considered the last stage in the correction pattern, which will eventually lead to the resumption of the decline in the direction of the values of 1.1650-1.1620.

The second scenario considers the sideways channel 1.1700/1.1755 as a process of accumulating trading forces, where the market, driven by emotions, creates local price impulses.

- Buying a pair is considered at a price above the level of 1.1775.

- Selling a pair is considered at a price below the level of 1.1685.

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On the other hand, the GBP/USD pair, like the European currency, is within the corrective course, with one difference – the pound has a high degree of speculative activity against the background of an unstable situation caused by the Brexit information background.

Based on the negative information background, as well as the development of the downward trend from September 1, we can assume that the correction course will end soon and the quote will return to the area of the local low of 1.2674, with the prospect of its breakdown.

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Market will unusually assess the Nonfarm data

All the market's attention will be turned to the publication of important data on US employment today, which will show the state of September's labor market after the Americans stopped receiving payments under the assistance program adopted in the spring of this year.

According to the presented consensus forecast, the US economy should have received 850,000 new jobs in the Nonfarm sector in September against 1.371,000 a month earlier, while the unemployment rate is expected to decline from 8.4% to 8.2%.

How can the dollar react to these statistics?

In our opinion, if they turn out to be in line with the forecasted values, this will not lead to any clear movements in the currency market in pairs where the US currency is present, since it is very likely that these values are already included in the quotes. But, if they come out above or below the estimated values, then it seems that the following can be expected:

If the values turn out to be higher than expected, the dollar will traditionally receive support in such cases, although limited, since positive values will lead to a growing demand for shares of American companies, which will greatly put pressure on the dollar rate and after pausing, it will resume its decline in the currency market.

Now, there is another possible scenario. The data on the number of new jobs will be lower than expected. We believe that this will also lead to a limited decline in the dollar exchange rate. Investors will traditionally react to weaker values, however, it is this bad news that can become the basis for a drop in demand for company shares with a simultaneous strengthening of the US currency.

In general, our expected possible development of events presented above may show an unconventional market reaction, which usually corresponds to those movements that are observed in conditions unlike the current ones.

Forecast of the day:

The EUR/USD pair is consolidating below the resistance level of 1.1755. It may decline further towards the level of 1.1515 due to weak data on the number of new jobs. At the same time, if they do not disappoint and are at least slightly above the forecasted values, this will push the pair above the level of 1.1755 to 1.1810.

The AUD/USD pair is trading below the level of 0.7200. It will react to employment data in the same way as the EUR/USD pair. On the positive data, it may continue to rise to the level of 0.7300, but negative values will lead to a price decline to 0.7115.

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EUR/USD: plan for the European session on October 2. COT reports. Brexit news dampened optimism among euro buyers. US nonfarm

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

Several signals to sell the euro appeared yesterday. The bulls' failure to climb to the 1.1754 level formed a good entry point into short positions for the euro in the afternoon. And today, the bears achieved their goal and tested the key target of 1.1713 during the Asian session, which made it possible to take around 40 points of profit from the market. We see that the bulls tried to gain a foothold above 1.1745 in the afternoon, but the reverse test of this level from top to bottom led to an instant breakout, so the necessary entry point for long deals was not formed.

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Nothing has changed since yesterday from a technical point of view. Euro buyers have the main task of breaking through and settling above the resistance of 1.1754, which will lead to a new wave of EUR/USD growth in the high of 1.1796. The 1.1833 level will be a distant target, which is where I recommend taking profits. However, before that it is worth trying to protect the nearest support level of 1.1713, where forming a false breakout will serve as a reason to open long positions in the pair. This area also coincides with the lower border of the corrective channel that was formed on September 28th. Therefore, it is best not to rush to buy when we have gone beyond this area, but to wait until the low of 1.1668 has been updated and open long positions there for a rebound, counting on a correction of 20-30 points within the day. We expect the eurozone inflation report to be released in the first half of the day, which may turn out to be worse than economists' forecasts, which is not in favor of the euro. And we also have a strong report on the number of employed in the US nonfarm sector in the afternoon, which can move the pair in any direction.

The Commitment of Traders (COT) reports for September 22 showed that both long and short positions increased, but there were more of the first ones than the latter, which led to an increase in the delta. Apparently, buyers are attracted to such a low euro rate for the first time in three months, even despite the risk of a second wave of coronavirus infection across Europe. Thus, long non-commercial positions increased from 230,695 to 247,049, while short non-commercial positions only increased from 52,199 to the level of 56,227. The total non-commercial net position also increased over the reporting week to 190,822, against 178,576 a week earlier, which indicates bullish market sentiment in the medium term. The more the euro falls against the US dollar, the more attractive it will be for new investors.

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

Sellers of the euro need to defend resistance at 1.1754, and form a false breakout on it, similar to yesterday. This will be your signal to open short positions in the pair. Now the bears are mainly aiming for a low of 1.1713, consolidation below which forms an additional entry point to short positions and will return the market to the bears, allowing them to reach the 1.1668 area, where I recommend taking profits. Support at 1.1617 will be a distant target. If the inflation data turns out to be better than forecasts, and there is no serious activity when resistance is tested at 1.1754, then it is best not to rush to sell, but to wait until the quote rises to a new resistance at 1.1796 and then you can sell the euro there immediately on a rebound, counting on a correction of 20-30 points within the day.

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Indicator signals:

Moving averages

Trading is carried out just below 30 and 50 moving averages, which indicates the bears' attempt to regain control of the market.

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

Bollinger Bands

The breakout of the upper border of the indicator around 1.1765 will help the euro grow further. A break of the lower border at 1.1715 will increase pressure on the euro.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
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Indicator analysis. Daily review on GBP / USD for October 2, 2020

The pair traded in a side-channel on Thursday. At the beginning of the day, the price traded upward and retested the resistance level 1.2943 (black bold line), this was followed by a downward pullback which tested 1.2827 - a 50% pullback level. (red dotted line). According to the economic calendar, dollar news is expected at 12:30 UTC.

Trend analysis (Fig. 1).

The market may continue to move downward from the level of 1.2893 (closing of Thursday's daily candlestick) with the target of 1.2827 - a 50.0% pullback level (red dotted line). Upon reaching this level, the price may begin to move upwards with the target at the resistance level 1.2942 (black bold line). Upon testing the said level, the upward trend may continue with the next target at the upper fractal 1.2979 (red dashed line). Much will depend on the market reaction to the news that comes out at 12:30 UTC.

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Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly chart - up.

General conclusion:

Today, the price may move down from the level of 1.2893 (closing of Thursday's daily candlestick) with the target of 1.2827 - a 50.0% pullback level (red dotted line). Upon reaching this level, the price may begin to move upwards with the target at the resistance level 1.2942 (black bold line).

Another possible scenario: upon testing the level of 1.2827 (red dotted line), the price may continue to move down with the next target at the historical support level 1.2769 (white dotted line).

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Forex forecast 10/02/2020 from Sebastian Seliga

In today's video we will take a look at the most important trading event of the week and possibly even month: the Non-Farm Payrolls data release Unemployment Rate from the US. The video will include the macro data review, technical analysis and possible trading plan to trade the NFP Friday.

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Indicator analysis. Daily review on EUR / USD for October 2, 2020

The pair traded upward on Thursday and tested 1.1765 - a 38.2% pullback level (red dotted line). Today, the price may move down before the news at 12:30 UTC. According to the economic calendar, euro news is expected at 09:00 UTC, and dollar news is at 12:30 UTC.

Trend analysis (Fig. 1).

The market may move downward from the level of 1.1751 (closing of yesterday's daily candlestick) with the target at the support level 1.1665 (black thick line). In case of testing this level, an upward pullback is possible to the level of 1.1765 (red dashed line). Much will depend on the market reaction to the news which comes out at 12:30 UTC.

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Figure: 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly chart - up.

General conclusion:

Today, the price may move downward from the level of 1.1751 (closing of yesterday's daily candlestick) with the target at the support level 1.1665 (black bold line). In case of testing this level, an upward pullback is possible to the level of 1.1765 (red dashed line).

Another possible scenario: from the level of 1.1751, the price may move down with the target at 1.1690 - a 38.2% pullback level (blue dashed line). Upon testing this level, an upward pullback is possible with the target at 1.1812 - a 50% pullback level (red dotted line).

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Technical Analysis of ETH/USD for October 2, 2020

Crypto Industry News:

Venezuelan President Nicolas Maduro said his country's government now sees cryptocurrencies as a potential way to avoid sanctions. On September 29, Maduro introduced a new law to help the country overcome the impact of US sanctions.

As part of the project, Venezuela will check the possibility of using various cryptocurrencies in both domestic and foreign trade. Maduro argued that the new anti-sanction law covers both private and state-supported crypto initiatives such as the cryptocurrency linked to crude oil in Venezuela, Petro:

"The anti-sanction law is the first response [...] aimed at giving new strength to Petro and other domestic and global cryptocurrencies and, in domestic and foreign trade, so that all cryptocurrencies in the world, state and private, can be used. It is an important project that is under development ".

According to online reports, the new law is currently being examined by Venezuela's legislative body, the National Constitutional Assembly.

The latest news apparently shows that Venezuela's interest in cryptocurrencies is not limited to the domestic Petro crypto, which has been placed as a major tool to evade US sanctions.

Maduro's new words came shortly after the Venezuelan government issued an official regulatory framework for mining cryptocurrencies such as Bitcoin. On September 23, Venezuelan national oversight of crypto assets and related activities issued the first decree regulating all cryptocurrency mining activities, setting out specific requirements for miners, including such as the obligation to join a so-called "domestic production pool". Maduro did not support any cryptocurrencies other than the state-owned Petro.

At the end of 2019, the president of Venezuela announced that retirees and pensioners will receive Christmas bonuses in Petro. In late 2018, the Venezuelan government converted the monthly pensioners' bonus into Petro.

Petro, officially introduced in February 2018, has become the world's first domestic cryptocurrency to be fired in oil. The coin is supposed to attract foreign investment as well as avoid sanctions from the US government. However, the token is not available for purchase outside of Venezuela.

Technical Market Outlook:

Despite the fact that the 61% Fibonacci retracement levels has been broken, the ETH/USD pair has reversed all the gains and made fresh local low at the level of $340.29 (at the time of writing the article). The bears are now in control over the Ethereum market and the next target for them is seen at the level of $332.38 and $321.95. Please notice, that only a clear and sustained violation of the demand zone located between the levels of $321.95 - $305.20 will open the road towards the key mid-term technical support located at the level of $288.85.

Weekly Pivot Points:

WR3 - $446.64

WR2 - $410.95

WR1 - $384.24

Weekly Pivot - $347.99

WS1 - $319.88

WS2 -$284.46

WS3 - $256.92

Trading Recommendations:

The weekly and monthly time frame trend on the ETH/USD pair remains up and there are no signs of trend reversal, so buy orders are preferred in the mid-term. The key mid-term technical support is currently seen at the level of $305.20 - $321.95, so all the dynamic corrections are still being used to buy the dips. The next mid-term target for bulls is seen at the level of $500.

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Technical Analysis of BTC/USD for October 2, 2020

Crypto Industry News:

The US Commodity Futures Trading Commission (CFTC) has accused the BitMEX derivatives exchange of operating an unregistered trading platform and violating anti-money laundering laws.

According to a statement released on Thursday, the CFTC has filed a civil suit in the South District of New York against five entities and three individuals who allegedly own and operate the stock exchange.

The accused include Arthur Hayes, known publicly as the CEO of BitMEX, as well as Ben Delo and Samuel Reed. The CFTC claims that these individuals own and operate BitMEX through a "maze of corporate entities".

The aforementioned corporate entities that are also cited as defendants in the case are HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).

The CFTC aims to lift or fix all "unfair profits", civil fines, permanent trade bans, and orders against future violations. They believe that BitMEX has been offering retail traders $ 1 trillion in face value illegal leveraged trading services since its inception in 2014. Despite its success, the CFTC believes the exchange has failed to adopt "most basic compliance procedures". These include failure to register with the commission, unfamiliarity with the client and anti-money laundering procedures.

Technical Market Outlook:

The BTC/USD pair has reacted to the BitMex exchange news negatively and dropped lower from the level of $10,890 to the level of $10,353 (at the time of writing the article). This move down has support in momentum, that is breaking into the negative territory. It looks like the market will test the level of $10,000 sooner or later as there is a clear negative sentiment that dominated the Bitcoin trading. The next intraday supports are seen at the levels of $10,344 and $10, 260.

Weekly Pivot Points:

WR3 - $11,934

WR2 - $11,451

WR1 - $11,105

Weekly Pivot - $10,558

WS1 - $10,238

WS2 -$9,737

WS3 - $9,392

Trading Recommendations:

The weekly trend on the BTC/USD pair remains up and there are no signs of trend reversal, so buy orders are preferred in the mid-term. All the dynamic corrections are still being used to buy the dips. The next mid-term target for bulls is seen at the level of $13,712. The key mid-term technical support is seen at the level of $10,000.

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Analytics and trading signals for beginners. How to trade EUR/USD on October 2? Plan for opening and closing trades on Friday

Hourly chart of the EUR/USD pair

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The EUR/USD pair started a new downward movement last night, which led to price taking below the upward trend line. This is exactly what we have been talking about in the past few days. Almost any round of correction will lead to price taking below the trend line. Now we can only guess if this is a new round of correction, after which the upward movement will resume, or is it the beginning of a new downward trend? One way or another, but you can try to reject the new signal that is encircled. We still recommend traders to be very careful, because trading the pair has recently been inconvenient and difficult, especially for novice traders.

The fundamental background for the US currency remains rather complex and has not changed in recent days. Thus, the dollar's growth (the fall of the euro/dollar pair) is still in doubt. This does not mean that the US dollar is not able to go down even 100 points now. On the hourly chart, we can see an even stronger fall, since 100 points is not even a move. We mean that the dollar is unlikely to strengthen this month, for example, by 300 or 400 points. The situation is moving smoothly towards the presidential election, which is still the most important topic in the United States. As for the vital news, there are very few of them from America right now, and all of them, as they say, are "past the box office". For example, the news that Democrats and Republicans decided to try to come to an agreement on a financial aid package for the US economy, is that good news given that it should have been agreed and signed back in early August?

Market participants continue to ignore macroeconomic data, but two rather important reports will be published today and novice traders should also pay attention to them. Firstly, we are talking about inflation in the European Union, which has recently been called deflation, and secondly, about the NonFarm Payrolls report, which will be released in the United States in the afternoon. Let's say right away that we do not expect any market reaction to the inflation report, we have a 50/50 likelihood that they will pay attention to the case of the NonFarm Payrolls report. The market continues to ignore any statistics. However, the report on the number of new jobs created outside the agricultural sector is still very important, so traders can make an exception today. The forecast is 850,000 new jobs. Any value exceeding the forecast by 100,000 or more will make it possible for the dollar to grow significantly. But market participants might just brush it off if it's only a small deviation from the forecast.

Possible scenarios for October 2:

1) Buy positions quickly lost their relevance, since the price has already settled below the upward trend line. Nevertheless, there is still a possibility that the current downward movement is a correction, after it has ended the upward movement will resume, and the trend line will simply be rebuilt. But for now, we do not recommend opening long positions.

2) Selling became relevant again on Friday morning, as the price broke the trend line. Now we recommend trading the pair down while aiming for 1.1692 and 1.1667. Bearing in mind that the current movement may be a round of correction, since an important US report will be released in the afternoon, the reaction to which may be unpredictable. We recommend novice traders to not forget about Stop Loss levels. Ahead of the release of the NonFarm Payrolls report, if there is even a small profit on the deal, you can close it, or set Stop Loss to breakeven.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator (10,20,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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Technical Analysis of GBP/USD for October 2, 2020

Technical Market Outlook:

The GBP/USD pair has reversed all the gains from the level of 1.2979 and a Bearish Sandwich candlestick pattern had been made at the H4 time frame chart. The price pulled-back towards the level of 1.2848, which is just in the middle of the wide demand zone. Nevertheless, the target for bulls is still seen at the level of 1.2979 and 1.3017 and strong and positive momentum support this short-term outlook despite the overbought market conditions. The technical support for bears is seen at the levels of 1.2848, 1.2816 and 1.2786.

Weekly Pivot Points:

WR3 - 1.3187

WR2 - 1.3072

WR1 - 1.2894

Weekly Pivot - 1.2783

WS1 - 1.2601

WS2 - 1.2494

WS3 - 1.2312

Trading Recommendations:

On the GBP/USD pair the main, multi-year trend is down, which can be confirmed by the down candles on the monthly time frame chart. The key long-term technical resistance is still seen at the level of 1.3518. Only if one of these levels is clearly violated, the main trend might reverse (1.3518 is the reversal level) or accelerate towards the key long-term technical support is seen at the level of 1.1903 (1.2589 is the key technical support for this scenario).

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USD/JPY Upside Clouded!

USD/JPY drops as the JP225 plunges and due to USDX's minor retreat ahead of the NFP report. It accelerates its sell-off and it could invalidate a potential further growth in the short term.

The pair is trapped within an extended sideways movement, but I really believe that the US data could bring a clear direction and a fresh trading opportunity. The yen rallies as the Japanese Consumer Confidence increased from 29.3 to 32.7 points, beating the 31.6 estimates. It remains to see if the USD will be saved from the downside by the US NFP which is expected around 900K. The Unemployment Rate could drop from 8.4% to 8.2% in September, while the Average Hourly Earnings could rose by 0.5%.

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USD/JPY failed to approach the R1 (106.17) static resistance and the median line (ml) of the ascending pitchfork signaling a high selling pressure. The resistance stands at the inside sliding line (sl) of the ascending pitchfork and now it could drop towards the lower median line (lml).

The pair have developed a potential major Double Bottom pattern, but only a valid breakout above 107.00 psychological level would have confirmed it. A downside breakout from this range invalidates the chart pattern and suggests selling as USD/JPY could drop deeper towards the 103 level.

  • USD/JPY Trading Tips

USD/JPY is still undecided as long it stays between 104.18 and 107.01 levels. A valid breakout from this extended range could bring a great trading opportunity.

Sell it if the price makes a valid breakdown below the lower median line (lml) and under 104.18. R3 (102.76) could be used as a potential downside target.

Buy USD/JPY if it jumps above 106.00 psychological level or after a false breakdown with great separation through the immediate support levels (lml, 104.18). A major upwards movement will be validated by an upside breakout from the extended range, above 107.

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Technical Analysis of EUR/USD for October 2, 2020

Technical Market Outlook:

After the EUR/USD pair has bounced from the low at the level of 1.1685, it started to test the short-term trend line resistance again, but failed to continue to bounce any higher. The level of 1.1772 had not been violated clearly and the market reversed towards the technical support located at 1.1696. Nevertheless, the next target for bulls is seen at the level of 1.1772 and 1.1790. The next target for bears is seen at the level of 1.1655. Only a sustained breakout above the level of 1.1758 would put bulls back into control again. The weekly time frame trend remains up.

Weekly Pivot Points:

WR3 - 1.2011

WR2 - 1.1939

WR1 - 1.1752

Weekly Pivot - 1.1683

WS1 - 1.1498

WS2 - 1.1408

WS3 - 1,1239

Trading Recommendations:

On the EUR/USD pair the main trend is up, which can be confirmed by almost 10 weekly up candles on the weekly time frame chart and 4 monthly up candles on the monthly time frame chart. Nevertheless, weekly chart is recently showing some weakness in form of a several Pin Bar candlestick patterns at the recent top. This means any corrections should be used to buy the dips until the key technical support is broken. The key long-term technical support is seen at the level of 1.1445. The key long-term technical resistance is seen at the level of 1.2555.

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Elliott wave analysis of GBP/JPY for October 2, 2020

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GBP/JPY broke above key-resistance at 136.60, but only to fail and break back down again, indicating a more complex correction unfolding for a revisite to good support at 135.23, but ultimate we should expect a small dip below this support for a dip closer to 134.59 to complete this complex correction and set the stage for the next impulsive rally higher through resistance at 136.60 towards 138.36 and above.

R3: 136.70

R2: 136.53

R1: 136.11

Pivot: 135.80

S1: 135.51

S2: 135.23

S3: 134.59

Trading recommendation:

We are long GBP from 133.51 and we will take 50% profit at 136.25 or upon a break below support at 135.50.

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Elliott wave analysis of EUR/JPY for October 2, 2020

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EUR/JPY failed to reach the former peak at 124.25, which means a fifth failure has been seen and we can now expect a second dip to 123.50 and likely even lower to the 61.8% corrective target of wave i at 123.09 before the next impulsive rally higher.

We will likely see support at 123.50 being able to reject the first test, but the second test will most likely break below 123.50 for the final dip towards 123.09 to complete wave ii and set the stage for wave iii higher through resistance at 124.25.

R3: 124.20

R2: 124.00

R1: 123.80

Pivot: 123.73

S1: 123.68

S2: 123.50

S3: 123.35

Trading recommendation:

We are long EUR from 122.95 and we will take 50% at 123.90 or upon a break below 123.68 and we will re-buy the 50% at 123.25

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Forecast for EUR/USD on October 2, 2020

EUR/USD

The euro rose by 26 points yesterday, a stronger movement was prevented from developing the signal level of 1.1754, created by the lows of August 21 and September 9. The Marlin oscillator is showing the first signs of a reversal. Perhaps with the release of US employment data, this reversal will intensify. The US unemployment rate for September is expected to fall from 8.4% to 8.2%. The first target for the euro is 1.1650, then 1.1550.

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The price formed a divergence with the oscillator on the four-hour chart. In order to confidently decline, The price needs to settle below the MACD line below 1.1688. We are waiting for the development of events.

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Forecast for GBP/USD on October 2, 2020

GBP/USD

The pound traded in a wide range of 157 points on Thursday due to conflicting information about the Brexit deal. In the current situation, the pound is falling under the general pressure of the dollar until we receive a positive portion of news (if they turn out to be such) from the camp of negotiators. Technically, there is a reversal, when the growing correction from September 24 is completed. The Marlin oscillator moves down without going into the growth zone. The nearest target for a decline is 1.2725 (100.0% Fibonacci), followed by 1.2645, 1.2540.

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The price is above the balance line and the MACD line on the four-hour chart, the growing short-term sentiment remains, but Marlin is already trying to penetrate the bears' territory, which will significantly facilitate the price's move to leave the area below the indicator lines. But before that, there are more than a hundred points.

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Forecast for AUD/USD on October 2, 2020

AUD/USD

The Australian dollar tried to go beyond the strong resistance of 0.7190 yesterday, but the price only managed to pierce the level. However, the Marlin oscillator channel has been disrupted and is being canceled. The oscillator turned slightly higher. As before, the aussie's first target is the 0.7065 level, then the support of the price channel at the 0.6970 area. We attribute this optimism with the expected positive data on employment in the US. The unemployment rate is expected to decline from 8.4% to 8.2%.

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The Marlin oscillator is on track for an active decline on the four-hour chart. The price is above the indicator lines, but the MACD line has kept its downward direction, indicating the corrective nature of the growth of the last five days. The MACD line itself acts as an intermediate support in the 0.7102 area.

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Forecast for USD/JPY on October 2, 2020

USD/JPY

The Japanese yen cannot go beyond the area above the balance indicator line on the daily chart for the seventh consecutive day, but it is firmly holding on to its target with the support of the Marlin oscillator, which started a barely noticeable growth from the border of the positive trend zone. The price is supported by the Fibonacci level of 110.0%. The targets remain the same: the Fibonacci level of 100.0% with the coinciding MACD line at 106.00, and the embedded price channel line at 106.35.

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The Marlin oscillator eased on the four-hour chart, now it is turning to the upside from the zone of negative values. The price overcomes the resistance of the balance line. Going beyond the area above it will mean a shift in the mood mainly towards buy positions. Setting the price under the MACD line (105.25 level) can return the yen to 104.65 - to the Fibonacci level of 123.6%.

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Hot forecast and trading signals for GBP/USD on October 2. COT report. Pound in a precarious situation. Bears preparing a

GBP/USD 1H

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The GBP/USD pair continued to trade within the ascending channel on October 1, leaving it only for a short time since the market reacted to an extremely important fundamental background. However, sellers could not remove the pair from the area below the Kijun-sen and Senkou Span B lines, so the quotes returned to the channel very quickly. Thus, at the moment we can say that the upward trend continues. Today we can expect a renewed strengthening of the British currency. Sellers failed to seize the initiative on the first attempt, however, given the fundamental background from the UK, it is possible that there will be new attempts. And in the very near future. Bears need to move the pair below the Senkou Span B and Kijun-sen lines in order to count on a new downward trend.

GBP/USD 15M

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Linear regression channels are directed towards different directions on the 15-minute timeframe, displaying trades in multiple directions throughout the day. The latest Commitment of Traders (COT) report for the British pound showed that non-commercial traders got rid of buying the pound and opened Sell-contracts (shorts). A group of commercial traders got rid of huge amounts of both longs and shorts of the pound. We then concluded that the pound sterling is now, in principle, not the most attractive currency for large traders. The new COT report showed absolutely minor changes for the "non-commercial" group. Buy-contracts (longs) fell by 2,000 while Sell-contracts decreased by 1,500. Thus, the net position for non-commercial traders remained practically unchanged for the reporting week (September 16-22). The British pound continued to fall, which can be considered a consequence of the previous reporting week, when the net position of non-commercial traders greatly decreased, by 11,500 contracts. No changes in the rate of the pound/dollar pair on the 23rd, 24th, 25th, which will be included in the next report. Thus, a long term decline in the pound's quotes is quite questionable, although the pound is still the most unattractive currency in the foreign exchange market.

The key news of the day was a statement from Brussels claiming that the European Union is starting a lawsuit against London because of British Prime Minister Boris Johnson's resonant UK Internal Market Bill. They jumped, as they say. After that, the pound was thrown from side to side, and the pair only managed to calm down in the evening. All other news of the day certainly fell into the shadows. We have already talked about US reports in the article on the euro/dollar. The index of business activity in the manufacturing sector was published in Britain, which marginally changed. There were no more reports in Britain. No scheduled macroeconomic publications for Britain on Friday, however, at any time, traders may receive new information on the confrontation between Brussels and London. Which, naturally, can cause a new storm in the foreign exchange market. In addition, the US will publish an important NonFarm Payrolls report for September. The forecast is +850,000. A value less than this figure may create additional pressure on the dollar, but in general, the pound sterling is in a precarious situation due to events related to Britain, Brexit and negotiations with the EU.

We have two trading ideas for October 2:

1) Buyers continue to push the pair up, but they remain inside the ascending channel. Therefore, you are advised to stay with long positions while aiming for the resistance area of 1.3004-1.3024 and the 1.3086 level as long as the pair remains above the Senkou Span B line and is within the channel. Take Profit in this case will be from 100 to 170 points. The current fundamental background is simultaneously bad for both the pound and the dollar, but it seems to be worse for the pound.

2) Sellers failed to settle below the Kijun-sen line several times in a row, so they remain out of the game for now. They need to wait for the price to settle below the Kijun-sen line (1.2831) and only after that should you resume trading downward while aiming for the support area of 1.2636-1.2660. Take Profit in this case can be up to 130 points.

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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Hot forecast and trading signals for EUR/USD on October 2. COT report. Traders not impressed by eurozone and US data

EUR/USD 1H

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The EUR/USD pair continued absolutely indistinct trading on the hourly timeframe on October 1, which it has done in recent months. Recall that the pair's quotes left the 200-point horizontal channel just recently, in which it has spent around two months in. Yesterday, trading was held in a narrow, approximately 60-point range with no specific direction. Nevertheless, this was enough to leave the descending channel, even though it was met with difficulty, but it still retained the prospect of a downward trend in recent days. Buyers also managed to overcome the resistance area of 1.1704-1.1728, but have not yet managed to gain a foothold above the Senkou Span B line. Thus, moving further up is also questionable.

EUR/USD 15M

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Both linear regression channels are directed slightly to the upside on the 15-minute timeframe, but they can change the direction at any moment. The euro/dollar fell by about one and a half cents last reporting week (September 16-22). Recall that the previous Commitment of Traders (COT) report showed that the "non-commercial" group of traders, which we have repeatedly called the most important, sharply reduced their net positions. Thus, in general, the downward movement that began later on was sufficiently substantiated. The only problem is that it started late. The new COT report, which only covers the dates when the euro began its long-awaited fall, showed completely opposite data. Non-commercial traders opened 15,500 new Buy-contracts (longs) and almost 6,000 Sell-contracts (shorts) during the reporting week. Thus, the net position for this group of traders has increased by around 9,000, which shows that traders are becoming bullish. Accordingly, the behavior of the EUR/USD pair and the COT report data simply do not match. For the second week in a row. However, if you try to look at the overall picture, you can still take note of a very weak strengthening of the bearish sentiment, so the COT report allows a slight fall in the euro. The question is, will it continue to decline or is it already over? The pair even managed to rise by 40 points from September 23-29. Therefore, there are no such changes again.

The European Union and some of its countries published indexes of business activity in industrial sectors on Thursday. Without going into the numbers, we can say that none of the indices fell below the key level of 50.0 and did not significantly decline compared to the previous month. The unemployment rate in the European Union rose, as predicted by experts, to 8.1%. There have also been several relatively significant publications in the United States. The number of initial claims for unemployment benefits was 837 thousand, and the total number of secondary claims fell to 11.767 million. Thus, the overall unemployment rate in the United States continues to decline. Personal incomes of Americans decreased by 2.7% in August, personal expenses increased by 1%. The ISM manufacturing PMI fell from 56.3 points to 55.4. Markit PMI - from 53.5 to 53.2. Thus, we see that all the reports of the past day were either secondary initially, or their real values did not differ much from the forecasted ones. And also do not forget that market participants continue to ignore almost all macroeconomic data.

We have two trading ideas for October 2:

1) Buyers continue to put pressure on the pair, but it is still not enough to break the downward trend, although the price still went out of the descending channel with grief. Therefore, long positions will formally be relevant above the Senkou Span B line (1.1763) with targets at 1.1798 and the resistance area of 1.1886-1.1910, but the upward movement is now extremely uncertain. Take Profit in this case will be from 20 to 110 points.

2) Bears have finally released the market from their hands. However, an upward trend line may come to their aid. If the price settles below this line, then the trend for the pair will change to a downward one. We recommend resuming bearish trading while aiming for the support level of 1.1538 if the bears manage to get the pair back below the critical line (1.1690). In this case, the potential Take Profit is up to 130 points.

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

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

Overview of the GBP/USD pair. October 2. The European Union begins legal proceedings with London regarding the Brexit agreement

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - upward.

CCI: 73.9072

On Thursday, October 1, the British pound paired with the US dollar showed enviable volatility. Within 7-8 hours, the British pound quotes first fell by 120 points, so they rose by 140, then fell again by more than 100 points. Such movements are called a "storm" when the pair is thrown from side to side. However, there were reasons for this on the first day of October. We will discuss them below. In the meantime, let's get back to the technical picture. Although the pound plowed down twice by 100 points, it still failed to confidently overcome the moving average line. Thus, first of all, we cannot yet make a clear conclusion that the upward trend has ended, and secondly, now we need to wait for the markets to calm down and re-evaluate the entire current technical picture.

The fundamental background suggested sharp movements of the pair in different directions yesterday. The fact is that the European Union sent an official notification to the government in London, in which it announced that it was starting legal proceedings for violating the Brexit agreement. This is exactly the scenario we expected, as we have repeatedly discussed in previous articles. Boris Johnson decided once again to bluff and scare Brussels with a violation of the agreement on Brexit if a trade deal is not signed. However, now the British Prime Minister will receive the international trial, which will further lower the reputation of the UK, which was tarnished the last action 10 Downing Street. European Commission President Ursula von der Leyen said that the UK authorities had to fix a new bill "on the domestic market" so that it is not contrary to the already signed agreement on Brexit. London had until September 30, but instead of making adjustments to the bill, the British Parliament approved it in the second reading. Von der Leyen called such actions by London "a de facto refusal to comply with agreements and principles of international law". "This bill is by its very nature a breach of the obligation of good faith set out in the Brexit agreement. Moreover, if it is adopted in its current form, it will completely contradict the protocol on Ireland and Northern Ireland," the head of the European Commission said.

However, these are far from the only problems the UK has faced in recent days. The fact is that the "coronavirus" is again attacking Foggy Albion. The beginning of the second "wave" was announced by Boris Johnson a few weeks ago. Now, health experts have said that "the virus is essentially out of control". "We don't keep it under control at the moment," the UK's chief scientific adviser, Patrick Vallance, said at a government press conference. Chief medical officer of Britain Chris Whitty confirmed that the number of illnesses and hospitalizations is growing. In the last two days, 7 thousand new cases were recorded. Boris Johnson himself makes only vague statements: "I know that some people think that we should give up and let the virus go its way, despite the huge human losses that could potentially be. But I don't think that's what the British people want." According to Johnson, "the country is in a critical situation," but the Prime Minister does not answer the question of why the country was unprepared for the second "wave" of the pandemic.

We can only once again note that for the economy, the pandemic is much worse than Brexit or the absence of trade agreements with the United States or the European Union. However, since the country is ruled by Boris Johnson, who has already received an unofficial nickname in Britain "Brexit Prime Minister", he decided that one trouble will not prevent another. Now the Kingdom has lost 20% of GDP in the second quarter and 40,000 lives, the second "wave" could claim more lives and percent of GDP in the third and fourth quarters (current levels of disease in the early "wave" is already above the maximum levels the first "wave"), in addition to this, agreements with the EU and the US on free trade "do not smell", and Johnson managed to fall out with Brussels and now, most likely, London will face long litigation and the destruction of international reputation and prestige. We have written several times about Boris Johnson's victories as Prime Minister, but this list has not expanded beyond one point. But Johnson's list of defeats is growing. Unfortunately, ordinary Britons will have to pay for everything, who gave all the power in the country to one person.

As for the prospects of the pound/dollar pair, the quotes remained above the moving average line, so the upward trend is still maintained. As we said earlier, we need to pay more attention to technical factors now, as all macroeconomic statistics continue to be ignored by market participants. The general fundamental background is extremely important, however, it remains approximately the same in the US and Britain. Equally bad. Thus, the pound/dollar pair remains one of the most difficult pairs at this time.

On the last trading day of the week in the States, a rather important report is scheduled to be published – Nonfarm Payrolls – the number of new jobs created outside the agricultural sector. However, as we have already said, traders now ignore any statistics. Today may be the same picture. Thus, it is not desirable to skip this report, however, you can't expect a serious market reaction.

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The average volatility of the GBP/USD pair is currently 135 points per day. For the pound/dollar pair, this value is "high". On Friday, October 2, therefore, we expect movement inside the channel, limited by the levels of 1.2756 and 1.3026. A new reversal of the Heiken Ashi indicator downwards signals a new round of corrective movement.

Nearest support levels:

S1 – 1.2878

S2 – 1.2848

S3 – 1.2817

Nearest resistance levels:

R1 – 1.2909

R2 – 1.2939

R3 – 1.2970

Trading recommendations:

The GBP/USD pair resumed its upward movement on the 4-hour timeframe, bouncing off the moving average line once again. Thus, today it is recommended to stay in the longs with the goals of 1.2939 and 1.3000 as long as the Heiken Ashi indicator is directed upwards. It is recommended to trade the pair down with targets of 1.2787 and 1.2756 if the price returns to the area below the moving average line.

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Overview of the EUR/USD pair. October 2. Trump awarded himself a victory in the debate.

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - downward.

Moving average (20; smoothed) - upward.

CCI: 92.9474

On October 1, the European currency paired with the US dollar continued fairly calm trading. Market participants still do not understand why they should force events, as well as which way to trade the pair now. The problem lies in the same fundamental background. For the US currency, it remains extremely weak, dangerous, and the future is uncertain. For the European currency, the fundamental background is more favorable, however, all the negative from overseas has already been worked out by traders several times (the pair's rise by 1300 points in the last 4 months), and we can't wait for a super-positive from the European Union either. Therefore, there is a stalemate in which market participants are very reluctant to trade, moreover, they are trying to return to the side channel of $ 1.17- $ 1.19, in which they spent about two months.

Meanwhile, US President Donald Trump evaluated the past first round of debates with his opponent Joe Biden. According to Trump, "he enjoyed the debate". "The verdict is out, and they say we won a major victory last night," Trump said. As usual, it is unknown who made such a verdict. However, Trump is confident of his victory despite the results of opinion polls that indicate a victory for Joe Biden. The US leader also believes that he brought Biden to justice "for all 47 years of lies, betrayal, and failures". And again, it is unclear how he brought the Democrat to justice. The US President also noted that the TV debate ratings were the highest in the country's history. We can say that this is not surprising, since the upcoming elections promise to be the most interesting in the history of the country.

At the same time, Democrats and Republicans in the faces of Nancy Pelosi and Steven Mnuchin continue to work on a new stimulus package that they cannot agree on. The situation with the new aid package is beginning to resemble the negotiations between London and Brussels. No one wants to give in on the most important issues, but both sides say they want to reach an agreement. The stumbling block is the scale of the aid itself. Democrats offer a minimum of 2 trillion, Republicans believe that one trillion is a lot. Thus, the negotiations stalled in fact on this issue at the beginning of August. According to the latest information, Democrats are preparing to submit a new $ 2.2 trillion stimulus package to Congress. What's the point if Republicans think it's too much and won't approve of it? Earlier, the Republicans themselves put forward a $ 300 billion aid package for consideration, which was rejected by the Democrats. "We are both working hard to achieve results. We are trying to understand whether we will be able to do this, and if not, we need to move on," Mnuchin said, expressing hope that an agreement will be reached.

Meanwhile, another speech by ECB head Christine Lagarde clarified some aspects of future monetary policy. It seems that Lagarde decided to follow in the footsteps of the Fed and introduce so-called "compensatory inflation". In other words, inflation will be allowed to go above the 2% level, which is the target for both the Fed and the ECB. It is when this level is reached over a long period that both central banks are ready to tighten monetary policy. Another thing is that monetary policy in the EU has not been tightened since 2012. Thus, Lagarde's statements about achieving and exceeding 2% inflation even sound like a mockery. Moreover, deflation is now registered in the EU, that is, prices are falling, not rising. "Although compensation strategies may be less successful when people are not completely rational in their decisions, the feasibility of such an approach can be studied," said Christine Lagarde.

Interesting news, but what about the euro/dollar pair itself? What are its prospects for the near future? In the European Union, everything now depends on the "coronavirus" epidemic and the scale of its second "wave". If the second "wave" is stronger than the first, then a new "hard" quarantine and even a "lockdown" is possible. And this, of course, will harm the bloc's economy. Although all macroeconomic indicators are ignored by market participants, they are now linked to the "coronavirus crisis". As for the US, the fundamental background is much more diverse. First, if the second "wave" has just begun in the EU, then the first "wave" has not even ended in America. And this factor puts pressure on the US currency. Secondly, there may be a change of government in the United States soon. And before this very change of power, there may be fierce battles in the elections, and then in the courts. It's no secret that many investors and traders fear uncertainty. Therefore, the US dollar is now far from the most attractive currency. Also, many traders and investors fear that Trump will be re-elected for a second term. And many investors and traders are wary of the uncertainty surrounding TTrump's second term. Third, we remind you that the conflict with China has not gone away, it is only put on pause. Thus, immediately after the election or after a while, it can flare up with a new force. Of course, this will depend on who will be the next US President. If Trump, it will flare up again. If Biden, there are options. Thus, we believe that until November 3, the US dollar will remain under pressure from market participants and is unlikely to be able to strengthen much before this date. On the US currency side, there are only technical reasons. The technical picture now speaks in favor of continuing to strengthen the euro currency, as the price first overcame, and then rebounded from the moving average, and the Heiken Ashi indicator is directed upwards.

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The volatility of the euro/dollar currency pair as of October 2 is 70 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1674 and 1.1814. A reversal of the Heiken Ashi indicator back down may signal a new round of downward correction.

Nearest support levels:

S1 – 1.1719

S2 – 1.1658

S3 – 1.1597

Nearest resistance levels:

R1 – 1.1780

R2 – 1.1841

R3 – 1.1902

Trading recommendations:

The EUR/USD pair continues to be located above the moving average line. Thus, it is now recommended to stay in long positions with targets of 1.1780 and 1.1814 until the Heiken Ashi indicator turns down or the price fixes below the moving average. It is recommended to consider sell orders again if the pair is fixed back below the moving average with the first targets of 1.1674 and 1.1597.

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