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Forex Daily Market Analysis from ForexMart

Discussion in 'Forex Forum' started by Andrea ForexMart, Oct 4, 2016.

  1. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Hot forecast for EUR/USD on 14/04/2022

    The single European currency showed a rather unexpected growth yesterday. Although it was insignificant, nonetheless. Moreover, the producer price index in the United States rose from 10.3% to 11.2%. But just a day earlier, a stronger than expected increase in inflation in the United States led to a rise in the dollar, as it finally convinced everyone that the Federal Reserve would actively raise the refinancing rate. The producer price index is a leading indicator for inflation, so it will continue to grow. Therefore, it is quite possible that by the end of this year the refinancing rate will be raised as much as 3.0%.

    Producer Price Index (United States):

    But the fact is that simultaneously with the release of these data, new forecasts for inflation in the UK were published. The Bank of England expects inflation to peak just in April, stopping at 7.2%. After that, it will gradually decrease. But investment banks think otherwise, and in their opinion, inflation will accelerate to 9.0%, which is quite different from the forecast of the Bank of England. Given the current inflationary dynamics, the forecast from the banking sector seems more realistic. And in this case, the Bank of England will have to react somehow. Of course, we are talking about a further increase in the refinancing rate. This was the reason for the pound's growth, which has already pulled the euro. This is clearly seen by the fact that the pound grew more actively than the euro.

    Data on retail sales in the United States will be published today, the growth rate of which may slow down from 17.6% to 11.0%. However, this news will be ignored in principle, since European Central Bank President Christine Lagarde's press conference will begin at the same time. The main event of the day is the meeting of the Board of the ECB. Interest rates, of course, will remain unchanged, as will all other parameters of the monetary policy pursued by the central bank. Only subsequent comments are of interest. If, as before, nothing is said about plans to raise the refinancing rate, then the dollar will resume its growth. But if Lagarde at least hints at the possibility of an increase in interest rates before the end of this year, then in this case the euro will begin to grow actively.

    Retail Sales (United States):

    The EURUSD currency pair, after the control convergence with the support level of 1.0800, the volume of short positions has sharply decreased. This led to a local stagnation, and then to a price rebound by about 100 points. A comparative analysis of the two trading instruments EURUSD and GBPUSD showed the possibility of a positive correlation, where due to the sharp strengthening of the British currency, there could be a rush to buy the euro.

    The technical instrument RSI H4 crossed the 50 middle line during the strengthening of the euro. This signal indicates a corrective move.

    The Alligator H4 indicator has a primary intersection between the moving lines, which also allows for a corrective move. Alligator D1 indicates a downward trend, MA moving lines are directed to the downside.

    Expectations and prospects:

    In this situation, much will depend on the external background, in particular, the results of the ECB meeting. As for the technical levels, the 1.0940 coordinate variable on the bulls' way, which can play the role of resistance if the hype for long positions subsides. If the price stays above 1.0950, it is highly likely that the correction will continue to form towards the psychological level of 1.1000.

    Complex indicator analysis gives a signal to buy in the short-term and intraday periods due to the rapid growth of the euro. Indicators in the medium term have a sell signal due to a downward trend.
     
  2. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Gold went into the shadow of a strong dollar

    This week, the demand for safe-haven assets has increased significantly. Gold has benefited from another spike in US inflation. But it seems that bullion is starting to seriously lose to the more reliable dollar.

    Yesterday's trading on the New York COMEX was the last one this week. Today, many US markets are closed due to the Good Friday holiday.

    Gold finished the shortened working week with an increase. Since Monday, its quotes have increased by 1.5%. The main growth driver for the yellow asset was the statistics on consumer prices in the US for March.

    Last month, inflation in America accelerated to 8.5% year on year. This is a new 40-year high. The last time the rate was at such a high level was in January 1982.

    The record price increase not only increased the value of the precious metal, but also reinforced the Fed's intention to raise interest rates more sharply at its next meeting.

    In March, the US central bank raised rates by 25 bp for the first time in four years. Now that inflationary pressures have increased, it is highly likely that the Fed's next move will be to raise the rate by 50 bps.

    This version was confirmed on Thursday by New York Fed President John Williams. He said raising interest rates by half a percentage point in May would be a "smart option" for the US central bank.

    The hawkish rhetoric of Fed officials has fueled US Treasury yields across the curve. This acted as fuel for the dollar.

    Yesterday the greenback index jumped 0.5% against its main competitors. The currency broke through the psychologically important level of 100 points.

    The steep dive of the euro also helped the greenback to strengthen. The EU currency fell sharply on the European Central Bank's dovish position. Yesterday, the ECB's meeting for monetary policy took place. The central bank decided to leave its course unchanged for the time being.

    Another driver for the dollar was the release of the consumer sentiment index of the University of Michigan. In April, the indicator rose sharply to 65.7 from the March value of 59.4 points.

    The powerful momentum that the greenback received had a negative impact on gold quotes. On Thursday, the asset fell 0.5%, or $9.80. The price dropped to $1,974.90. This is the first drop in the value of the precious metal in six trading sessions.

    Recall that in the outgoing week, bullion tested a critical level on the way to $2,000. But, according to analysts, gold will not be able to break out of the current price range in the near future. The main obstacle is the dollar.

    Now we are seeing strong bullish dynamics of the US currency. According to forecasts, it will continue in the short term. As long as the greenback index remains above 100, the yellow asset has almost no chance of approaching $2,000.

    What can help gold?
    In the foreseeable future, the gold market will continue to follow the rhetoric of the world's central banks, many of which are hawkish. The Bank of England's interest rate decision is particularly important now.

    Tightening the policy of major central banks may lead to a weakening of the US currency. This is a favorable factor for the precious metal.

    In addition to the fall of the dollar, bullion may receive support from geopolitics. Currently, most experts predict a further escalation of the military conflict in Eastern Europe.

    This week, Russia threatened to deploy nuclear weapons and hypersonic missiles if Sweden and Finland join NATO. The comment came from the Deputy Chairman of the Security Council of the Russian Federation Dmitry Medvedev.

    This happened just a day after US President Joe Biden announced that America would provide Kiev with additional firepower, including heavy artillery, worth $800 million.

    If the situation in Ukraine continues to heat up, gold may come close to $2,000. However, traders should be prepared for the opposite situation.

    The settlement of the conflict in Eastern Europe or the reduction of inflationary risks may lead to a significant drop in the value of the precious metal – up to $1,900.
     
  3. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Bitcoin (BTC) will not fall below $24,500

    Bitcoin is declining for the second week in a row under the influence of the negative dynamics of the stock market. The main decline in BTC last week occurred on Monday against the backdrop of a noticeable drawdown in US stock indices.

    The leaders of the world's largest crypto exchanges, interviewed by CNBC, said that they have recently noticed signs of a "crypto thaw", expressed in a changing attitude towards cryptocurrencies from governments.

    The Central Bank of Portugal granted the bank the country's first license to work with crypto assets. Bison Bank has become the first bank in Portugal to offer custody and trading services for cryptocurrencies for large clients.

    Tesla CEO Elon Musk said recently that he intends to buy Twitter. Cardano founder Hoskinson suggested that Musk join forces to create a decentralized social network if Twitter refuses the deal.

    The 12th DOGE cryptocurrency will become the most used cryptocurrency for online payments, said Robinhood CEO Vlad Tenev. However, to do this, developers must increase the speed of transaction processing.

    The Ministry of Finance of the Russian Federation finalized the draft law on mining and circulation of digital assets. The government of the Russian Federation submitted to the State Duma a draft law on the taxation of digital assets by three types of taxes.

    The creator of the Stock-to-Flow (S2F) model PlanB believes that bitcoin will no longer fall to $24,500. His optimism regarding the asset remains unchanged. According to PlanB, BTC could reach $100,000 by the end of the year.
     
  4. KostiaForexMart

    KostiaForexMart Well-Known Member

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    US stock market opens this week with decline

    In the session on Monday, US stock indices dropped on the back of a record rise in the yield of the 10-year Treasury note.

    As a result, all three major indices – the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite – sank by 0.1%, having settled at 34,411.69, 4,391.69, and 13,332.36 respectively.

    The major outsiders among the DJIA companies were the securities of Walt Disney Co. (-2.1%), Honeywell International Inc. (-1.6%), and Home Depot Inc. (-1.4%). The best performers were Goldman Sachs Group Inc. (+2.7%) and Intel Corp. (+2.1%).

    Bank of America Corp's shares rose by 3.4% on Monday. In the first quarter of the financial year, the bank's net profit fell by 12%. Despite this, the final earnings report exceeded analysts' expectations as the total revenue increased by 2%.

    The Bank of New York Mellon securities dropped in value by 2.3% as the company's report showed a decline in profit for the first quarter. At the same time, earnings per share turned out to be higher than market forecasts.

    Shares of the Chinese taxi aggregator Didi Global Inc. plunged by 18.5% yesterday after the company reported a 12.7% drop in revenue in the fourth quarter of 2021.

    The share price of Natus Medical Inc., a developer, manufacturer, and supplier of screening devices, surged by 29%. As was reported earlier, Natus Medical is being acquired by investment company ArchiMed for $1.2 billion.

    The value of Southwest Gas Holdings Inc. went up by 5.7% following the reports that the company is considering various scenarios for its future development, including a possible sale.

    On Monday, the price of US government bonds continued to decline, while the yield of the 10-year Treasury bills increased by 4 basis points and soared to 2.861%. This was the highest closing rate since the end of 2018. So, the bond yield has gained more than half a percentage point since early April.

    As a rule, a rise in US Treasury yield puts pressure on risk assets. This rule is especially evident in the case of tech stocks and consumer cyclical companies.

    This week, markets will closely watch the steps of the US Federal Reserve who intends to increase the interest rate in the near future. The regulator is trying to cap running inflation and save the US economy from significant damage.

    At the same time, investors believe that measures taken by the Fed are not enough to tackle inflation. They hope that at its next meetings in May and June, the US central bank will increase the benchmark rate by 0.5 percentage points. Last month, the Fed raised the rate by 0.25 percentage points to 0.25% -0.5%.

    Recently, analysts at one of the world's largest investment banks, Goldman Sachs Group Inc., have warned that there is a 35% chance of a recession in the US in the next two years. Therefore, the US Federal Reserve should tighten its monetary policy to the extent where it will help reduce job openings without sharply rising unemployment.

    Goldman Sachs notes that achieving a so-called "soft landing" may be tough because historically the gap between jobs and the labor force has narrowed significantly only during recessions.

    In addition, market participants will closely monitor the financial reports of the country's leading corporations. Such popular investor choices as Netflix, Tesla, Johnson & Johnson, Snap, Twitter, and United Airlines will reveal their earnings reports this week.

    The financial results of the US corporate giants will show how successfully these companies are coping with the permanently rising inflation.
     
  5. KostiaForexMart

    KostiaForexMart Well-Known Member

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    USD/JPY: dollar at its 20-year high versus Japanese yen

    Pressure on the yen has returned. On Wednesday morning, USD bulls pushed the pair to the psychological level of 130.

    The greenback is getting stronger versus the Japanese yen amid the difference in the monetary policies of their central banks as well as strong divergence between Japanese and US bond yields.

    Earlier today, the dollar surged to its 20-year high against the yen. Eventually, USD/JPY skyrocketed to 129.43 and then bounced to 128.615.analytics625fb5aacbbf4.jpg

    The dollar swelled on hawkish comments by a Fed official, hinting at even more aggressive moves by the US regulator.

    The ongoing lockdown in China aimed at curbing the spread of COVID-19 is believed to only make things worse when it comes to global supply chains. Against such a backdrop, inflation will accelerate and the Fed will have to resort to emergency measures to tame it.

    In this light, the US Treasury yield has extended the rally. During the Asian session, yields hit the high of 2.981% that was previously recorded in December 2018.

    Unlike its American counterpart, the Bank of Japan still sticks to its dovish monetary policy stance. On Wednesday, the regulator offered to buy an unlimited amount of 10-year bonds at 0.25% to defend the yield target.

    The Bank of Japan is committed to maintaining yields at around zero percent, which is the main driver for USD/JPY. The pair is now on track for its second monthly rally in a row. USD/JPY grew by 5.8% in March and advanced by more than 5% in April.

    Geopolitical uncertainty and the escalation of the Russia-Ukraine conflict are playing on the side of the greenback with demand for the safe haven being on the rise.

    Earlier today, USDX increased to 101.01 and then fell to 100.76 versus the basket of 6 major currencies.

    The greenback has received additional support from the dovish People's Bank of China. On Wednesday, the Chinese central bank announced it would maintain its benchmark interest rates for corporate and household loans unchanged. In this light, the Chinese yuan dropped against the dollar to its October 2021 low of 6.4115.
     
  6. KostiaForexMart

    KostiaForexMart Well-Known Member

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    USD/CAD: Loonie is confused by ups and downs and looks to the downside, then to the upside

    The Canadian dollar started the week on the rise, and ends it in some confusion. After disappointing macro statistics and another round of inflation, the loonie significantly fell. However, the loonie is trying to "keep face" and is looking for ways out of this situation.

    The Canadian dollar strengthened against the US dollar in the middle of the week, reaching 1.2584. However, after four days of growth, the USD/CAD pair showed a downward momentum, retreating from the local high at 1.2644. To date, the pair is struggling to hold its positions, but is determined to catch up. On Thursday, April 21, the USD/CAD pair traded at 1.2480, leaning to the downside and upside from time to time.

    The "loonie" was tripped up by the growing inflation recorded in Canada. According to current data, consumer inflation in the country accelerated to 6.7% in March, exceeding forecasts. Recall that this figure was 5.7% in February. Against this background, the Bank of Canada is interested in raising interest rates above current levels. The central bank's immediate goals are to curb inflation without provoking a recession in the economy.

    The pressure on the USD/CAD pair is exerted by the growing US currency. According to analysts, the resistance to the dollar is draining the loonies. In the future, the loonie will sink even more in relation to the greenback, however, it will strengthen against the euro.

    The Canadian currency was supported by the increase in the key rate by the Bank of Canada (by 50 bp) recorded last week. In addition, the central bank announced the start of quantitative tightening in response to accelerating inflation.

    The Canadian economy got a head start thanks to rising prices for commodities and energy. This contributes to the decisive actions of the Bank of Canada, aimed at normalizing monetary policy. The country's economy is on the winning side compared to other states that are importers of energy and hydrocarbons. In such a situation, the CAD receives tripartite support: from a significant influx of money into the country, from the growth of business activity and the potential tightening of the central bank's monetary policy.

    According to experts, galloping inflation is a weighty argument for further tightening of monetary policy by the Bank of Canada. The implementation of such a scenario will strengthen the position of the Canadian dollar in the medium term. In such a situation, experts recommend holding short positions on the USD/CAD pair with a target of 1.2450.
     
  7. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Gold to resume growth in near term

    Gold closes this week with losses despite a great start. On Monday, the price shortly exceeded $2,000. Will gold develop an impressive rally again?

    Since the beginning of the week, the precious metal has depreciated by 1.4%. Now it is on its way to the first weekly drop in 3 weeks.

    The main factors that sent gold down from a 5-day high reached on Monday are the strengthening of the US dollar and the rise in US Treasury yield.

    Both USD and Treasury yields advanced this week on expectations of a more aggressive approach from the Fed.

    There have been some very tough comments by the Fed officials in recent days, and especially the recent statement made by the Fed Chair.

    Speaking at a meeting of the International Monetary Fund, Jerome Powell made it clear that the regulator is set to raise interest rates by 50 basis points in May.

    "Inflation is now much higher and the interest rate is more flexible. It is appropriate in my view to be moving a little more quickly," he said.

    The hawkish tone of the Fed Chair weighed on the gold quotes. The precious metal closed yesterday's trading down by 0.4%, or $7.40, at $1,948.20. This is the lowest value in 2 weeks.

    Silver futures for May also declined by 2.6%, or 65 cents, compared to the previous close. So, the price of silver fell to $24,621.

    The precious metals market was also affected by the comments about the ECB policy made by EU officials.

    In particular, Bundesbank President Joachim Nagel said that the regulator could raise interest rates as early as the beginning of the third quarter.

    Now markets expect a rate hike by 20 basis points by July and by more than 70 basis points by the end of the year. If such a scenario comes true, the benchmark interest rate will be above zero for the first time since 2013. This will serve as a catalyst for the euro.

    The tightening of the monetary policy of major central banks is a key negative factor for gold.

    In addition, the geopolitical crisis is another driver for the value of gold. The aggravation of tensions between Russia and Ukraine allowed the asset to go slightly higher today.

    At the time of writing, gold was up by 0.2% and was trading at $1,952.00.

    On Wednesday, Moscow sent a draft peace agreement to Kyiv. However, there is no talk of an early ceasefire.

    The US and its allies continue to supply Ukraine with weapons, including heavy artillery, so that its forces can repel Russian advances in the eastern part of the country.

    The latest reports from the UK Defense Ministry suggest that Russia will try to conduct a quick and decisive fight in Ukraine before Victory Day.

    Russia is seeking to demonstrate significant progress in Ukraine ahead of May 9, an important date for Moscow.

    According to forecasts, a serious escalation of the conflict in this period may lead to additional sanctions against the Kremlin.

    The next anti-Russian sanctions are likely to raise inflationary expectations, which will be a positive factor for gold.

    Gold is expected to develop an uptrend ahead of Victory Day in Russia.
     

  8. KostiaForexMart

    KostiaForexMart Well-Known Member

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    American stock indices fell by 2.6-2.8%

    Pressure on financial markets continues to come from growing expectations of a rapid tightening of monetary policy by the Federal Reserve System (Fed), worsening the mood of investors, already worried about the ongoing acceleration of inflation and the situation with COVID-19 in China. Traders are increasingly afraid that the Fed's cycle of raising the base interest rate could lead to a recession in the US economy.

    Fed Chairman Jerome Powell, speaking Thursday at an event during the spring meetings of the International Monetary Fund and the World Bank, said that the Fed may need to move a little faster with a rate hike.

    It was Powell's last public appearance before the next meeting of the Federal Open Market Committee (FOMC) on May 3-4. On the previous FOMC raised the rate by 25 basis points (bp) to 0.25-0.5%. At the same time, the last time the Fed raised the rate at two meetings in a row was in 2006, and the rise by 50 bp at once. hasn't been since 2000.

    Judging by the rate futures, the market is almost certain that the Fed will increase the cost of borrowing by at least 50 bp. at each of the next two meetings - in May and June. At the same time, traders estimate the probability of raising the base interest rate by 75 bp at once at 94%. in June, according to data from CME Group Inc.

    The two-year US Treasuries yielded 2.71% on Friday, the highest since December 2018.

    Traders continue to follow the quarterly reports of companies, which are generally quite favorable. In the case of S&P 500 companies that have already reported for the past quarter, total earnings per share turned out to be 8.2% better than experts' forecast, according to Credit Suisse data. The performance of about 75% of companies exceeded market expectations. However, analysts fear that companies' results will worsen in the near future due to higher rates.

    The Dow Jones Industrial Average fell by 981.36 points (2.82%) by the close of the market on Friday to 33,811.4 points.

    Standard & Poor''s 500 fell 121.88 points (2.77%) to 4271.78 points.

    The Nasdaq Composite dropped 335.36 points or 2.55% to 12839.29 points.

    At the end of the week Dow Jones lost 3.9%, S&P 500 - 2.7%, Nasdaq Composite - 1.9%.

    Shares of American Express Co. lost 2.8% in price on Friday, despite the fact that the quarterly report of the company, which is one of the leaders in the US plastic card market, was better than market forecasts.

    The price of securities of the gold mining company Newmont Corp. fell by 3.3%. Newmont's first-quarter net income and revenue came in below market expectations due to the company's rapidly rising costs.

    Share price of Verizon Communications Inc. decreased by 5.6%. The US telecom operator's adjusted earnings for the last quarter came in slightly better than the market's forecast, while revenue fell slightly short of expectations.

    The price of Gap Inc. papers. collapsed by 18%. The clothing company has announced the resignation of Nancy Green as president and CEO of the Old Navy brand. In addition, Gap said it expects a larger drop in sales in the first fiscal quarter than previously thought.

    Kimberly-Clark Corp stock quotes and Schlumberger Ltd., which posted strong first-quarter results, rose 8.1% and 2.5%, respectively.
     
  9. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on April 27, 2022

    Economic calendar for April 27

    Today is a rather boring day in terms of macroeconomic statistics due to the lack of statistical data significant for the market. The only thing that will be published is the index of pending sales in the United States real estate market, where fluctuations in the negative zone are predicted.

    Trading plan for EUR/USD on April 27

    The downward trend is considered the main movement in the market, there are prospects for a further decline. In order for a signal to appear for the subsequent growth of the volume of short positions, the quote must be kept below the level of 1.0636 in the daily period. Until then, the risk of a price rebound remains in the market, which will be justified by the oversold status of the euro.


    Trading plan for GBP/USD on April 27

    Despite the colossal oversold level of the pound, there is still a downward interest in the market. It is caused by the inertia-speculative behavior of traders who ignore the oversold status. Sooner or later, there will be a technical pullback or a full-size correction in the market. This movement will not break the integrity of the downward trend. The values 1.2500, 1.2250, and 1.2000 are considered variable pivot points.
     
  10. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on April 28, 2022

    Yesterday was a rather boring day in terms of macroeconomic statistics due to the lack of significant statistical data for the market. The only thing that was published was the index of pending home sales in the United States, which was of little interest to anyone.

    Economic calendar for April 28
    The first estimate of the US GDP for the first quarter is expected today. The data may reflect a significant slowdown in economic growth, which will lead to a weakening of dollar positions.

    At the same time, weekly data on jobless claims will be published, which is predicted to reduce in volume. This is a positive factor for the US labor market.

    Statistics details:

    The volume of continuing claims for benefits may be reduced from 1.417 million to 1.403 million.

    The volume of initial claims for benefits may be reduced from 184,000 to 180,000.

    Time targeting

    US GDP - 12:30 UTC

    US Jobless Claims - 12:30 UTC

    Trading plan for EUR/USD on April 28
    The level of 1.0500 plays the role of a support in the market, which may lead to a reduction in the volume of short positions. As a result, a technical pullback or a full-size correction is allowed. At the same time, the inertia-speculative behavior of traders allows a breakdown of the control level, where the signal of oversold will be ignored by market participants. In this case, holding the price below 1.0500 in a four-hour period will lead to the subsequent weakening of the euro towards 1.0350.

    Trading plan for GBP/USD on April 28
    A stable holding of the price below the level of 1.2500 may lead to a subsequent increase in the volume of short positions. The signal about the oversold pound sterling can be ignored by speculators, who are focused on the inertial move.

    The technical correction scenario is still being considered by traders, but in order to confirm it, the quote first needs to determine the pivot point.

    Note that the values of 1.2500, 1.2250, and 1.2000 are considered as variable pivot points.
     
  11. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on April 29, 2022

    Economic calendar for April 29
    Today, the publication of the first estimate of Eurozone GDP for the first quarter is expected, where the data are slightly exaggerated. An acceleration in economic growth from 4.6% to 5.0% was predicted, despite the fact that the situation in the world and Europe does not favor GDP growth. Thus, there is an assumption that the data will come out worse than expected, which will negatively affect the euro exchange rate.

    At the same time, data on inflation in the EU will be published, where further growth is expected from 7.4% to 7.5%. This is a negative factor for the economy, which will also put pressure on the European currency.

    Time targeting

    Eurozone GDP - 09:00 UTC

    Eurozone Inflation - 09:00 UTC

    Trading plan for EUR/USD on April 29
    The technical pullback is only a temporary manifestation of the price, the downward mood persists in the market. In order for a new round of the downward cycle to occur, the quote needs to be stable below the 1.0500 level. This will lead to an increase in the volume of short positions and a movement towards the low of 1.0350. Until then, there will be a pullback in the market, which serves as a regrouping of trading forces.

    Trading plan for GBP/USD on April 29
    There is currently a technical pullback in the market that serves as a regrouping of trading forces. Over time, the overheating of short positions will subside. This will lead to the subsequent weakening of the pound sterling, which is in line with the main trend.

    Market participants consider the psychological level of 1.2000 as a reference point for a downward trend.
     
  12. KostiaForexMart

    KostiaForexMart Well-Known Member

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    EUR/USD: Is a trend reversal possible?

    Major dollar pairs froze in anticipation of the announcement of the results of the Fed's May meeting. The EUR/USD pair was no exception here: the price settled at the bottom of the 5th figure, demonstrating low volatility. Over the past few days, both sellers and buyers have tried their hand. But they were unable to turn the tide in their favor. The EUR/USD bears failed to gain a foothold within the 4th figure in order to theoretically qualify for further decline, while the pair's bulls failed to develop a corrective movement, which bogged down near the 1.0580 target. As a result, the parties took a defensive position, waiting for the Fed's verdict.

    By and large, there are only two options for the development of events: either traders will go to the bottom of the fourth figure in order to further test the support level of 1.0350 (this is the area of 20-year lows), or buyers will drag the pair into the range of 1.0660–1. 0730 (Tenkan-sen line and middle line of Bollinger Bands on D1 respectively).

    Looking ahead, it should be noted that trading in dollar pairs is extremely risky now, given the fact that the intrigue around the results of the May meeting remains. On the one hand, it is quite clear that the Fed will take a hawkish stance, raising interest rates and declaring further steps in this direction. But on the other hand, there is no consensus among the expert community regarding the pace of monetary tightening.

    For example, the option of a 75-point rate increase following the results of the May meeting is not at all excluded (although such a scenario is recognized as unlikely). Or the regulator may allow the rate to increase by this amount at the June meeting, if US inflation continues to show rapid growth.

    In general, it doesn't matter whether the Fed raises the rate by 75 points at the May meeting, or announces such a move in the context of the June meeting: the effect will be the same. In this case, we will witness a dollar rally throughout the market, including the EUR/USD pair. This is the most hawkish scenario – it will allow the EUR/USD bears to take another step towards 20-year price lows.

    The rest of the scenarios are more moderate, but all involve a 50 basis points hike in May and (probably) 50 bp in June. As for the future prospects, the regulator can leave room for maneuver, "tying" the pace of monetary policy tightening to the dynamics of inflationary growth.

    Based on this, the question follows: is a corrective growth of EUR/USD possible even in the event of a 50-point rate increase? Certainly, it is possible. The fact is that the market has wound up on itself quite strongly: over the past few weeks, the hawkish expectations of traders have been growing "by leaps and bounds," thereby increasing the degree of heat. St. Louis Fed President James Bullard added fuel to the fire, who, in fact, proposed raising the rate by 75 points at once at the May meeting. The flywheel of hawkish expectations has been spinning more and more, especially during the last days – as you know, "appetite comes with eating."

    That is why the US Federal Reserve may not fully justify these expectations by taking a "moderately aggressive" position. For example, if they raise the rate by 50 points and rather vaguely admit the option of a 50-point increase in the future "depending on the circumstances," that is, depending on the further growth of US inflation. At the same time, the regulator may not mention the option of a 75-point increase at all or even reject it. In this case, buyers of the EUR/USD pair will organize a fairly powerful counterattack, with targets in the range of 1.0660-1.0730.

    It would be reasonable to use this corrective growth for opening short positions, with the targets of 1.0550, 1.0500. The fact is that even in the case of its "moderate aggressiveness," the American regulator will still be several steps ahead of the European Central Bank. Consequently, the divergence of the positions of the central bank will not go anywhere.

    Let me remind you that the ECB still doubts the advisability of tightening monetary policy in the foreseeable future. In particular, the vice-president of the European regulator, Luis de Guindos, in one of his interviews a few days ago, stated that the ECB Governing Council "did not discuss any predetermined way to raise rates." According to him, much will depend on macroeconomic data in June. At the same time, market expectations are opposite: the first increase is expected at the July meeting, while the ECB should raise rates by 70–90 points by the end of the year.

    In addition, the dollar is supported by the external fundamental background. First of all, we are talking about geopolitical tensions in Eastern Europe and around Taiwan, as well as another outbreak of coronavirus in China. The euro, in turn, is under pressure from "its own" factors. These are issues of energy security of the European Union, as well as the risks of stagflation.

    All this suggests that it is advisable to use any corrective pullbacks for the EUR/USD pair as a reason to enter sales. The downward targets in the medium term are 1.0550 (if following the results of the meeting, the upward impulse will follow in the area of the 6th figure), 1.0500, 1.0450.
     
  13. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on May 5, 2022

    Economic calendar for May 5

    Today, the focus is on the meeting of the Bank of England, where they expect the fourth consecutive increase in interest rates by 25 basis points. Annual inflation in the UK reached a 30-year high of 7% in March, so the regulator has no choice but to continue tightening monetary policy.

    Will the pound sterling react to the news about the rate hike? Possible, but in a local form, in view of the fact that the event is expected in the market.

    During the American trading session, data on jobless claims in the United States will be published, where figures are expected to remain unchanged. Thus, if the forecasts are confirmed, then no one will pay attention to the data on applications.

    Time targeting

    BoE meeting result - 11:00 UTC

    US Jobless claims - 12:30 UTC

    Trading plan for EUR/USD on May 5

    The slowdown of the upward cycle around the value of 1.0636 led to the formation of a consolidation of versatile Doji-type candles. This threatens with new speculative manipulations in the market. For this reason, two possible scenarios should be considered at once.

    The first scenario comes from the tactic of a rebound from the level of 1.0636, where holding the price below 1.0600 can restart the sellers' positions. This will cause the price to return to the support level of 1.0500.

    The second scenario considers the formation of a full-length correction, where holding the price above 1.0655 can lead to a move towards 1.0700-1.0800.

    Trading plan for GBP/USD on May 5

    At the moment, most of the recent impulse has been won back, the quote has returned to the boundaries of the earlier amplitude movement. In order for the downward move to get a new round of activity, the quote needs to stay below 1.2450. In this case, the medium-term downward trend will again be prolonged to new price levels. Otherwise, another turbulence is possible within the values of 1.2460/1.2600, which may be facilitated by the results of the Bank of England meeting.
     
  14. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on May 6, 2022

    Economic calendar for May 6
    The main macroeconomic event on Friday is considered to be the report of the United States Department of Labor, which predicts by no means bad indicators. The unemployment rate could drop from 3.6% to 3.5%, and 385,000 new jobs could be created outside of agriculture. We have a strong US labor market, which could support the US dollar.

    Time targeting

    US Department of Labor Report - 12:30 UTC

    Trading plan for EUR/USD on May 6
    The downward cycle is still relevant among traders. The strongest increase in the volume of short positions will occur when the price holds below the level of 1.0500 in a four-hour period. In this case, the sellers will have a high chance of prolonging the downward trend towards the local bottom of 2016.

    Otherwise, the amplitude of 1.0500/1.0600 may continue to form, delaying the stage of building a downward trend.

    Trading plan for GBP/USD on May 6
    Such an intense downward movement last day led to a local overheating of short positions, which caused a short-term stagnation at 1.2324. At the same time, the downward mood among traders remains. After a short stop or pullback, the downward cycle will resume movement. The level of 1.2250 can become a variable point of support on the sellers' way. The strongest point of support is at the psychologically important level of 1.2000.
     

  15. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on May 11, 2022

    Economic calendar for May 11
    US inflation data is expected to be published. The consumer price index is expected to decline for the first time since the summer of 2021. This is a positive signal for the US economy, and will also indicate confirmation of the Fed's action in tightening monetary policy.

    How will this news play on the market?

    In the beginning, it can play on the dollar exchange rate in terms of its local strengthening. After that, the US dollar may come under pressure if the Fed softens the requirements for tightening monetary policy. In simple words, the Fed's subsequent comments with the gradual normalization of inflation may already be more restrained. From the rhetoric, the statement about the interest rate hike by 0.75% will disappear at first. After that, they can lower the bar for a one-time increase from 0.5% to 0.25%. In this case, the above text is just a reflection of possible scenarios for reducing inflation. The prospect is medium-term.

    Time targeting

    US inflation - 12:30 UTC (prev. 8.5% ---> forecast 8.1%)

    Trading plan for EUR/USD on May 11
    The stagnation stage will end soon, the existing amplitude in the values of 1.0500/1.0600 will play the role of a lever for speculators. In this case, the optimal trading strategy is considered to be a breakdown of one or another stagnation border.

    We concretize the above into trading signals:

    Buy positions on the currency pair are taken into account after holding the price above the value of 1.0636 in a four-hour period.

    Sell positions should be considered after holding the price below 1.0470 in a four-hour period due to the repeated storming of the 1.0500 border.

    Trading plan for GBP/USD on May 11
    Price movement within the framework of stagnation is a local manifestation of the market. In this situation, the key values are considered to be: 1.2250 (support level) and the peak of the recent eye at 1.2405. Holding the price outside one or another control value may well indicate a subsequent quote path.
     
  16. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Analysis and trading tips for EUR/USD on May 12

    EUR/USD reaching 1.0555 led to a buy signal in the market, but having the MACD line far from zero limited the upside potential of the pair. Similarly, the downside potential was limited because the indicator was also far from zero when the pair tested the level again and prompted a sell signal. The test of 1.0532 in the afternoon also led to losses because the MACD line was still far from zero. No other signal appeared for the rest of the day.

    CPI data from Germany did not help euro yesterday because the figure completely coincided with economists' forecasts. Similarly, the speech of ECB President Christine Lagarde did not change the balance in the market even though her statements hinted that rates may increase in July. US data on CPI for April also showed further increases, returning demand for dollar.

    Most likely, EUR/USD will continue declining today as there are no scheduled statistics for the Euro area. The US will also release reports on jobless claims and producer prices, which, if shows sharp increases, will lead to a further rise in dollar demand. The upcoming speech of Fed member Mary Daly will also provide support for USD.

    For long positions:

    Buy euro when the quote reaches 1.0520 (green line on the chart) and take profit at the price of 1.0570 (thicker green line on the chart). A rally is quite unlikely because demand for dollar returning. Nevertheless, when buying, make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0489, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0520 and 1.0570.

    For short positions:

    Sell euro when the quote reaches 1.0489 (red line on the chart) and take profit at the price of 1.0446. Pressure will most likely return after the release of data on the US economy in the afternoon. But note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.0520, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0489 and 1.0446.
     
  17. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on May 13, 2022

    Economic calendar for May 13

    Today the macroeconomic calendar is practically empty. The only thing you can pay attention to is industrial production in the EU, where a decline is predicted.

    Time targeting

    The volume of industrial production in the EU - 09:00 UTC

    Trading plan for EUR/USD on May 13

    In this situation, the convergence of prices with the local bottom of 2016 may well lead to a slowdown in the downward cycle. This will lead to a slowdown or a full-length pullback.

    An alternative development scenario considers the continuation of the inertial course in the market, where the signals about the oversold euro will be ignored by traders. In this case, holding the price below 1.0325 in a four-hour period will restart short positions.

    Trading plan for GBP/USD on May 13

    If the current stagnation serves as a regrouping of trade forces, then a local acceleration may soon occur. In this case, the optimal trading tactic is an outgoing momentum relative to the boundaries of stagnation.
     
  18. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Tips for beginner traders in EUR/USD and GBP/USD on May 16, 2022

    Economic calendar for May 16

    Monday is traditionally accompanied by a blank macroeconomic calendar. Nevertheless, stable information and news flow will continue to play on the nerves of speculators, which allows new jumps in the market.

    Trading plan for EUR/USD on May 16

    In this situation, the pullback was replaced by stagnation, where the values of 1.0350/1.0420 serve as variable boundaries of the amplitude. The optimal trading strategy is considered to be a breakdown of one or another stagnation border.

    We concretize the above into trading signals:

    Buy positions on the currency pair are taken into account after holding the price above the value of 1.0450 with the prospect of a move to 1.0500.

    Sell positions should be considered after keeping the price below the local low of 2016, at 1.0325.

    Trading plan for GBP/USD on May 16

    Despite the slowdown, the pullback stage is still relevant in the market. In order for the downward cycle to resume, the quote must first return to the pivot point of 1.2150. This price move will indicate an increase in the volume of short positions, which will lead to the breakdown of the variable support and the trend prolongation.

    An alternative market development scenario considers the price transition from the pullback stage to a full-scale correction. This movement can be indicated by a long stay of the price above 1.2250 in the daily period.
     
  19. KostiaForexMart

    KostiaForexMart Well-Known Member

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    EURUSD bears lure opponents into a trap

    Taking advantage of the hawkish rhetoric of the ECB and Hungary's stubborn resistance to the Russian oil embargo, the EURUSD bulls, as expected, went on the counterattack and inflated the quotes of the main currency pair above 1.05. For a long time, the positions of the euro looked hopeless, but any trend, no matter how strong it may be, needs correction. Why not now?

    Such a rapid fall of the single European currency was clearly not part of the ECB's plans. In such a scenario, an increase in import prices further accelerates inflation and slows down economic growth. In this regard, the words of Bank of France Governor Francois Villeroy de Galhau look like a verbal intervention. The authoritative official said that the ECB is closely monitoring the situation on Forex, and the fall of the euro contradicts the goals of price stability.

    The faster growth of eurozone GDP in the first quarter by 0.3%, rather than 0.2% QoQ, added fuel to the fire of the bulls' counterattack on EURUSD. The currency bloc's economy is recovering from the pandemic faster than previously expected. If it were not for the armed conflict in Ukraine, it could have outstripped its American counterpart, which would have led to the breakdown of the downward trend in the main currency pair.

    Eurozone GDP dynamics

    However, work on Forex does not tolerate the subjunctive mood. Due to the fact that the Fed will tighten monetary policy faster than the ECB; the US economy has recovered faster from COVID-19, and the eurozone is closer to the epicenter of hostilities in Eastern Europe, the EURUSD bears dominate the market and can afford to play cat and mouse with their main opponent.

    Investors are looking forward to the speeches of Christine Lagarde and Jerome Powell. Lagarde's alleged "hawkish" rhetoric is one of the drivers of the euro pullback. The derivatives market predicts that the deposit rate will rise by 90 bps in 2022, which is equivalent to 25 bps at three or four meetings of the Governing Council. Out of the 48 Reuters experts, 26 said that borrowing costs will rise by 50 bps by the end of the third quarter, another 18 see +25 bps, and two said +10 bps. More than 90% of respondents expect to see zero or positive rates by the end of the year. Note that at present it is -0.5%.

    Hungary's resistance to the EU's plan to embargo Russian oil is also lending a helping hand to EURUSD bulls. 65% of oil imports to this country come from the Russian Federation. And in order to abandon it, it is necessary to redo the entire infrastructure, which Budapest estimates at €15–18 billion. No ban on oil supplies—no higher prices—no retaliatory sanctions from Moscow. This means that the risks of a recession in the eurozone are reduced. Good news for the euro.

    Technically, the return of EURUSD to the boundaries of fair value indicates the seriousness of the intentions of the bulls. Closing the trading day above 1.053 will increase the risks of a correction in the direction of 1.06 and 1.066. In this regard, the longs formed at the break of resistance at 1.0435 are still holding and watching the closing price.
     
  20. KostiaForexMart

    KostiaForexMart Well-Known Member

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    Hot forecast for GBP/USD on 18/05/2022

    The correction that began on Monday ended quite quickly. It was supposed that at best, Federal Reserve Chairman Jerome Powell's words would stop it, but in fact, it happened long before that. Namely, at the very opening of the US trading session. The fact is that US macroeconomic reports suddenly turned out to be noticeably better than forecasts. And instead of slowing down the main indicators, they accelerated each other.

    The growth rate of retail sales increased from 7.3% to 8.2%, although they expected a decrease from 6.9% to 4.2%. That is, not only did the new data turn out to be significantly higher than the forecast, but also the previous ones were revised up. Unlike industrial production, whose previous results were revised from 5.5% to 5.4%. But its growth rate accelerated to 6.4%, instead of slowing down to 2.0%. And judging by these data, the American economy is doing just great. Especially when you consider that the data were published for April.

    Retail Sales (United States):

    But if macroeconomic statistics have completed the corrective movement, then Powell's words indicate the resumption of the trend for the strengthening of the dollar. Despite the recent slowdown in inflation, Powell did not say a word about the possibility of any revision of plans to raise interest rates. Powell once again stated that the central bank will raise the refinancing rate until inflation falls to target levels. That is, up to 2.0%. Given that it is now above 8.0%, then at least until the end of this year, during each meeting of the Federal Open Market Committee, the refinancing rate will be raised by at least 0.25%. So by the end of the year, it is likely to be above 2.00%. But in general, there is nothing new in this, and Powell only confirmed the previously announced plans, regarding the implementation of which there were some doubts. Powell dispelled them.

    But if Powell's words were not enough to immediately start the process of strengthening the dollar, then British inflation coped with this task perfectly, which rose from 7.0% to 9.0%. And this is the biggest value in more than forty years. But the Bank of England has recently assured everyone that in April, and the data were published for this month, inflation will peak, after which it will gradually decline. That's just according to the forecasts of the British central bank, it should have reached the level of 7.2%. But the reality turned out to be noticeably worse. And there is no doubt that such a high level of inflation will have an extremely negative impact on the economy of the United Kingdom. Yes, it already does. As a result, after a small local rebound, the market returned to the long-familiar trend of strengthening the US dollar.

    The GBPUSD currency pair formed a correction by more than 300 points, eventually returning the quote to the level of 1.2500. The subsequent price slowdown indicates an overheating of long positions.

    The RSI H4 technical instrument entered the overbought zone during the acceleration. This signal confirms the overheating of long positions in the short term.

    The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move in the market. The Alligator D1 indicator still signals a downward trend in the medium term. The moving MA lines are directed down.

    Expectations and prospects:

    Price stagnation within the level of 1.2500 signals the process of accumulation of trading forces. It will end soon and lead to subsequent price spikes.

    If we assume that the correction is coming to an end, then keeping the price below the 1.2420 mark will lead to a full-fledged rebound of the price from the 1.2500 level. This step, in turn, will restart short positions.

    An alternative scenario sees the current slump as an opportunity for a realignment of trading forces that would remove the overbought status from the pound. In this case, keeping the price above 1.2520 in a four-hour period allows for the subsequent formation of a corrective move.

    Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. Indicators in the medium term give a sell signal due to the main trend.
     

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