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Indicator analysis. Daily review for November 19, 2018 for the pair GBP / USD

The price on Friday rally down worked out the top. Bears were fixing profits, and the market broke off the support line 1.1248 (red thick line). On Monday, there is no strong calendar news. Most likely, the bears once again try to resume movement down.

Trend analysis (Fig. 1).



On Monday, the price will move downward with the first target 1.2751 - the support line (red thick line).
Fig. 1 (daily schedule).
Comprehensive analysis:
- indicator analysis - down;
- Fibonacci levels - neutral;
- volumes - down;
- candlestick analysis is neutral; - trend analysis - up;
- Bollinger lines - up;
- weekly schedule - up.
General conclusion:
On Monday, the price will move downward with the first target 1.2751 - the support line (red thick line).

Analysis are provided byInstaForex.

 

Calm before the storm: the pound in anticipation of Parliamentary battles

British Prime Minister Theresa May, and with it the pound, were able to contain a huge onslaught without succumbing to a barrage of criticism during the previous week. The head of government did not resign, and the British currency remained within the limits of the 27-28 figures.

The "house of cards" did not crumble, despite the resignations – moreover, the minister of environment, who also planned to leave his post, suddenly changed his mind, saying that he supports the actions of the prime minister. The post of Dominic Raab - chief negotiator from Britain - was vacant for just a day and a half: last Thursday, as May appointed former Deputy Minister of Health and Social Care Stephen Barkley to this position. He is a consistent supporter of Brexit, in particular, two years ago, by his own admission, he voted for the country's exit from the EU.



In other words, the design of the current government was able to show its resilience, which means that hopes for a "soft" Brexit remain. Although there are still some political risks: today the Lower House of the British Parliament received a petition for a vote of no confidence in the Prime Minister. "Hawks" among the Conservatives began to collect signatures last week – and it is still unknown whether they managed to find 48 supporters or not (that's how many signatures are needed to start the procedure). In her Sunday interview, Theresa May said that, according to her information, there is no necessary amount. Insider sources of the British press indirectly confirm May's information – according to them, her opponents were able to collect only 42 signatures. By and large, the case is only in six deputies, so the intrigue in this matter remains.

However, the very fact that the procedure is being launched will play an emotional role rather than a "practical" one. To declare a vote of no confidence in the prime minister, the Tories need to enlist the support of the majority of the 316 deputies from the Conservative party. According to experts, the internal party opposition simply does not have such a large number of supporters, so this is a losing initiative. But if conservatives can't even run the corresponding procedure, it will speak about the support of May from the deputies. Although this support is rather forced, it is not so important in the context of the foreign exchange market. The approval of the transaction by the Parliament is at stake, a few traders are interested in what way the prime minister will convince the deputies to support it. The result is important.

As Theresa May herself admitted, the next seven days will be especially difficult for the country. By and large, this is a key stage of Brexit – if the deputies still approve the agreement, the probability of a deal will increase as much as possible, given the volume of concessions to Brussels from London. According to the majority of experts, the approved deal is based mainly on EU conditions – therefore, if it is approved by the British parliamentarians, there should be no delays on the part of the Alliance.

All this means that the pound in the coming days will again live in the information hype about the presence/absence of the required number of votes. All other fundamental factors will play a secondary role, although important events are expected this week.



In particular, the Bank of England's parliamentary hearings on inflation will be held tomorrow. I would like to remind you that the British central bank must report to the Parliament every three months on inflation and the prospects of monetary policy. These hearings are attended not only by the head of the British central bank, but also by other members of the monetary committee. For example, the participation of five officials for tomorrow was announced, in addition to Mark Carney and his deputies.

As a rule, traders closely monitor this event, as it allows you to get a kind of insider perspective on the further actions of the regulator. The inflation report includes not only an overview of the current situation, but also a forecast for a certain time period – medium and long-term. A positive assessment of inflation prospects could increase the likelihood of tightening monetary policy, given the dynamics of the consumer price index this year. But in this case we have to speak in a subjunctive mood, because at the moment the prospects of monetary policy depend mainly not on the dynamics of inflation, but on the fate of Brexit. If a deal is concluded, the interest rate will probably be increased in the first half of next year – the market has little doubt about this. Otherwise, the mirror option is not excluded: Mark Carney recently admitted the probability of a rate reduction in the case of a chaotic Brexit.

Thus, it is not necessary to build illusions about the impact of macroeconomic factors or comments of members of the English regulator. In the near future, all the attention of traders will be focused on the parliamentary battles, the results of which will allow is to build long-term plans for the prospects of the British currency.

Analysis are provided byInstaForex.

 

EUR/USD. The European Commission will announce the verdict to the Italians on Tomorrow



On November 21, the European Commission will announce its verdict on the draft budget of Italy. By and large, there is no intrigue here: representatives of the EC have repeatedly stated that the nominal budget deficit is three times higher than the figure provided for by earlier commitments of the Italians. In addition, the submitted document contradicts the Stability and Growth Pact, which defines the tax and budget policy of the European Union. Rome, in turn, refused to change the parameters of the budget – last week it was presented it was in fact presented in the same form. Therefore, it is easy to predict the "verdict" of the European Commisssion – Brussels will certainly announce the above theses, thereby, launching a disciplinary procedure against Italy.

This scenario is already partially embedded in the current prices, because the further algorithm of mutual actions was obvious even when the Italians refused to revise the budget rejected by the European Commission. Therefore, on Tuesday, the EC members will only state this fact, after which there are two possible scenarios: either Brussels will resort to penalties (having previously prepared a report codifying the violations committed by the Italian authorities), or the European Commission will agree to postpone the introduction of such measures. The second option, though unlikely, but still not excluded – according to some experts, the EC can wait until December – so that the Italians could once again "think about their behavior."

Of course, such a turn of events will be a positive signal for the euro – this will speak about the potential negotiability of Brussels and Rome. But the "sanctions path" certainly will not bring down the position of the single currency. The euro will be under background pressure, but one can hardly expect a downward impulse of several figures. First, the most likely scenario is already taken prices into account – the market is ready for further confrontation between the EU and Italy.

Secondly, the implementation of the disciplinary procedure will last for months, so the European currency will remain only under background pressure, while other, more "live" fundamental factors will set the tone for trade. Third, the outcome of the disciplinary procedure is also predictable: experts believe that the amount of the fine will be about 1.7 billion euros (i.e. 0.2% of GDP). This amount may double if the Italians continue to "resist". But the doubled amount of the fine is unlikely to affect the euro radically against the background of other events of a fundamental nature.

Thus, the question of the Italian budget has already outlived itself somewhat: traders are not so emotional to react to mutual verbal "injections" of politicians and are ready for their further battles. Moreover, some ECB representatives urge not to exaggerate the importance of this problem. For example, the representative of the European central bank Ewald Nowotny said that the increase in the yield of Italian government bonds has a "very limited impact" on the broad stock market. In addition, the budget confrontation itself has a limited impact on other, larger-scale processes.

In my opinion, the cause for concern will appear when the issue of the Italian budget turns into a political crisis in Italy: for example, early re-elections can strengthen anti-European rhetoric among politicians - and this fact will put strong pressure on the euro.

The economic calendar for the EUR/USD pair this week is almost empty - only the report of the last ECB meeting is of interest, the release of which is scheduled for Thursday. Therefore, traders will focus their attention on the events of the external fundamental background: Brexit and prospects of the US-China trade negotiations. Also interesting is the position of Fed members on the prospects of monetary policy in the light of the "correspondence confrontation" of the head of the Federal Reserve Jerome Powell and his Deputy Richard Clarida.

Let me remind you that Powell quite positively assessed the growth dynamics of the American economy and announced a further gradual increase in the rate. Clarida, in turn, noted that the slowdown in the global economy will have a negative impact on the key indicators of the US economy, and the interest rate has already approached its neutral level. Such discord surprised the market, then the dollar index slid to the limits of the 95 points. The rhetoric of the other Fed members will help traders navigate the situation in the context of the regulator's future prospects.

From the technical point of view, the situation for the EUR/USD pair has not changed since yesterday: the price has overcome two resistance levels on the daily chart – the average Bollinger Bands line and the Kijun-sen line. The next price target is the upper line of the Bollinger Bands indicator on D1, which corresponds to the level of 1.1485. If the pair overcomes this target, the Ichimoku Kinko Hyo indicator will form a "Golden cross" signal, which warns of a change in the bearish market to the bullish one. In this case, the price may jump to the middle of the 15th figure. The support level is the middle line of Bollinger Bands and the price of 1.1370.

Analysis are provided byInstaForex.

 

EU and Britain reached an agreement on Brexit



The latest news: the European Union and Britain signed a joint declaration on relations after Brexit.

This is an important step to resolve the main problem for Britain and the EU at the moment.

This is an important victory for Theresa May in the fight against opponents in Britain.

On this news, the pound rose sharply by almost 1%.

Analysis are provided byInstaForex.

 

GBP/USD. Will Brexit trip over Gibraltar?

The pound is again under pressure because of the vague prospects of Brexit. The forced pause in this matter created an informational vacuum, but yesterday alarming signals were received regarding further approval algorithm for the deal. And it's not just the obstinacy of the British deputies: some representatives of Europe also expressed their dissatisfaction with the draft "divorce" agreement.

Another stumbling block was the British overseas territory – Gibraltar. A few centuries ago, the British won this strategically important piece of territory from the Spaniards, and since then disputes over its ownership have not subsided between countries. However, the discussion of this issue was conducted in a sluggish mode for many years: just now Madrid found a reason to intensify this process, in other words - took advantage of the situation.



Although a few months ago, Theresa May held talks with the Spanish side regarding Gibraltar, and this point was considered a resolved matter. In particular, in the spring of this year, Brussels proposed to give the Spaniards the veto over Gibraltar's future trade relations with the EU. After months of negotiations, the parties reached a compromise – at least, this was stated by the official representatives of Spain after the October EU summit.

The Spanish foreign minister then stressed that Gibraltar would not be a problem for signing the Brexit deal, despite the fact that some key aspects of future relations had not yet been resolved. The parties refused to disclose the details of the agreements, but according to insider leaks, London and Madrid agreed on the rights of citizens – primarily those citizens who are not British citizens, but live in Spain and work in Gibraltar. Here it is important to emphasize one point: the compromise on Gibraltar was agreed in the form of a protocol, which should be added to the common deal on the withdrawal between Britain and the European Union. The same protocols will be issued in respect of Northern Ireland, as well as the British military base in Cyprus.

This aspect is extremely important in the context of today's requirements of the Spaniards. The fact is that the agreement approved by the British ministers assumes that negotiations on further relations between Britain and the EU (which are not covered by the points of the deal) will continue after March 29, 2019, that is, after the official withdrawal of the country from the European Union. Madrid, in turn, requires that a separate clause be written in the agreement that would oblige London to negotiate with Spain on sovereignty over Gibraltar.

According to rumors, the Spaniards suspect the British of "diplomatic tricks" -after all, the above 184th article of the agreement does not clearly oblige London to return to this issue, and its provisions can be interpreted in different ways. The Spaniards fear (and I think it is justified) that once the draft deal becomes an official document, the Gibraltar issue will be shelved again. That is why Madrid is actively insisting that this issue be included as a separate paragraph in the draft agreement. Moreover, Spain threatened to vote against the draft if its demands were not met.



The British, in turn, reasonably appeal to the fact that, first of all, the draft deal was agreed upon by the negotiators, and the negotiating group includes representatives of the EU, which are responsible for defending the interests of the eurozone countries (including Spain). Secondly, this project has already been agreed upon by the British ministers – any amendments to the document will entail a "domino effect", because there are a lot of claims to this agreement. Third, London reminded Madrid of the results of the October meeting at the EU summit, where the parties agreed to formalize their relations in a separate protocol, which will be an integral part of the overall deal.

In other words, the British flatly refused to make changes to the "body" of the agreement itself, while they can sign other documents regulating the relations of countries with respect to Gibraltar. It is worth noting that Angela Merkel and some other representatives of European countries recently said that the key EU summit on Brexit, which is scheduled for November 25, will not take place unless an agreement is reached on the remaining part of the agreement. It is this fact that brought down the pound to the 27th figure yesterday - uncertainty again prevailed over optimism.

However, according to the Spanish press, this morning London and Madrid signed four memorandums of understanding, as well as a tax treaty. If today Spain will remove its demands (or rather,an ultimatum) about the change in the text of the draft deal, then the British currency will play its position in the context of corrective growth. But a steady and large-scale growth of the GBP/USD is still not expected. At least until November 25, that is, until next Sunday, the pound will be under background pressure in anticipation of the next stage of the "divorce process".

Analysis are provided byInstaForex.

 

GBP / USD Forecast for November 26, 2018





GBP / USD

The trading volume on the British pound on Friday was the smallest in the last 3 months. Under the general pressure of the dollar (USDH 0.46%) and in anticipation of the decision of the EU emergency meeting on Brexit, the pound lost 64 points.

On Sunday, the EU countries unanimously adopted the Brexit plan. In England, the opposition,in particular the Labor Party, spoke out against voting on this draft in Parliament and suggested either changing the text of the treaty or holding a second Brexit referendum. On the other hand, EU representatives replied that there would be no second agreement on the UK leaving the EU, that is, under the most extreme scenario, England would leave the EU without a deal. It seems to us that the treaty will still be ratified until December 25 as required. But we do not expect significant growth of the pound in this case, since in fact, the United Kingdom will still acquire small restrictions. Probably, there will be no growth at all - as the working out of the exchange phenomenon of selling on the facts.

In the current situation, we are waiting for the price to overcome the support of the price channel line on the daily timeframe at about 1.2777. After that, we are waiting for the further decline of the pound to the underlying line in the 1.2560 area.

Analysis are provided byInstaForex.

 

Elliott wave analysis of EUR/NZD for November 27 - 2018



We are still looking for a firm break above minor resistance at 1.6767 for a continuation higher to at least 1.6915 and likely even closer to resistance near 1.7023,

Short-term support is seen 1.6698, which ideally will protect the downside for the expected break above 1.6767, but it will take an unexpected break below support at 1.6638 to cause concern and indicate that wave iv/ could have completed prematurely.

R3: 1.6879
R2: 1.6836
R1: 1.6832
Pivot: 1.6767
S1: 1.16731
S2: 1.6706
S3: 1.6642

Trading recommendation:
We are long EUR from 1.6706 with our stop placed at 1.6555. We will raise our stop to break-even upon a break above 1.6767.

Analysis are provided byInstaForex.

 

GBP / USD. Pound does not believe in "soft" Brexit

After the turbulent events of the past week, the financial world froze in anticipation. In early December, it will become clear whether the market will return to a state of relative stability or global uncertainty will continue further, defining the corresponding prospects for 2019. Given such an eventual fork, any prediction of currency strategists somehow comes down either to Brexit or to US-China trade relations. In the case of the pound-dollar pair, both topics are relevant - especially now, on the eve of the G20 summit and the key vote in the British parliament.

Brexit has an unconditional priority for the pound - all other fundamental factors are of secondary importance. These may affect the dynamics of the currency only if an information vacuum is temporarily created around the "main" theme. Recently, there are practically no such periods: the prospects for the most important voting are spoken daily, the most diverse speakers - from political scientists to the leaders of British political parties.



The disposition at the moment is as follows : there are 650 deputies in the British parliament. Meanwhile, the prime minister needs 320 votes in favor in order for the deal to pass through the millstones of the House of Commons. The complexity of the situation lies in the fact that, after the extraordinary re-election, the conservatives have lost the majority - now they are only left with 316 votes. In this regard, they entered into a coalition alliance with the Democratic Unionist Party (DUP), 10 deputies of which has provided control over parliament to conservatives. Theoretically, Theresa May has the necessary number of votes. However, in practice, the situation is completely different. Unionists have already managed to declare that they will not vote for the draft deal: a similar statement was made by the representatives of the Labor party and the Scottish National Party.

True, in each case that they did not manage to gain the necessary number ( 48) of supporters - but from this, it can be concluded that the backbone of the inner-party opposition is about three dozen deputies. Overwhelmingly, they are supporters of a more "rigid" Brexit. In their opinion, Theresa May gave in to the pressure of Brussels and allowed too many concessions to the Europeans. And although the number of opponents among conservatives can vary, the prime minister does not have to rely on the monolithic support of party members.

This means that Theresa May needs to do the almost impossible: to win over the representatives of the Labor Party to her side. It is worth noting that among the Laborites, there are also supporters of Brexit, however, it is in their interpretation, which provides for maximum cooperation with the European Union. Even when the possibility of early elections was discussed in London, Labor declared that Brexit would take place anyway if he won, but under different conditions.

According to experts, Theresa May will seek support from those Labor Party deputies who, on the one hand, are in favor of the country's withdrawal from the EU, and on the other hand, are satisfied with the formula for further cooperation with Brussels. Also, the prime minister will continue to put pressure on his party members, emphasizing the lack of an alternative to the achieved deal. Rather, the only alternative in this case is the chaotic Brexit, the negative consequences of which have been voiced more than once.

In this way, The British Prime Minister faces a very difficult political task, which may be unsolvable for her. At least, many analysts doubt that she will be able to consolidate the deputies - especially from the two opposing camps. Other experts are confident that the fear of the disordered Brexit will force many parliamentarians to support the deal, despite the flaws that have been declared. Uncertain prospects put a lot of pressure on the pound. Today, a pair of GBP/USD has finally consolidated in the 27th figure, testing a half-week minimum. And the closer the "hour of the X", the stronger the volatility will be for the pair, since the degree of intensity will only increase. In particular, a televised debate between Theresa May and Labor leader Jeremy Corbyn can take place next week. The premier has already confirmed Theresa May's participation in this event. If the head of the government looks unconvincing, then the British currency will again surrender its position, updating all the new price prima.



One must not forget about the quoted currency GBP / USD - dollar. On the eve of the G20 summit, Trump made a rather unfriendly statement about the introduction of new tariffs on Chinese imports - from January 1 of next year. Such rhetoric only increased the importance of the G20 summit, which will begin this Friday. Against the background of increased uncertainty, the American currency is again increasing its position: the dollar index is in the area of 97 points. In other words, the uncertainty of the British currency and the restoration of the greenback determine the southern trend for the pair. The nearest support level is far below the current levels at around 1.2670. This is the bottom line of the Bollinger Bands indicator on the daily chart.

Analysis are provided byInstaForex.

 

Forecast for USD / JPY on November 29, 2018





Yesterday, the Japanese yen was able to withstand the onslaught of counterdollar currencies at the speech of Fed Chairman Jerome Powell, but this resistance weakened today in the Asian session - the yen's decline is 32 points. Of course, the yen has a traditional patron - the stock market. Yesterday, the S & P500 added 2.3%. Today, the Nikkei225 is growing by 0.61%. It seems that the stock market rally has already begun. According to the data released today, retail sales in Japan added 3.5% y / y in October against the forecast of 2.7% y / y. Tomorrow, a whole block of positive changes are expected: industrial production growth in October is 1.3%, the base CPI of the capital Tokyo in November from 1.0% y / y to 1.1% y / y. Consumer confidence index is expected to be 43.3 against 43.0 earlier, the number of new housing bookmarks is from -1.5% y / y to 0.4% g / g.

At the moment, the price is close to the Krusenstern indicator lines and the balance on H4, but as part of the fluctuation, it is possible to reduce to support for the daily scale in the area of 113.00. From the level, we are waiting for the price reversal up to the resistance of the trend line of the price channel (115.15).

Analysis are provided by InstaForex

 

Technical analysis: Intraday Level For EUR/USD for December 20, 2018

Company does not offer investment advice and the analysis performed does not guarantee results



When the European market opens, some economic data will be released such as Current Account. The US will also publish the economic data such as Natural Gas Storage, CB Leading Index m/m, Unemployment Claims, and Philly Fed Manufacturing Index, so amid the reports, the EUR/USD pair will move in a low to a medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.1440.
Strong Resistance: 1.1433.
Original Resistance: 1.1422.
Inner Sell Area: 1.1411.
Target Inner Area: 1.1384.
Inner Buy Area: 1.1357.
Original Support: 1.1346.
Strong Support: 1.1335.
Breakout SELL Level: 1.1328.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors.The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Analysis are provided byInstaForex.

 

Here is my question when you say: "Company does not offer investment advice and the analysis performed does not guarantee results"

Does your company at least sorry sorry when its customers lose their investment and as well their broker fees if not all to you??????????????????????????????????? Please answer!!

 

Technical analysis: Intraday level for USD/JPY for December 21, 2018

Company does not offer investment advice and the analysis performed does not guarantee results



In Asia, Japan will release the National Core CPI y/y and the US will also publish some economic data such as Revised UoM Inflation Expectations, Personal Income m/m, Revised UoM Consumer Sentiment, Personal Spending m/m, Core PCE Price Index m/m, Final GDP Price Index q/q, Durable Goods Orders m/m, Final GDP q/q, and Core Durable Goods Orders m/m. So there is a probability that the USD/JPY pair will move with a low to a medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Resistance. 3: 111.78.
Resistance. 2: 111.56.
Resistance. 1: 111.85.
Support. 1: 111.07.
Support. 2: 110.86.
Support. 3: 110.64.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

News are provided by InstaForex

 

Technical analysis: Intraday Level For EUR/USD for December 27, 2018



When the European market opens, some economic data will be released such as ECB Economic Bulletin. The US will also publish the economic data such as New Home Sales, CB Consumer Confidence, HPI m/m, and Unemployment Claims, so amid the reports, the EUR/USD pair will move in a low to a medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1425.
Strong Resistance: 1.1418.
Original Resistance: 1.1407.
Inner Sell Area: 1.1396.
Target Inner Area: 1.1369.
Inner Buy Area: 1.1342.
Original Support: 1.1331.
Strong Support: 1.1320.
Breakout SELL Level: 1.1313.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Analysis are provided by InstaForex

 

EUR/USD: US consumer confidence weakened the dollar

The dollar index froze in flat today: on the one hand, the indicator was able to return to the area of 96 points, but on the other hand, further growth was questionable. The fundamental background for the US currency is quite controversial, so traders are in no hurry to open large positions - neither in favor of the greenback nor against it.



Bulls of EUR/USD situationally took advantage of the situation, making up for yesterday's losses, however, the northern dynamics is also under a certain question. Throughout the trading day, traders stormed the 14th figure, but it is not yet possible to finally gain a foothold in this area. The European currency was not able to attract investors even against the background of the shaken demand for the dollar. As a result, the EUR/USD pair was also stuck in a flat, despite the predominantly bullish sentiment of investors.

In general, the foreign exchange market today is balanced between two border states. In the morning, there was clearly a thirst for risk in the background of recent events. Traders "changed their anger to mercy" when the main indices of the US stock market showed rapid growth. News from China also encouraged the market, as the date of talks between Beijing and Washington became known: the American delegation will visit the Chinese capital in the second half of January. This fundamental picture has weakened the interest of traders in the dollar, which has recently enjoyed the status of a "defensive asset".

In turn, this situation allowed the EUR/USD bulls to return the pair to the area of the 14th figure, although the northern dynamics of the price were under serious threat. The reason for this is the economic bulletin, which was published today by the ECB. The European equivalent of the "minutes" of the Federal Reserve rarely causes strong volatility in the market, but against the background of an almost empty economic calendar and low liquidity, today's release played a role for the euro.

By and large, the published Bulletin in many respects duplicates the already voiced information from the last meeting on monetary policy. Today, traders did not see anything new in the report: according to members of the central bank, the eurozone economy still needs significant amounts of stimulation against the backdrop of increasing downward risks. The central bank expects to see further expansion of the economy, although the momentum of growth by the end of the year slowed noticeably. In addition, the regulator is quite pessimistic about the dynamics of the EU economic growth in 2019 against the background of the expected slowdown in the global economy.

All these theses were almost literally voiced by Mario Draghi at the ECB's last meeting this year. However, he was more optimistic in his assessments, while the Bulletin compiled only negative factors. Therefore, among the experts today there is a fairly reasonable assumption that at the beginning of the year the European Central Bank will soften its rhetoric.

In their opinion, the regulator will first of all change the wording regarding the approximate term of the rate increase. If at the moment the ECB plans to tighten the monetary policy "not earlier than autumn 2019", then in the text of the January or March accompanying statement of the wording may be subject to adjustment. The essence of the possible changes is obvious: the regulator will move the date of rate increase for an indefinite period, so that, on the one hand, not to entertain the market with unrealistic illusions, and on the other hand, not to drive itself into the framework of its own forecasts.

In my opinion, these concerns are justified, but only if the key inflation indicators show a further decline in the first quarter of next year. That is, the ECB can adjust its position only at the March meeting, while the January meeting is likely to be "passing". Apparently, the market also came to the conclusion that it is too early to worry about this, so after a small southern pullback, the EUR/USD pair shot up, after all having overcome the price outpost of 1.1400.

This price movement contributed to the US statistics. The consumer confidence indicator published today turned out to be much worse than forecast: with the forecast of 133.7, it came out at 128.1 - this is the weakest result since July of this year. The indicator has weakened quite sharply and unexpectedly, since over the past five months it has not decreased below the 130th mark.

As you know, this index is a leading indicator of consumer spending, so traders returned to the problem of inflation growth in the United States. The market was again concerned about the pace of the rate hike next year – after all, according to some experts, the Fed may even pause the process of tightening monetary policy - or just raise the rate once at the December 2019 meeting. And although these arguments are also too generalized, the dollar was under quite strong pressure.



Technically, the bulls of the EUR/USD pair still need to consolidate above the upper line of the Bollinger Bands indicator on the daily chart (1.1430) and the upper limit of the Kumo cloud (1.1515). Having overcome these price barriers, traders will indicate the priority of the northern movement. Until then, there is a risk of a downward rollback to the middle line of the Bollinger Bands, that is, to the level of 1.1360.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Analysis are provided byInstaForex.

 

Trading plan for 02/01/2019



The start of the new year brings a revival of trade, which for the currency market mainly means USD sales. EUR / USD and USD / JPY are gaining new levels closer to 1.15 and 109 respectively. More pressure concerns only AUD and NZD in the company of the stock market in Asia, where the pressure was created after disappointing data from China.

On Wednesday, the 2nd of January, the event calendar is light in important data releases, but the global investors should keep an eye on PMI Manufacturing data from Germany, France, Spain, Italy, UK and the whole Eurozone being released early in the morning. During the US session, Canada and the US itself will publish their PMI Manufacturing data as well.

EUR/USD analysis for 02/01/2018:

China's December Caixin manufacturing PMI fell from 50.2 in November to 49.7, in line with the official manufacturing PMI, which fell from 50.0 to 49.4. Together with a fall in industrial profits of 1.8%YoY in November from +3.6%YoY in October, and softer retail sales growth (8.1% in November from 8.6% in October), the global investors have a clear indication that the economy is weakening.

The Chinese HSBC Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy. Flash figures are released approximately 6 business days prior to the end of the month. Final figures overwrite the flash figures upon release and are in turn overwritten as the next Flash is available. The Chinese HSBC Manufacturing PMI is concluded from a monthly survey of about 430 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has broken through the local technical resistance zone located between the levels of 1.1442 - 1.1471 and made a new local high at 1.1495 on its way up. The zone between 1.1493 - 1.1499 is a resistance zone as well so the bulls might have some problems there, but the momentum is still strong and positive, which supports the short-term bullish outlook. In a case of a further rally, the next target for bulls is seen at the level of 1.1533 and 1.1550.

Analysis are provided by InstaForex

 

GBP/USD. And again Brexit: the pound fell into the zone of turbulence

The situation in the foreign exchange market is changing rapidly: in the morning the pound-dollar pair showed a positive attitude, taking advantage of the weakness of the US currency – but in the second half of the day the British sharply fell throughout the market, testing the 25th figure paired with the greenback. It was followed by the euro, which was unable to hold local highs and hastily returned to December positions. After the New Year holidays, traders again remembered Brexit, the prospects of which are still very vague.

The immediate reason for the price collapse of the GBP/USD was the message that Theresa May is holding an emergency meeting of the cabinet ministers today, on the agenda of which there will be only one issue – preparation for a "hard" Brexit. Traders reacted anxiously to this news, although, in my opinion, today's situation should be considered from a slightly different angle.



The fact is that since the beginning of December, when Theresa May canceled the Brexit vote, the general mood among British parliamentarians has not changed. It would be possible to talk about any changes if Brussels went to a meeting and outlined the validity period of the backstop. But Europe refused, so the prime minister returned to London with nothing, refusing to even hold a press conference. May's behavior is quite understandable: after all, the Europeans not only refused her request, but even criticized her for the lack of structural elements. Brussels expressed bewilderment: what kind of "legal guarantees" can we talk about if the draft agreement already approved by the European Union and British ministers provides for consideration of this issue during the transition period?

In other words, over the past three weeks, the situation has not changed, whereas after two weeks the British deputies must render their verdict to the proposed deal. Theresa May still needs to consolidate the votes of not only her fellow party members (117 of whom voted for her resignation), but also find 10 more votes outside the Conservative Party. The task, to put it mildly, is not easy, so the prime minister needs to act "decisively and convincingly."

And apparently, May decided to play the "no alternative" card of the proposed agreement again. The previous attempt ended in failure: according to preliminary estimates, on the eve of December 11, the prime minister lacked a few dozen votes, which was the reason for the cancellation of the vote. Now the situation is somewhat different, so the prime minister will certainly try her luck again - especially since there are simply no other options.

Let me remind you that since around the end of September, May has been actively focusing on the catastrophic consequences of chaotic Brexit, recalling that the proposed deal is a single alternative to this scenario. This position was repeated by the European Union: according to the European side, the members of the Alliance will under no circumstances reconsider any points of the agreement reached. Speaking with a "united front", Brussels and London tried to convince members of Parliament that they have little choice: either they vote for the deal (with all its shortcomings), or let the country "derail", allowing a chaotic scenario.

But shortly before the key vote, the deputies began to discuss possible alternatives. Among them is the rejection of Brexit as such (the European court at the end of 2018 allowed such an option) or a new referendum. As a result, Theresa May's script has lost its trump card, which lay in the proverbial no alternative.



Why does May again begin to escalate the situation, "scaring" politicians with hard Brexit? The fact is that in late December, the leader of the British opposition, Jeremy Corbyn, disappointed supporters of the second referendum with his unexpected statement. He said that his party supports Brexit, but at the same time the Labour Party will try to change the terms of the deal if they win the early elections in 2019 (if they are held, of course). Thus, the probability of holding a second referendum has largely decreased, since now only small parties defend this idea, which are unable to change the situation as a whole.

Other proposed scenarios look too ephemeral to "compete" with the draft deal proposed by May. That is why in the coming days the situation will only escalate: supporters of the prime minister will, under any pretext, "scare" the public and politicians with catastrophic consequences of a hard Brexit. This strategy can persuade doubting MPs that a bad deal is better than a chaotic option – especially in the absence of clear alternatives.

Traders of GBP/USD, in turn, will have to be patient: the pound reacts sharply to any comments or events related to the prospects of the "divorce process". Therefore, the period of "panic" will be perceived by the British quite painfully. At the moment, the pair is heading to the nearest, strongest support level of 1,2505 (the lower line of the Bollinger Bands on the daily chart), where a corrective pullback may follow.

Analysis are provided byInstaForex.

 

EUR/USD. Friday's Jackpot: Nonfarm and European inflation

The foreign exchange market is experiencing a period of increased volatility, showing strong price impulses. The dollar/yen pair has passed more than 400 points in the last day, the pound/dollar – almost 150, the "kiwi" and "loonie" – about 100. In all cases, the dollar for some time significantly strengthened its position, but then just as rapidly fell throughout the market. This difference in mood is due to the changeable fundamental background, which is clearly confusing traders.



The fact is that the dollar last year (especially in the second half of it) actively enjoyed the status of a defensive instrument – even the negative events in the United States increased the demand for the greenback. The US currency had a powerful trump card in the form of the hawkish policy of the Fed, especially against the background of the uncertainty of the rest of the central banks of the leading countries of the world. Now the situation has changed somewhat: the problems in the US are still growing like a snowball, but the position of the Federal Reserve has softened significantly. The results of the December Fed meeting will "chase" the dollar for a long time, especially if the key US economic indicators show a decline in the first half of the year. Some representatives of the American regulator, who had recently voiced the "hawkish" position, added fuel to the fire. Now their rhetoric has changed significantly.

For example, the head of the Federal Reserve Bank of Dallas, Robert Kaplan, said today that the regulator should take a wait-and-see position for at least two quarters of 2019. The essence of his position boils down to the fact that the US-Chinese trade conflict has harmed not only the world economy and not only China – but also the United States. In view of this fact, he expects a slowdown in US GDP growth and inflation this year. The Fed, in his opinion, should react accordingly, so as not to aggravate the already precarious situation. Here it is worth recalling that in the autumn of last year Kaplan stated that 4 rounds of increase would follow to the neutral level of the rate (that is, the neutral level would be at the level of 3.25%). As we see, now his opinion has changed dramatically: now he stands for a six-month pause.

If the rest of the Fed members move to the "dovish" camp in the same way, the dollar finally loses its foothold. In this context, it is important to listen to Jerome Powell, who will speak at the economic conference tomorrow with his predecessors, Janet Yellen and Ben Bernanke. If the incumbent Fed chief also softens his rhetoric (or at least repeats the main points of the December meeting), the dollar index will continue its downward trend.

However, tomorrow is full of other events. First of all, we are talking about the Nonfarm, which can give an additional impetus to dollar pairs. According to preliminary estimates of experts, the number of people employed in the non-agricultural sector in December should increase by 180 thousand, while the unemployment rate will remain at the previous level of 3.7%. This is a good forecast, so if real numbers meet expectations, then the dollar will avoid another wave of sales.



But as shown today, experts can make a big mistake in their estimates: the American manufacturing index ISM, contrary to all forecasts, fell to the mark of 54.1 - this is the weakest result since September 2016. This unexpected result discouraged dollar bulls, after which the EUR/USD pair was able to return to the 14th figure for a short time. If tomorrow's Nonfarm will present a similar "surprise", then the market reaction will be more extensive.

Another important release on Friday is the dynamics of wages. The indicator of the average hourly wage in the USA has been fluctuating in the range of 0.1% to 0.3% (m/m) for a long time, although in annual terms the indicator has grown slightly (up to 3.1%). For EUR/USD bears, it is important that the indicator does not cross the zero line on a monthly basis and does not "dive" under the three percent mark in annual terms. This indicator is closely monitored by the Fed, so its negative dynamics will affect the position of the US currency.

Also, we should not forget that tomorrow the release of data on the growth of European inflation is expected. The consensus forecast suggests that the consumer price index will drop again - to 1.8%. Core inflation should remain at the same level - 1%. Any deviations from the forecast scenario will cause strong volatility - depending on the direction in which the pendulum will swing. The recovery of inflation indicators will inspire the bulls of the EUR/USD pair, as the chances of a rise in the ECB rate this year will increase. If the price pressure continues to weaken, the euro will be too vulnerable - even against the background of an uncertain greenback.

Analysis are provided byInstaForex.

 

GBP/USD: do not succumb to the illusions of growth

The pound/dollar pair is now extremely unreliable in the context of any forecasts – and in the short term, and even more so in the long term. The general weakness of the US currency can create the illusion of the northern trend of GBP/USD, but in this case it is absolutely impossible to focus on the dynamics of the dollar. "Cable "for two and a half years is completely subject to Brexit, so the vector of price movement here depends only on the fate of the "divorce process".

However, sometimes emotional news related to the prospects of the Federal Reserve's monetary policy still drowns out Brexit. One of those rare occasions happened yesterday. The resonant statement of the head of the Federal Reserve of Atlanta that the regulator can hypothetically reduce the interest rate coincided with the failure of the British parliament to vote for Theresa May's government. The GBP/USD pair remained in its positions (showing even the northern dynamics) only at the expense of the dollar that had sharply fallen throughout the market.

Although in reality there are no reasons for optimism among bulls of the pair, and there was no. Although in reality there are no reasons for optimism among bulls of the pair, and there is no.



On the one hand, the amendments adopted yesterday by British MPs do not entail any serious consequences - at least for today. Members of the House of Commons have adopted amendments to the tax law, thereby limiting the powers of the Cabinet of Ministers in this area in the event of the development of a "hard" Brexit scenario. Now the Ministry of Finance will not be able to change the amount of taxes (thus offsetting the negative effect of "hard" Brexit), if this step is not approved by the deputies. According to legislators, this rule will prevent the country's chaotic exit from the EU: "Now Theresa May must by all means reach a compromise solution with the European Union and the British Parliament," said Labour leader Jeremy Corbyn.

The logic of this law is to "force negotiations": as many politicians believe, Theresa May has largely conceded to Brussels, and now "frightens" the Parliament by the lack of any alternative to the agreement reached. The above norm, in the opinion of the deputies, will incline the prime minister to additional negotiations with the EU.

British MPs adopted another rule and is very significant of character. Parliament ordered the government to prepare a new Brexit plan if the members of the House of Commons do not vote on January 15 for the proposed draft deal. Moreover, ministers are obliged to present a "plan B" within three days after the failed vote. 308 of the 618 deputies of the lower house of Parliament voted in favour of the proposal, while 297 opposed the idea.

It is not even the essence of the adopted bills that is important here (although their content also speaks volumes) - yesterday's voting showed a preliminary political alignment in the Parliament. And apparently, it is clearly not in favor of "soft" Brexit. The results of the vote suggest that the majority of deputies in the House of Commons are opposed to leaving the EU without an agreement – May's opponents are not only among Labour and other opposition parties, but also among "their" conservatives.

Thus, the British prime minister's "saving strategy" seems to be a fiasco. Let me remind you that the local press this week discussed a possible scenario in which the Parliament approves the deal, but only if Brussels provides additional guarantees regarding the duration of the special regime on the Northern Ireland border. As you can see, the Parliament decided to go its own way, playing ahead. In addition, representatives of the European side also hurried to assure their British colleagues that they will no longer discuss the terms of the deal – under any conditions.



What are the options then? According to the majority of experts, there are not so many of them, or to be more precise, only two: either the prime minister will postpone the vote again, as it was in December, or she will postpone the country's exit from the EU for an indefinite period, using the decision of the European Court of Justice, which at the end of last year clarified the provisions of the 50th article of the Treaty of Lisbon. Both options are negative for the British currency, despite the fact that they save from the "hard" Brexit. The market is quite exhausted by the two-year period of uncertainty, so the prolongation of this regime will be bad news for GBP/USD bulls.

That is why the northern dynamics of the pair now looks unreliable and unconvincing. Long positions on the pair are too risky, especially on the eve of January 15, when a key vote in the British Parliament is to be held. If Theresa May takes one of the two decisions listed above at the weekend, the pound may collapse on Monday for several figures, as it was in mid-December. It will be possible to speak about the confident growth of the "cable" only when the "soft" Brexit becomes a reality – that is, when it receives the approval of the British parliamentarians.

Analysis are provided byInstaForex.

 

Brexit: Scenarios of the movement of the British pound. May, Tusk and Juncker exchanged courtesies

The euro fell in the first half of the day to the area of a minimum amid weak industrial production data, indicating the likelihood of a slowdown in economic growth in 2018. A further bearish trend in the EUR/USD pair gets more real.

Eurozone

According to the report, industrial production in the eurozone in November last year declined more significantly than expected. As noted in Eurostat, industrial production in the euro area fell by 1.7% in November compared with October. This is the biggest drop since February 2016. Economists had expected a decline in production of 1.3%. Germany, where production fell by 1.9%, and Spain, where the decline was marked by 1.6%, were among the leaders in countries where production was falling the fastest.



Thus, the decline in industrial production in many European countries only confirms the weakening of the global economy.

This was noted in today's report of the Organization for Economic Cooperation and Development, which states that the growth rates of the United States and many other developed countries will continue to slow down this year. The only exception may be the Chinese economy, which shows signs of stabilization. But even here, a lot will depend on the trade agreement with the United States.

According to the data, the leading indicator for the US fell for the third month in a row, being at the level of 99.6 points. China's indicator rose to 98.9 points, indicating a less active slowdown in economic growth. The leading indicator of the eurozone is below the level of 100 points, indicating a continued slowdown in the pace of activity.

As for the technical picture of the EUR/USD pair, it remained unchanged compared with the morning forecast. Buyers of risky assets need to go back to the resistance level of 1.1490 since the future direction will depend on it. If this fails to be done, then it is likely that the bears will continue to push the euro down to the support of 1.1425 and 1.1370.

UK and Brexit

The British pound continues its growth, which, apparently, is still more speculative. Traders positively perceived the information that the Prime Minister of Great Britain today sent a letter to Tusk and Juncker, in which she confirmed her intentions to carry out the decision made during the referendum. However, despite this, May is concerned about the fate of the Brexit deal, which is under threat due to concerns over Northern Ireland. The Prime Minister of Great Britain assured that the EU's concerns about the threat of a rigid border are groundless and negotiations will continue immediately after the vote in the UK. The focus of these negotiations will be on technology that will give up the guarantee of the absence of a rigid border.

In turn, Juncker and Tusk responded to May in the same style, sending her a letter with assurances regarding the Brexit deal, but adding that they would not agree to anything that changes the agreement or does not correspond to it. Juncker also noted that the EU will quickly work on a trade agreement in order to avoid applying the guarantee of the absence of a rigid border in Ireland.

All of these suggest that if the deal with the EU in the framework of a vote does not receive the support of parliamentarians tomorrow, the British pound may remain in the side channel until a final decision is reached since there are a lot of future development scenarios. Starting from the postponement of the exit of the UK from the EU, ending with indiscriminate exit without the adoption and approval of the basic laws.

The prospect of complete abolition of Brexit also has a place to be that will support the British pound when information appears about the next referendum on this matter.

Analysis are provided by InstaForex