EUR/USD and GBP/USD. March 25. Results of the day. Mike Pompeo and Donald Trump accuse China of concealing and misinformation

Trading 25 mar 2020 Commentaire »

4-hour timeframe

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Average volatility over the past five days: 223p (high).

The EUR/USD currency pair ends the third trading day of the week with the same corrective movement within which it has been in since March 19. Despite the visual weakness of the correction, the pair consistently passes at least 150-200 points a day. And it "only" passed 90 today, March 25th, but this is at the moment, there could be more by the end of the day. We frankly rejoice at the fact that the volatility of the euro/dollar pair began to decline. Despite the fact that the coronavirus continues to spread very rapidly across the planet, we are primarily interested in the foreign exchange market, the trend in it and the reaction of traders to certain events. In recent weeks, there was no justified reaction to any events. We associate this phenomenon with high volatility, which is the first sign of panic. If volatility begins to decline, then most traders begin to bounce back, calm down and get used to new realities. Accordingly, in the near future we can expect the markets to return to normal, although it may take years before, for example, the stock markets of the EU, Britain and the United States fully recover.

Meanwhile, the total number of cases of coronavirus worldwide is 438,000, according to official data. These are only officially recorded cases of the disease. There are almost 70,000 infected in Italy and 55,000 in the United States. The world Health Organization (WHO) notes that over the past day, the largest number of new infections occurred in the EU and the United States. The US accounts for about 40% of all new diseases. There is a strong acceleration in the number of infected citizens in the US. At the same time, a leading epidemiologist Ira Longini predicted that the peak of deaths in America will occur in about three weeks. According to Longini, when this period of maximum mortality and infection is over, it will be possible to partially lift restrictions on movement among American citizens. At the same time, not everyone believes such forecasts are real. Many scientists say that the figure will be six weeks, during which the number of infected and the number of deaths from the COVID-2019 virus will increase in the United States. And at the same time, the United States again blames China. This time, it is no longer about spreading the virus, but about hiding information about the virus that could stop the spread of the pandemic. "I am concerned that the cover - up and misinformation that the Chinese Communist party is engaged in deprives the entire world of the necessary facts to prevent new cases of coronavirus infection," said US Secretary of State Mike Pompeo. The same opinion is shared by the US President Donald Trump. "If we had learned about all aspects of the disease a few months earlier, the virus could have been contained within the borders of one province(Wuhan)," Trump said.

Meanwhile, there has been a slight decline in the spread of the virus in Italy. However, WHO spokeswoman Margaret Harris said it was too early to celebrate the victory. Firstly, fewer coronavirus tests have been conducted in recent days than previously. Secondly, this may be a mere coincidence. Italy has already caught up with China in the number of deaths from the disease, and in the near future it can be doubled.

4-hour timeframe

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Average volatility over the past five days: 420p (high).

The GBP/USD currency pair was traditionally more active than the euro/dollar pair on March 25. The pair managed to overcome the critical line during the day, and work out the lower boundary of the Ichimoku cloud, the Senkou span a line, and bounce off it, and return back to the Kijun-sen line. Thus, at the moment, we can say that the buy signal from Ichimoku Golden Cross is extremely weak, so long positions can not be considered relevant. Moreover, at the current bar, the price may again return to the area below the critical line,and the MACD indicator may turn down. Volatility remains very strong. The pound/dollar pair has already passed about 330 points during March 25. It is difficult to say whether the downward trend will resume or whether the pound/dollar pair will now switch to a sideways movement for an indefinite period. We have repeatedly said that the British currency has not had a strong and unambiguous reason to fall by 1500 points against the dollar in the past two weeks. You can note the coronavirus epidemic, and the fall in the main stock indexes of the United States and great Britain, and the fall in the oil market, and absolutely draconian measures taken by the Bank of England and the Federal Reserve, and the terrible forecasts of the IMF, Goldman Sachs and Morgan Stanley regarding the prospects for the world economy in 2020. However, all these factors apply to both Britain and the US. Thus, from our point of view, the main reasons for the fall of the pound and the reasons that can trigger the resumption of the downward trend are still panic and the general belief of traders that, whatever happens, the dollar was, is and will exist, and is the most secure currency in the world.

Meanwhile, in the UK, the number of cases of the "Chinese virus" reached 8,000. And again, this is only official statistics. No one knows how many people are sick in the UK. In order to have a complete picture of things on hand, it is necessary that absolutely all residents pass a test for coronavirus, which, for obvious reasons, is impossible. Scientists at Oxford University take this fact into account and believe that more than half of the UK population could already become infected, simply as long as they do not have any symptoms of malaise. According to scientists, only one out of a thousand people who become infected with the coronavirus have such a degree of malaise that makes him go to the hospital. And the vast majority of Britons show either very mild symptoms, or none at all.

Recommendations for EUR/USD:

For short positions:

The euro/dollar continues to have a corrective movement on the 4-hour timeframe. Thus, it is recommended to sell the euro currency if the price consolidates below the Kijun-sen line with a target level of 1.0531 volatility.

For long positions:

Formally, you can buy the EUR/USD pair, as the price crossed the Kijun-sen line, with the first goal at 1.0977. However, we believe that the prospects for the upward movement are now very vague.

Recommendations for GBP/USD:

For short positions:

The pound/dollar pair sharply resumed its downward movement on March 25. Thus, it is recommended to sell the British pound with the goal of a volatility level of 1.1316 after fixing the price below the critical line.

For long positions:

It is recommended to buy the GBP/USD pair in case of a price rebound from the Kijun-sen line with the first goal, the volatility level is 1.2156, but with very small lots. As in the case of the euro currency, it is recommended to remember the increased risks when opening any positions.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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

EUR/USD. Trump and Covid-19: the head of the White House faces a difficult choice

Trading 25 mar 2020 Commentaire »

"One step forward, two steps back" - this is how you can describe the dynamics of the euro-dollar pair in recent days. The growth of EUR/USD is extremely difficult for buyers – they have been testing the eighth figure for four trading days, but they can not get a foothold in this price area. The price retreated during the US session, and then the bulls again had to conquer the unyielding height. Nevertheless, the overall result remains for the single currency: the pair plunges into the seventh figure less often, not to mention lower values. The pair is gradually recovering its positions with deep price reversals, despite the rather contradictory fundamental background.

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The dollar has been between the "rock and the hard place" for several days now. On the one hand, the greenback is under pressure from the latest actions by the Federal Reserve. Initially, the regulator announced a quantitative easing program worth $700 billion, but after a few days it canceled the threshold and made this program unlimited in amount. Jerome Powell also announced the opening of credit lines for corporations and US local authorities. At the same time, the Fed chief noted that current purchases of US Treasury and mortgage securities will be expanded "as much as necessary." In addition, the Fed opened dollar swap lines with the ECB, the Bank of England, the Bank of Japan and nine other central Banks of the leading countries of the world.

Such generosity of the US regulator and the saturation of dollar liquidity have reduced the excitement around the greenback. Nevertheless, the market still uses it as a protective tool, so the bulls of the EUR/USD pair were not able to take full advantage of the situation. In addition, today it became known that the US Senate will still vote for a package of economic measures for $2 trillion. At least, according to Senator Mitch McConnell, the White House and the Democrats have come to a compromise and are ready to make an agreed decision. Therefore, at the end of today's US session or in the midst of the Asian, we should expect a market reaction to the actual adoption of this document by congressmen.

And although this fact is already largely taken into account in prices, dollar bulls are unlikely to ignore such powerful state assistance to the US economy. The bill provides for prompt payments, which should help Americans pay bills in the event of dismissal during the epidemic, expand unemployment payments and allow emergency loans to small businesses. In addition, a stimulus package will support the economy by providing large-scale assistance, which will include $500 billion to support the most affected sectors through loans.

This is very useful, since the United States, apparently, will become the new epicenter of the coronavirus pandemic. At least this assumption was voiced by the World Health Organization. The United States is actively catching up with Italy in terms of the number of infected people - last night the number of infected Americans crossed the 50,000th mark. The virus claimed the lives of more than 600 Americans.

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But in the context of the foreign exchange market, a slightly different question is important - will the White House extend quarantine measures in the country or not? Trump is still against tough decisions - moreover, he admitted that after three weeks his administration can cancel all quarantine measures. According to him, "treatment in this case is worse than the disease itself," bearing in mind the economic consequences of restrictive measures. He was supported by many Republicans and some representatives of large business.

The essence of their arguments is quite simple: the collapse of the US economy can kill more people than the notorious Covid-19. In fact, large banks also joined Trump's position, having calculated the possible losses. For example, according to preliminary estimates of Bank of America, the US economy will collapse by 12% in the second quarter, if quarantine measures last until the summer. Deutsche Bank predicts a decline of almost 13%, while Goldman Sachs - immediately by 25%. According to bankers, the labor market will lose around 5 to 8 million jobs - unemployment will increase significantly in the country and consumer activity will decrease. The representative of the Fed (President of the Federal Reserve Bank of St. Louis) James Bullard voiced more gloomy forecasts. According to him, over 45 million Americans may lose their jobs due to the epidemic (and, accordingly, quarantine measures), and the unemployment rate will jump to a record 30%. He also skeptically evaluated the package of incentive measures proposed by the White House - according to him, the state program will bring only "temporary relief", but no more. However, he did not rule out the application of additional measures by the Fed.

Thus, economists have voiced strong enough arguments in favor of easing or completely abolishing restrictive measures in connection with the coronavirus. However, doctors, virologists, and other specialized specialists give no less weighty arguments in favor of prolonging and strengthening quarantine. In their view, the peak of the epidemic in the United States has not yet arrived, so strict social isolation is vital. Otherwise, the worst case scenario could be implemented, according to which up to 100-150 million people will be infected with the US coronavirus. In this case, the death toll will increase to one and a half (according to other estimates - 800 thousand to 1.7 million) million people. Such prospects, of course, will hit Donald Trump's political positions - just a few months before the presidential election.

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Thus, the US president is now facing a very difficult choice. According to him, the decision to terminate quarantine will be based only on irrefutable facts and data. At the same time, he added that he was already seeing "a gap at the end of the tunnel." However, the latest figures indicate that the end of this tunnel is still quite far away - the number of infected and dead is growing by the hour and not by the day. All this suggests that the White House will probably extend quarantine by a few more weeks in early April. This fact (even preliminary hints of a similar scenario) will put strong pressure on the US currency - this will allow the EUR/USD bulls to finally take the pair initiative, gain a foothold in the ninth figure and overcome the resistance level of 1.0940 (the lower boundary of the Kumo cloud on the daily chart).

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

SNB Launches Covid-19 Refinancing Facility To Combat Coronavirus Crisis

Trading 25 mar 2020 Commentaire »

The Swiss National Bank introduced a COVID-19 refinancing facility to support liquidity to offset the economic impact of the coronavirus outbreak.

The COVID-19 refinancing facility, or CRF, is aimed at strengthening the supply of credit to the Swiss economy by providing the banking system with additional liquidity, the SNB said in a statement on Wednesday.

The interest rate for these refinancing transactions corresponded to the SNB policy rate. The CRF will be available from March 26.

There will be no upper limit on the amounts available under the CRF and drawdowns could be made at any time, the bank said.

The facility will allow banks to obtain liquidity from the SNB, which is secured by the federally guaranteed loans.

In order to further facilitate lending, the SNB has also submitted a proposal to the Federal Council to reduce the countercyclical capital buffer to 0% with immediate effect.


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

*U.S. Crude Oil Inventories Increase By 1.6 Million Barrels In Week Ended 3/20

Trading 25 mar 2020 Commentaire »

U.S. Crude Oil Inventories Increase By 1.6 Million Barrels In Week Ended 3/20


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

U.S. Durable Goods Orders Unexpectedly Jump 1.2% In February

Trading 25 mar 2020 Commentaire »

A report released by the Commerce Department on Wednesday showed an unexpected increase in new orders for U.S. durable goods in the month of February.

The Commerce Department said durable goods orders jumped by 1.2 percent in February after a revised uptick 0.1 percent in January.

Economists had expected durable goods orders to decrease by about 0.8 percent compared to the 0.2 percent dip that had been reported for the previous month.

The unexpected increase in durable goods orders was largely due to a substantial rebounded in orders for transportation equipment, which spiked by 4.6 percent in February after falling by 0.9 percent in January.

"For once that wasn't driven by the volatile aircraft orders figures, but instead reflected a 1.8% increase in vehicle orders and a 32% m/m surge in other transport orders," said Michael Pearce, Senior U.S. Economist at Capital Economics.

However, excluding the jump in orders for transportation equipment, durable goods orders fell by 0.6 percent in February after climbing by 0.6 percent in January. Economists had expected a 0.4 percent drop.

Orders for fabricated metal products, primary metals and computers and electronic products showed notable decreases, offsetting a jump in orders for electrical equipment, appliances and components.

The report also said orders for non-defense capital goods, excluding aircraft, a key indicator of business spending, fell by 0.8 percent in February after surging up by 1.0 percent in January.

Shipments in the same category, which is the source data for equipment investment in GDP, slid by 0.7 percent in February after jumping by 1.1 percent in the previous month.

"The rise in durable goods orders in February reflected a surge in transport orders, with underlying capital goods orders and shipments falling back," Pearce said.

He added, "That suggests business equipment investment was on track to broadly stagnate in the first quarter, even before the virus crushed domestic demand."

Next Thursday, the Commerce Department is due to release a separate report on factory orders in the month of February, which includes orders for both durable and non-durable goods.


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

*SNB To Deactivate Countercyclical Capital Buffer

Trading 25 mar 2020 Commentaire »

SNB To Deactivate Countercyclical Capital Buffer


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

*SNB Unveils Covid-19 Refinancing Facility

Trading 25 mar 2020 Commentaire »

SNB Unveils Covid-19 Refinancing Facility


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

Dollar Little Changed Following U.S. House Price Index

Trading 25 mar 2020 Commentaire »

At 9:00 am ET Wednesday, Federal Housing Finance Agency's house price index for January has been released.

The greenback changed little against its major rivals following the data.

The greenback was trading at 111.35 against the yen, 1.0818 against the euro, 1.1836 against the pound and 0.9800 against the franc around 9:01 am ET.


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

Dollar Mixed Ahead Of U.S. House Price Index

Trading 25 mar 2020 Commentaire »

At 9:00 am ET Wednesday, Federal Housing Finance Agency's house price index for January will be out.

The greenback traded mixed against its major rivals ahead of the data. While the greenback held steady against the yen and the franc, it recovered against the euro and the pound.

The greenback was valued at 111.37 against the yen, 1.0813 against the euro, 1.1831 against the pound and 0.9808 against the franc as of 8:55 am ET.


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

U.S. Durable Goods Orders Jump 1.2% In February

Trading 25 mar 2020 Commentaire »

A report released by the Commerce Department on Wednesday showed an unexpected increase in new orders for U.S. durable goods in the month of February.

The Commerce Department said durable goods orders jumped by 1.2 percent in February after a revised uptick 0.1 percent in January.

Economists had expected durable goods orders to decrease by about 0.8 percent compared to the 0.2 percent dip that had been reported for the previous month.

The unexpected increase in durable goods orders was largely due to a substantial rebounded in orders for transportation equipment, which spiked by 4.6 percent in February after falling by 0.9 percent in January.

However, excluding the jump in orders for transportation equipment, durable goods orders fell by 0.6 percent in February after climbing by 0.6 percent in January. Economists had expected a 0.4 percent drop.


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