EUR/USD and GBP/USD. March 26. Results of the day. Euro and pound revival thanks to 3.3 million new weekly US unemployment

Trading 26 mar 2020 Commentaire »

4-hour timeframe

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Average volatility over the past five days: 199p (high).

The EUR/USD pair ends the fourth trading day of the week by continuing growth, which was initially classified as a corrective movement, but now represents a full-fledged upward trend. We cannot say with absolute certainty that the downward course for the euro/dollar pair has ended. However, now everything looks exactly as if traders are sated with purchases of the US currency. After all, it is true that the US currency has been continuously rising in price for almost two weeks. There was only one reason – the coronavirus and the panic associated with it. But why did the dollar become more expensive? There can only be one answer. Traders firmly believed that the US economy would survive the crisis and the epidemic with complete calm, or at least with less losses than other countries. However, in practice, it turns out that the United States is not far behind the eurozone and even threatens to overtake it in the number of diseases and deaths from infection. The coronavirus first began to spread in the European Union, so it is not surprising that the largest number of infected people can be found there. Nevertheless, the United States adds 10-20% to their number of infected people every day. Moreover, the central banks of both the EU and the US simultaneously lowered rates to a minimum and resumed quantitative stimulus programs. However, the EU did not lower the rates. They have long been at ultra-low values. That is, the euro/dollar exchange rate at the time before the outbreak of the epidemic just took into account the fact that rates in the EU are much lower than in the United States. What happens next? The Federal Reserve lowers rates to zero, announces a huge program of quantitative stimulus, and yesterday passes a law that involves injecting $2 trillion additional into the economy. Yes, this is not a QE program, which involves the Fed buying securities from the open market. But these are the same incentives: helicopter money for the US population, cheap loans for small and medium-sized businesses, subsidies, grants, and assistance to the companies most affected by the epidemic and the shutdown. Thus, it was the US currency that should have weakened against other currencies, not the other way around. Well, if you also remember the collapses in the US stock market, record slumps, the problems of the US oil and gas sector, which will suffer due to low oil prices, it is not clear why the dollar was getting more expensive? And to all this, we now add the firm strengthening of the US currency in the period from March 9 to 19, and we get that the greenback is most overbought in the current conditions. That the demand for it is unreasonably high in the current reality and with the current balance of forces between the monetary policy of the ECB and the Fed. However, all these arguments are opposed by only one factor – the majority of market participants' faith in the dollar. And if traders decide to resume buying the US currency, despite the macroeconomic and fundamental background, the dollar will again become more expensive. However, while traders have not yet returned to unwarranted investments in the dollar, we would say that the euro has a good chance of fully recouping all losses over the past month.

The United States has just published a report on applications for unemployment benefits for the week of March 13-20. The indicator of the previous week already warned that everything is bad, and you need to prepare for the worst. Experts expected from 1 to 1.1 million new applications for benefits. However, the reality was slightly worse. The actual number of applications for one week was 3.283 million, while the normal value of the indicator is 220-230 thousand. And this is only for the first week of the epidemic raging. What will happen next? I immediately remember the words of the representative of the Monetary Committee of the Fed, James Bullard, who predicted unemployment at 30%. It seems that he is not far from the truth. As for the US currency, it continued to fall today, March 26. We cannot say that this was the market's reaction to the published report. However, most likely, this report also affected the decline in demand for the dollar. Volatility remains quite high today, but it is not as high as in the first weeks of the new crisis. About 110 points have been passed so far.

4-hour timeframe

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Average volatility over the past five days: 351p (high).

The GBP/USD currency pair resumed its upward movement on March 26, after the price rebounded from the Kijun-sen critical line. Thus, the movement continues towards the upper boundary of the Ichimoku cloud. The reasons for the pound's growth are now approximately the same as for the euro. Given the new reality, the new rates of the Fed and the Bank of England, new quantitative stimulus programs and new cash injections in each economy, the position of the British currency no longer looks hopeless. Yes, the aggravating factor in the form of Brexit in the form of negotiations on trade relations after Brexit between Brussels and London continues to hang over Britain and the pound. However, now this topic is no longer in the first place for traders and investors. Thus, if the US dollar will not be bought up by market participants simply because it is the dollar, then the pound will continue to recover with a high degree of probability. No matter how weak the pound is, we believe that losing 1,500 in two weeks is too much. Today, the pound/dollar pair has already passed about 260 points, but this value is likely to exceed 300 points by the end of Thursday. Thus, the average volatility will remain stably high.

Recommendations for EUR/USD:

For short positions:

The euro/dollar continues its upward movement on the 4-hour timeframe. Thus, it is advised that you should only sell the euro if the price is consolidated below the critical line with the first goal, the level of volatility is 1.0677. The second target is the support level of 1.0476.

For long positions:

Formally, you can buy the EUR/USD pair now, since the price has crossed the Kijun-sen line, with the first goal the resistance level is 1.1075. The chances of a recovery in the euro are growing, but the signal from the Ichimoku Golden Cross is still weak. Therefore, buy-positions only in small lots.

Recommendations for GBP/USD:

For short positions:

The pound/dollar pair resumed its upward movement, bouncing off the Kijun-sen line. Thus, it is recommended to sell the British pound with the goal of a volatility level of 1.1510 only after price taking below the Kijun-sen line. The second goal is the support level of 1.1229.

For long positions:

You can buy the GBP/USD pair now, since a rebound from the Kijun-sen line has been made, with the first goal, the level of volatility is 1.2212, but in small lots. Similar with the euro's case, it is advised that you keep in mind 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.

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Record Surge In U.S. Jobless Claims Intensifies Dollar Sell-off

Trading 26 mar 2020 Commentaire »

The U.S. dollar lost ground against its major counterparts in early New York deals on Thursday, as first-time claims for unemployment benefits soared to an all-time high last week amid the Covid-19 pandemic shut down in large parts of the U.S. economy.

Data from the Labor Department showed that initial jobless claims skyrocketed to 3,283,000 in the week ended March 21, an increase of 3,001,000 from the previous week's revised level of 282,000.

Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.

With the record-breaking increase, the number of seasonally adjusted initial claims reached the highest level in the history of the seasonally adjusted series.

The grim data has offset optimism over the Senate approval of $2 trillion fiscal stimulus package to mitigate the economic effects of the virus.

The bill now heads to the Democrat-controlled House for final approval on Friday.

In other economic releases, data from the Commerce Department showed that the increase in U.S. gross domestic product in the fourth quarter was unrevised from the previous estimate.

The Commerce Department said GDP increased by 2.1 percent in the fourth quarter, unchanged from the estimate provided last month and in line with economist estimates.

The greenback was down against the euro at an 8-day low of 1.0990. The pair had finished Wednesday's deals at 1.0882. Further fall in the greenback may face support around the 1.12 area.

Survey data from market research group GfK showed that German consumer confidence is set to decline sharply to the lowest in more than a decade in April as the increase in the number of coronavirus infection cases and the accompanying measures made consumers to take cautious approach.

The forward-looking consumer confidence index fell to 2.7 from 8.3 in March. The score was forecast to fall moderately to 7.7 from March's initially estimated value of 9.8.

Having climbed to 111.29 at 5:15 pm ET, the greenback slipped to a 6-day low of 109.38 against the yen. At Wednesday's close, the pair was worth 111.20. Next likely support for the greenback is found around the 108.00 level.

Data from the Bank of Japan showed that Japan producer prices rose 2.1 percent on year in February.

That was shy of expectations for an annual increase of 2.2 percent and down from 2.3 percent in January.

The greenback fell to a 1-week low of 0.9676 against the franc, after rising to 0.9775 at 6:30 pm ET. Should the greenback falls further, 0.95 is likely seen as its next support level.

The greenback dropped to an 8-day low of 1.2037 against the pound, from a high of 1.1777 seen at 7:15 pm ET. The greenback is seen finding support around the 1.22 mark.

Data from the Office for National Statistics showed that UK retail sales declined unexpectedly in February.

Retail sales dropped 0.3 percent on a monthly basis in February, in contrast to a 1.1 percent rise in January and confounding expectations for an increase of 0.2 percent.

The greenback touched 1.4066 against the loonie, its lowest level since March 17. The currency is likely to face support around the 1.33 region, if it falls again.

After rising to a 2-day high of 0.5777 in the previous session, the greenback moved down against the kiwi, reaching an 8-day low of 0.5933. The greenback may challenge support around the 0.64 area.

The greenback reached as low as 0.6057 against the aussie, following a 2-day jump to 0.5870 at 10:00 pm ET. Immediate support for the dollar is seen near the 0.68 level.


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U.S. Weekly Jobless Claims Spike By More Than 3 Million

Trading 26 mar 2020 Commentaire »

Reflecting the shutdown of large swaths of the U.S. economy due to the coronavirus pandemic, the Labor Department released a report on Thursday showing a record spike in first-time claims for unemployment benefits in the week ended March 21st.

The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week's revised level of 282,000.

Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.

With the record-breaking increase, the number of seasonally adjusted initial claims reached the highest level in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982.

While the increase in unemployment claims is staggering, economists noted the data may still underestimate the number of new claims due to constraints on the capacity of offices to process claims.

The report said there were 186,800 new claims in California and 80,300 new claims in New York, which economists said seem low based on anecdotal evidence.

"We would expect numbers from these states and others to climb in coming weeks, particularly with the number of lockdowns increasing across the U.S.," said ING Chief International Economist James Knightley.

The four-week moving average of claims is seen as less volatile but still soared to 998,250, an increase of 765,750 from the previous week's revised average of 232,500.

The report also said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, jumped by 101,000 to 1.803 million in the week ended March 14th.

The increase drove continuing claims to their highest level since reaching 1.824 million in the week ended April 14, 2018.

The four-week moving average of continuing claims climbed to 1,731,000, an increase of 27,500 from the previous week's revised average of 1,703,500.

Next Friday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of March.

"Based solely on the historical relationship between claims and the unemployment rate, 3,283,000 equates to an unemployment rate of somewhere between 30% and 40%," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

He added, "We are not suggesting the latter will rise to those levels, but we would be amazed if it didn't exceed 10% by May, if not April."


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Pound Mixed After BoE Announcement

Trading 26 mar 2020 Commentaire »

The pound showed mixed trading against its major counterparts in the European session on Thursday, after the Bank of England retained its record low interest rate and asset purchase programme, after easing monetary policy at an unscheduled meeting last week.

The Monetary Policy Committee voted unanimously to maintain the interest rate at 0.1 percent and the quantitative easing at GBP 645 billion.

At a special meeting on March 19, the bank had reduced its bank rate by 15 basis points and expanded bond purchases by GBP 200 billion. The bank had reduced the rate twice this month.

The MPC said it can expand asset purchases further if needed.

The nature of the economic shock from Covid-19 is very different from those to which the MPC has previously had to respond, the bank said.

The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimized, the bank added.

Data from the Office for National Statistics showed that UK retail sales declined unexpectedly in February.

Retail sales dropped 0.3 percent on a monthly basis in February, in contrast to a 1.1 percent rise in January and confounding expectations for an increase of 0.2 percent.

The pound fell against its major opponents in the previous session as the spread of coronavirus raised concerns about a global recession.

The pound climbed to 0.9136 against the euro, from a low of 0.9239 seen at 7:15 pm ET. The pound had ended yesterday's trading session at 0.9150 against the euro. The pound is seen finding resistance around the 0.88 mark.

Survey data from market research group GfK showed that German consumer confidence is set to decline sharply to the lowest in more than a decade in April as the increase in the number of coronavirus infection cases and the accompanying measures made consumers to take cautious approach.

The forward-looking consumer confidence index fell to 2.7 from 8.3 in March. The score was forecast to fall moderately to 7.7 from March's initially estimated value of 9.8.

The pound rose back to 131.71 against the yen, up from a low of 130.54 set at 7:15 pm ET. The pair was valued at 132.12 when it ended trading on Wednesday. Next key resistance for the pound is likely seen around the 141.00 level.

After touching 1.1637 against the franc, the pound held steady in subsequent deals. At Wednesday's close, the pair was worth 1.1608. The pound is likely to face resistance around the 1.26 region, if it gains again.

The pound rallied to an 8-day high of 1.2031 versus the greenback amid soaring unemployment claims in the U.S. The pair had finished Wednesday's deals at 1.1879. Should the pound strengthens further, it is likely to test resistance around the 1.29 region.

Data from the Labor Department showed a record spike in first-time claims for unemployment benefits in the week ended March 21.

The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week's revised level of 282,000.


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*Czech Central Bank Cuts Key 2-week Repo Rate By 75 Bps To 1.00%

Trading 26 mar 2020 Commentaire »

Czech Central Bank Cuts Key 2-week Repo Rate By 75 Bps To 1.00%


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BoE Holds Rate, QE; Sees Risk Of Longer-Term Damage From Covid-19 Outbreak

Trading 26 mar 2020 Commentaire »

Policymakers of the Bank of England unanimously decided to hold the interest rate at a record low and asset purchase programme and signaled further easing if required. The bank also noted risk of longer-term damage to the economy from the coronavirus, or covid-19 outbreak.

At the regular policy meeting, the Monetary Policy Committee governed by Andrew Bailey decided to maintain the interest rate at 0.1 percent and the quantitative easing at GBP 645 billion.

The bank had altogether reduced the rate by 65 basis points at two unscheduled meetings this month. At a special meeting on March 19, the bank had cut its bank rate by 15 basis points and expanded bond purchases by GBP 200 billion.

The MPC said it can expand asset purchases further if needed. The committee said it stands ready to respond further as necessary to guard against an unwarranted tightening in financial conditions, and support the economy.

The economic consequences of the spread of the coronavirus are becoming more apparent and a "very sharp reduction" in activity is likely, policymakers noted. There is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.

The nature of the economic shock from Covid-19 is very different from those to which the MPC has previously had to respond, the bank said.

The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimized, the bank added.


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

U.S. GDP Growth Unrevised At 2.1% In Q4

Trading 26 mar 2020 Commentaire »

A report released by the Commerce Department on Thursday showed the increase in U.S. gross domestic product in the fourth quarter was unrevised from the previous estimate.

The Commerce Department said GDP increased by 2.1 percent in the fourth quarter, unchanged from the estimate provided last month and in line with economist estimates.

The unrevised growth came as an upward revision to consumer spending was largely offset by downward revisions to federal government spending and non-residential fixed investment.

GDP growth in the fourth quarter was unchanged from the third quarter, as a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment and a slowdown in consumer spending.


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March 26, 2020 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 26 mar 2020 Commentaire »

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Since December 30, the EURUSD pair has trended-down within the depicted bearish channel until few weeks ago, when extensive bearish decline established a new low around 1.0790 where the EUR/USD pair looked OVERSOLD after such extensive bearish decline.

On February 20, recent signs of bullish recovery were demonstrated around 1.0790 leading to the recent steep bullish movement towards 1.1000, 1.1175, 1.1360 and finally 1.1480 where a (123) bearish reversal pattern was initiated around.

This turned the short-term technical outlook for the EURUSD pair into bearish when bearish persistence below the Keyzone of 1.1235 was maintained on a daily basis.

Moreover, the mentioned intermediate-term bearish Head & Shoulders pattern has achieved all of its projection target levels.

Earlier this week, the EURUSD pair has expressed significant bullish recovery around 1.1065

The recent bullish engulfing H4 candlesticks as well as the recently-demonstrated ascending bottoms indicated a high probability bullish pullback at least towards 1.0980 and 1.1075 (Fibonacci Level 50%) that should be watched by conservative traders for probable bearish rejection.

Yesterday, Intraday traders were looking for bullish persistence above 1.0790 - 1.0830 as this enabled further bullish advancement to pursue towards higher levels.

Further bullish advancement towards 1.1075 should be expected soon.

On the other hand, negative divergence is being demonstrated on the depicted H4 chart suggesting a high probability bearish rejection to occur around the next supply levels to be reached.

Key Supply levels in confluence with significant Fibonacci levels are located around 1.1075 (50% Fibonacci) and 1.1175 (61.8% Fibonacci) where bearish rejection is highly-expected.

Trade recommendations :

Intraday traders should wait for more bullish pullback towards the mentioned key-level around 1.1075 and look for some bearish rejection signs as valid SELL signals for short-term trades.

S/L to be placed above 1.1130 while Initial T/P level to be located around 1.1000.

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U.S. Weekly Jobless Claims Spike To 3.3 Million

Trading 26 mar 2020 Commentaire »

Reflecting the shutdown of large swaths of the U.S. economy due to the coronavirus pandemic, the Labor Department released a report on Thursday showing a record spike in first-time claims for unemployment benefits in the week ended March 21st.

The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week's revised level of 282,000.

Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.

With the record-breaking increase, the number of seasonally adjusted initial claims reached the highest level in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982.


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

*U.S. Fourth Quarter GDP Growth Unrevised At 2.1%

Trading 26 mar 2020 Commentaire »

U.S. Fourth Quarter GDP Growth Unrevised At 2.1%


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