EUR/USD. Result of the week. How will "coronavirus" affect the results of the US presidential election in 2020?

Trading 02 mai 2020 Commentaire »

24-hour timeframe

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Another trading week on the Forex market has ended, and we are summarizing its results. The EUR/USD currency pair spent most of the trading week trading with an increase, which led to the end of the week to overcome the critical Kijun-sen line and change the trend to an upward one. Given the fact that the pair has updated the previous local high and low over the past 7 trading days, we can assume that the consolidation process is complete and traders are ready to form a new trend. But what will it be like? Movements in the past week speak in favor of the formation of a new upward trend. At the same time, until the Ichimoku cloud is overcome, the Golden cross buy signal (which is not even formed yet) will remain weak. Moreover, even if you close your eyes to the entire fundamental and macroeconomic background, which in any case is ignored by traders, it is very difficult to find the fundamental reasons for the growth of the euro currency. Thus, we recommend that traders continue to adhere to the indicator readings on the 4-hour chart to determine the trend.

Meanwhile, market participants not only continue to ignore all macroeconomic reports but also have cooled down to the news on the topic of "coronavirus". If at the very beginning of the epidemic, markets were literally shocked by what is happening in the world, now no one is particularly surprised by almost 3.4 million cases of the disease, and many people again treat the "coronavirus" as seasonal flu, just more dangerous for humans. Despite 238,000 deaths from the epidemic worldwide (and this is just official statistics), many countries are beginning to relax quarantine measures and open up their economies. In fact, it is difficult to blame them for this, since there is still no vaccine and representatives of the medical field say that it should not be expected until the fall of 2020. And this is an extremely optimistic scenario. More realistic forecasts suggest that it will take from a year to 18 months to create a vaccine. It is impossible to imagine a "lockdown" that will last for another 18 months. Since after this period, there will be nothing to restore. Thus, many governments have taken a decision to relax quarantine measures to restart the economy and to function in the more loyal of quarantine measures. Most likely, in practice, it will look like this. Almost the entire business will open, but the rules of personal hygiene, mask mode, and social distancing will still apply. In the case of new outbreaks, the strict quarantine will be re-introduced. We can only evaluate how these actions of governments will be effective and correct.

Despite the fact that the ECB and the Fed held meetings last week, and GDP data were published, more interesting topics remain the investigation of the origin and causes of the COVID-2019 virus leak, possible sanctions from around the world (183 countries were infected) against China, as well as the US presidential election, which will be held in November this year. According to many media outlets, the current US President treated the possible infection with disdain and that is why now the United States is leading in the number of diseases and in the number of deaths. This opinion is indirectly confirmed by the early statements of Trump, where he flippantly declared in his own manner that "the coronavirus does not pose a threat to Americans" and "will not survive the warm season of the year." As it turned out, nothing has changed with the arrival of the warm season, and the number of Americans who "will not suffer from the virus" already exceeds 1.1 million. And, probably, these mistakes would have been forgotten, as well as many others, over time, if only this year there were no presidential elections coming up. As practice shows, when the population is faced with a choice, they prefer the candidate with whom there is less negativity. Joe Biden was not the President of the United States and did not dirty his reputation with dubious stories, was not involved in international scandals, and did not provoke trade wars. Thus, according to many polls, it is the Democratic candidate who leads in political ratings. Trump can only shift the responsibility for what is happening to others (WHO, China, the chief epidemiologist of the United States), in order to at least try to "bleach" before the election. Trump has already lost all three of his main trump cards (low unemployment, high employment, and high economic growth) thanks to an epidemic that he himself treated with disdain. Thus, it is not clear what he will say to the American population in the framework of the election campaign, in which it will be necessary not only to make new promises but also to take stock of his four-year reign.

But it will be much easier for the Democratic candidate, Joe Biden, to shape his election program. The former Vice President of the United States is free to criticize the current President. And there was much to criticize Trump for during his entire term of office. The US leader constantly provokes scandals, quarrels with the Democrats without hesitation, and calmly ignites international conflicts and trade wars. Thus, Biden just needs to draw the attention of Americans to Trump's discouraging actions and show that they did not bring any benefit to America. And the main topic that can help Biden become President is "coronavirus." Yes, unfortunately, the highest political circles in the United States believe that the politicization of "coronavirus" is absolutely normal. And Biden has already begun to act in this direction. More recently he stated: "The unpleasant truth is that Donald Trump has made America vulnerable to a pandemic. He ignored the warnings of experts in the field of health and intelligence, who instead trusted Chinese leaders. And now we are paying the price." Biden also focused the attention of Americans on the fact that Trump stopped funding the program for tracking epidemics and reduced by 60% the number of specialists on China in the centers for disease control and prevention. At the same time, Biden very competently bypasses the issues of WHO funding, which Trump refused, accusing the organization of failing to prepare for the pandemic and overly focusing its activities on China. If Biden had criticized Trump for refusing to fund WHO, then Trump could have accused Biden of approving taxpayer-funded organizations that treat the United States "unfairly."

Now, Trump, in fact, has only one way to go. He needs to get China and WHO to admit their guilt in the spread and failed attempts to contain the "coronavirus" so that he himself can appear before the American people completely innocent. Especially if the US population believes that if it were not for the current government, the human losses would be much higher. How the US President will do this is still unknown. But there are reasons to assume that through the mechanism of sanctions, threats and pressure already known to the whole world.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair continues to try to form a new upward trend. The nearest target is the Senkou Span B line, which almost coincides with the resistance level of 1.1086. However, on the 4-hour timeframe, which we continue to recommend using as the main one, a downward correction is expected on Monday and Tuesday. In general, the upward trend has already been formed and it can be rejected.

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

Gold remains inside trading range, back tests cloud resistance

Trading 02 mai 2020 Commentaire »

Gold price reached our first target after breaking below the triangle pattern. Price reached the lower trading range boundary and then bounced strongly towards cloud resistance. Next week is very important. Will we see a rejection or a break out?

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Red lines- trading range

Gold price bounced strongly on Friday after reaching the support zone around $1,670. We warned during the week that a move towards the first support level of $1,670 was very possible specially if price were to break $1,690-$1,700. Price reached that level and is now back testing the Kumo (cloud). Here at $1,700 we have important resistance. Trading below the cloud implies that short-term trend is bearish. A rejection therefore will confirm that bears have control of the short-term trend and could lead to a new move lower towards $1,630-$1,600. On the other hand if bulls manage to penetrate the cloud and break above $1,710-20 then we could see a move towards $1,740-50 come fast. Monday's session is very important for the short-term move in Gold.

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

Weekly analysis on EURUSD

Trading 02 mai 2020 Commentaire »

EURUSD has reached our short-term cloud target after the bullish signals we mentioned and since price broke the key resistance levels of the tenkan-sen and kijun-sen indicators. Short-term trend is about to change if bulls continue this upward move next week.

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In our previous analysis the past week we said that if price were to break above the tenkan-sen(yellow line indicator) it would move towards the kijun-sen (green line indicator) and could even reach the Kumo (cloud) resistance. Our target are was 1.10-1.1050. On Friday price made a high at 1.1018. Additionally we noted a bullish inverted Head and Shoulders pattern if price were to break above 1.0890-1.09. So far this pattern is still valid and we continue to target 1.1050.

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We are very likely to move towards 1.11 as long as price is above 1.09. Bulls need to keep price above 1.09 and bears need to break back below it once again. If price continues to make higher highs and higher lows then we could see it break above 1.11. So far the sequence of lower lows and lower highs has been stopped since Friday's new higher high. The formation I see now starts to feel more like a bottoming process. The low at 1.0727 although it briefly breached below the April 6 low, it turned swiftly upwards providing a higher high. This is clearly bullish. Next week is crucial, as it 1.09.The material has been provided by InstaForex Company - www.instaforex.com

U.S. Dollar Turns In Mixed Performance Against Peers

Trading 02 mai 2020 Commentaire »

The U.S. dollar exhibited a mixed trend against major currencies on Friday, reacting to weak economic data and the news about coronavirus infections and U.S. President Trump's threat to impose fresh tariffs on Chinese goods.

President Trump said on Thursday that his administration is crafting retaliatory measures over the origin of the coronavirus pandemic that has swept through the U.S. and crippled its economy. He added that the first phase of a multi-billion dollar trade bill the two countries signed in January is now of secondary importance.

The dollar index slipped to 98.78 before recovering to 99.08, recording a marginal gain over previous close.

Against the Euro, the dollar was weaker by about 0.2%, at $1.0976, easing from $1.0953.

The pound sterling lost ground against the dollar, weakening to $1.2495 from $1.2594.

The dollar was down by about 0.25% against the Japanese currency, with a unit fetching 106.90 yen compared to 107.18 yen Thursday evening.

Against the Aussie, the greenback firmed up by 1.4% to $0.6421

The loonie was weak against the dollar with a unit of the U.S. currency fetching 1.4062 Canadian units.

Swiss franc was stronger at CHF 0.9617 a dollar.

A report from the Institute for Supply Management showed U.S. manufacturing activity continued to contract in the month of April. The ISM said its purchasing managers index slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity.

The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9.

With the decline, the purchasing managers index dropped to its lowest level since hitting 39.9 in April of 2009.

Meanwhile, a separate report released by the Commerce Department showed an unexpected 0.9% increase in construction spending in the month of March, after tumbling by 2.5% to a revised $1.348 trillion in February.

The increase came as a surprise to economists, who had expected construction spending to plunge by 3.5% compared to the 1.3% slump originally reported for the previous month.


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

Treasuries Close Lower Following Lackluster Session

Trading 02 mai 2020 Commentaire »

Treasuries showed a lack of direction during trading on Friday before eventually ending the session moderately lower.

Bond prices moved to the downside in afternoon trading and spending the morning bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 0.642 percent.

The lower close by treasuries came after report from the Institute for Supply Management manufacturing activity continued to contract in the month of April but the decline was not as bad as feared.

The ISM said its purchasing managers index slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity.

The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9.

With the decline, the purchasing managers index dropped to its lowest level since hitting 39.9 in April of 2009.

Meanwhile, a separate report released by the Commerce Department showed an unexpected increase in construction spending in the month of March.

The Commerce Department said construction spending climbed by 0.9 percent to an annual rate of $1.361 trillion in March after tumbling by 2.5 percent to a revised $1.348 trillion in February.

The increase came as a surprise to economists, who had expected construction spending to plunge by 3.5 percent compared to the 1.3 percent slump originally reported for the previous month.

Next week's trading may be impacted by reaction to the Labor Department's monthly jobs report as well as reports on the U.S. trade deficit, service sector activity, and private sector employment.


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

Oil Futures Settle Higher For 3rd Straight Day

Trading 02 mai 2020 Commentaire »

Crude oil prices moved higher on Friday despite persisting worries about the outlook for near to medium term energy demand amid the ongoing coronavirus pandemic.

Reports about OPEC and its allies beginning to cut outputs supported oil prices. OPEC and its allies led by Russia had last month agreed to reduce output by 9.7 million barrels per day (bpd) for May and June.

West Texas Intermediate Crude oil futures for June ended up $0.94, or about 5%, at $19.78 a barrel, after moving between $18.07 and $20.48 a barrel.

June WTI crude oil futures gained about 21% in the week.

Brent crude futures for July settled lower by about 0.6% at $26.31 a barrel. Brent crude futures have shed around 60% so far this year.

Oil was also supported by a report from Baker Hughes that said the number of active rigs drilling for oil in the U.S. dropped by 52 to 325 this week, declining for a seventh successive week. The total active rig count fell by 57 to 408 in the week, the report added.

Data released by the Energy Information Administration (EIA) on Wednesday said crude stockpiles rose by about 9 million barrels in the U.S. in the week ended April 24, lower than an expected rise of about 11.7 million barrels.

According to the data, crude production in the U.S. fell by 100,000 barrels per day last week.


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

Gold Snaps 4-day Losing Streak, Settles Modestly Higher

Trading 02 mai 2020 Commentaire »

Gold prices climbed higher on Friday on safe-haven appeal after riskier assets such as equities tumbled after data showed sharp contraction in manufacturing activity in the U.S. and U.K.

Stocks were also hit due to renewed worries about a trade war after the U.S. President Donald Trump threatened fresh tariffs on China.

The dollar's recovery from lower levels limited gold's uptick. The dollar index, which had slipped to 98.78 around mid-morning, later rose to 99.05, up slightly from previous close.

Gold futures for June ended up $6.70, or about 0.4%, at $1,700.90 an ounce, snapping a five-day losing streak. Gold futures shed about 2% in the week. Gold futures tumbled to a low of $1,676.00 in the Asian session.

Silver futures for July ended down $0.035 at $14.938 an ounce, while Copper futures for July settled lower by $0.0320 at $2.3120 per pound.

President Trump said on Thursday that his administration is crafting retaliatory measures over the origin of the coronavirus pandemic that has swept through the U.S. and crippled its economy. He added that the first phase of a multi-billion dollar trade bill the two countries signed in January is now of secondary importance.

A report from the Institute for Supply Management showed U.S. manufacturing activity continued to contract in the month of April. The ISM said its purchasing managers index slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity.

The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9.

With the decline, the purchasing managers index dropped to its lowest level since hitting 39.9 in April of 2009.

Meanwhile, a separate report released by the Commerce Department showed an unexpected 0.9% increase in construction spending in the month of March, after tumbling by 2.5% to a revised $1.348 trillion in February.

The increase came as a surprise to economists, who had expected construction spending to plunge by 3.5% compared to the 1.3% slump originally reported for the previous month.


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