EUR/USD. ECB protocol, corrective decline and northern perspectives

Trading 26 Nov 2020 Commentaire »

The Euro-dollar pair today updated the two-week high (1.1941), but retreated from the positions won in the afternoon. This is all due to the minutes of the European Central Bank's last meeting which turned out to be quite gloomy and pessimistic. Mainly, the published document did not tell anything new but once again reminded traders of existing problems. Yesterday, there was a similar situation with the Fed Protocol where no sensations were announced, but the reaction of dollar bulls was negative.

Moving forward, we can say that the current price decline can be used as a reason to open longs. The pair needed a downward corrective pullback after two days of fairly strong growth. On Monday, the price was at the base of the 18th figure while this morning it reached 1.1941. The pair grew almost recoilless for two days, so the correction was literally asking for it. Traders found an informational reason for this, focusing on the rhetoric of the minutes of the October ECB meeting.

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This Protocol reflects negative forecasts. So, the key parameters of the economy will recover much slower and longer compared to earlier (September) forecasts according to the members of the European Central Bank. In particular, the overall inflation rate will remain in negative territory until at least the end of the year, while employment will continue to decline due to the second wave of the pandemic. It is worth noting here that we are talking about the meeting that happened last October 29, while the most stringent quarantine restrictions in most European countries were introduced beginning of November. On the one hand, the ECB's forecasts were justified because of lockdowns, resulting in many employees (especially in the service sector) being left without work. On the other hand, the European quarantine gradually began to bear fruit as the rate of spread of the disease slowed down. Therefore, in December, members of the European Central Bank will assess the epidemiological situation that will develop at the time of the meeting.

The other theses that are present in the ECB Protocol have already been repeatedly voiced by Christine Lagarde and other members of the regulator. Therefore, the southern correction of EUR / USD was short-term. Moreover, the current situation has shown that the pair's bears are currently not capable of a downward march: the price literally dived into the area of the 18th figure for an hour, where it attracted the attention of buyers. The weakness of the US currency as well as low liquidity due to the celebration of thanksgiving Day in the US made themselves felt.

All this suggests that purchases of EUR / USD are still relevant especially in the downward corrective price declines. There are several arguments in favor of the upward scenario. First, the Fed minutes published yesterday, reminded traders that the Fed is ready to "turn on the printing press", expanding quantitative easing programs. Secondly, the dollar continues to be under pressure from the "coronavirus factor". States are updating anti-records both for the number of infected people and the number of deaths. If in Europe, the situation is at least beginning to level down, then in the United States the pandemic is gaining momentum. In particular, the recorded number of deaths from COVID-19 over the past six months is more than 2.4 thousand. And over the past 17 days, the number of hospitalizations of patients with coronavirus has never decreased. The overall daily morbidity rate is also growing - from 100 thousand (per day) in early November to 170 up to 190 thousand (per day) in recent days.

Some macroeconomic reports are also of concern. For example, the rate of increase in the number of applications for unemployment benefits is growing for the second week in a row, approaching the 800 thousand mark. Earlier, disappointing retail sales data were published as well as weak inflation indicators. Based on indirect indicators, November Nonfarmies will also disappoint, increasing pressure on the US currency.

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This fundamental background supports the growth of the EUR/USD pair, primarily due to the weak positions of the US currency. From the technical point of view, the pair may well reach 1.1970 in the near future, where the nearest resistance level is located in the form of the upper line of the Bollinger Bands indicator on the daily chart. In addition, the upward trend is confirmed by the "Parade of lines" signal of the Ichimoku indicator and the location of the price between the middle and upper lines of the Bollinger Bands indicator.

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Forecast and trading signals for GBP/USD on November 27. COT report. Analysis of Thursday. Recommendations for Friday

Trading 26 Nov 2020 Commentaire »

GBPUSD 15M

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The lower linear regression channels turned to the downside on the 15-minute timeframe, which is absolutely logical after the price failed to overcome the 1.3397 level. However, the downward movement entirely depends on the ability or inability of traders to overcome the critical Kijun-sen line.

GBPUSD 1H

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The GBP/USD pair reached the resistance level of 1.3397 for the second time, rebounded from it for the second time and began a new round of corrective movement within the same upward channel, reaching its lower boundary by the end of Thursday, November 26. At the same time, the pound/dollar pair reached the critical Kijun-sen line, which was moving towards the price. Now, if the quotes rebound off these two supports, then the upward trend may resume. The fundamental background is not on the pound's side, however this was also the case a week ago, and the British currency was still growing in price. If the bears push through the Kijun-sen line and the lower channel line, this will be a serious step towards a new downward trend that has been brewing for a long time. We still believe that the pound has no prospects, and it is becoming more expensive solely due to the markets' faith in a bright future (in the free trade deal between the UK and the EU).

COT report

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The GBP/USD pair rose by 25 points in the last reporting week (November 10-16), although the volatility was quite high during this time period. However, the Commitment of Traders (COT) report has not provided us with any important information that could help in forecasting and trading for several weeks now. Recall that the red and green lines must move away from each other or sharply change the direction of their movement, so that we can conclude that one trend ends and another begins. In recent months, both lines regularly change their direction, which indicates the absence of signals based on COT reports. What can we say about the most important group of non-commercial traders? This group opened 533 contracts to buy the pound and 616 contracts to sell during the reporting week. Therefore, it doesn't even make any special sense to calculate the change in the net position or the amount by which the attitude of professional traders has changed. A little more than 1000 contracts per week is very little. Therefore, in essence, there are no changes. What do we end up with? There are no changes, and the general picture of things does not make it possible to predict any definite development of the situation. So now it is better to pay more attention to technique and foundation.

The foundational backdrop for the British pound was hilarious on Thursday. There were no macroeconomic statistics that day, but that is not required for the pound right now anyway. Market participants are overwhelmingly focused on the information regarding the negotiations on the Brexit trade talks, although, to be honest, it would be better if they did not pay attention to it at all. Head of the European Commission Ursula von der Leyen said that the next few days will be extremely important and the EU is ready for Brexit to have no deal. Michel Barnier threatened David Frost with withdrawing from negotiations this week (or at all?) If London continues to take a principled and uncompromising position. The French foreign minister accused London of dragging out the talks. And the turn to make a statement came to the chief negotiator from Great Britain, David Frost, who said that London wants to resume negotiations with Brussels one-on-one, but everything depends on the European partners whether they want a new meeting. Thus, both sides continue to rush phrases that are designed to show the world community that they are not to blame for the failure of the negotiations if something happens. These statements do not carry any semantic meaning and are only meant to confuse.

No major events or macroeconomic reports from the UK and the United States for today. Market participants will monitor any news related to the trade talks. Of course, this is not the only topic that can influence the pound. However, for now, traders do not want to pay attention to them. We have said more than once that if we take the entire fundamental background into account, then the pound has no reason to rise in price against the dollar. Nevertheless, the upward trend remains within the rising channel.

We have two trading ideas for November 27:

1) Buyers for the pound/dollar pair continue to hold the initiative in their hands and did not let the price go below the Kijun-sen line (1.3328) and below the rising channel. Thus, we advise you to trade upwards while aiming for the resistance levels of 1.3397 and 1.3483 as long as the price is within the rising channel and above the critical line. Take Profit in this case will be up to 120 points.

2) Sellers failed to get the pair to settle below the rising channel. If the price settles below the Kijun-sen line (1.3328) and below the rising channel, you are advised to sell the pair while aiming for the Senkou Span B line (1.3251) and the support level of 1.3191. Take Profit in this case can range from 60 to 130 points.

Forecast and trading signals for EUR/USD

Explanations for illustrations:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.

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

Analytics and trading signals for beginners. How to trade EUR/USD on November 27? Analysis of Thursday deals. Getting ready

Trading 26 Nov 2020 Commentaire »

Hourly chart of the EUR/USD pair

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Following our morning review, the EUR/USD pair fell and began a round of either a downward movement, or a downward correction. We have warned novice traders that virtually, any downward pullback will result in the upward trend line being broken. And so it happened. Therefore, the upward trend has now formally changed to a downward one. In fact, the price can move in any direction. Simply because the trendline was weak enough to support bull traders. Traders still managed to get the pair out of the 1.1700-1.1900 horizontal channel, so now there are chances for the upward movement to continue. At the same time, take note of the fact that the euro is very reluctant to rise in price. Having barely overcome the 1.1903 level, the pair managed to go up another 30 points, no more, afterwards it immediately began to correct. In total, the pair went up 140 points from the last local low.

No important macroeconomic reports from the European Union and the United States on Thursday. In general, no news that could stir up the markets. Donald Trump continues to amuse the public with his statements in the United States. The US president reiterated the Democrats' election fraud and his own victory, which he would have received without problems if it had not been for the rigging of Joe Biden's team. However, no one has paid attention to these statements for a long time. Meanwhile, the lockdown in Germany has been extended. Other countries may follow Germany's example. The coronavirus situation is also very difficult in America, but the authorities of this country have long decided not to introduce total quarantine. Therefore, the US economy should feel relatively stable in the near future. But will this help the dollar?

Only secondary reports are set for release on Friday in both America and the EU. Novice traders are not recommended to pay attention to this. Therefore, if we do not receive any unexpected information during the day, the fundamental background will be empty tomorrow. Based on this, we see no reason to strengthen the pair's movement. Most likely, the trades will be held with volatility of 50-60 points and the absence of a pronounced movement in one direction.

Possible scenarios for November 27:

1) Long positions have formally become relevant. Buyers managed to take the pair above the 1.1903 level. However, the current upward trend is no longer supported by the trendline, although it was extremely weak. The MACD indicator has discharged to zero, so it can now produce a strong buy signal, but traders no longer have an upward trend line at their disposal. Thus, the technical picture is ambiguous and novice traders can open positions only fully aware of the increased risks. Targets for a possible upward movement are 1.1936 and 1.1957.

2) Trading for a fall at this time remains more relevant. The price has settled below the trend line. Therefore, after a slight upward correction, you can try to try to sell the euro while aiming for 1.1888 and 1.1861. It is a paradoxical situation when both short and long positions can be formally considered.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

ECB Minutes Show Policymakers Saw Risks To Growth Clearly Tilted To Downside

Trading 26 Nov 2020 Commentaire »

European Central Bank policymakers saw the risks to the euro area growth outlook as clearly tilted to the downside and agreed that this warranted an adjustment in its monetary policy measures in December, the minutes of the latest policy session showed on Thursday.

"Overall, members considered the risks surrounding the growth outlook to be clearly tilted to the downside," the minutes, which the ECB calls the 'account', of the October 28-29 Governing Council session revealed.

In the post-decision press conference on October 29, ECB President Christine Lagarde had clearly signaled that the ECB is set to take policy action in December as policymakers will be presented with the latest set of ECB staff macroeconomic projections.

Policymakers' comments thereafter have hinted at a possible expansion of the pandemic emergency purchase programme, or PEPP, and more targeted lending to banks in the form of TLTROs.

Rate-setters felt that the sharper slowdown in growth momentum and the weakening of underlying inflation dynamics, as well as the deterioration in the balance of risks, would warrant a recalibration of the monetary policy instruments in December, the minutes said.

"It was noted that taking monetary policy decisions in December would be consistent with prevailing market expectations," the minutes added.

That said, they also stressed on the need to reaffirm that the Governing Council stands ready to act at any time, when needed.

The resurgence in the coronavirus or Covid-19 pandemic has seen countries like Germany and France return to lockdown. While the market reaction to this has been relatively muted, they remain fragile and the threat of a price correction persists in case of a no-deal Brexit or a further worsening of the pandemic.

A delay in the disbursement of funds under the Next Generation- EU programme could also affect market sentiment, the ECB minutes said.

Policymakers also pointed out that more than half of the PEPP envelope was still available to conduct ongoing purchases in a flexible manner in case of renewed market turbulence.

ECB rate-setters also expressed concern regarding the side-effects and "diminishing returns" of existing policy instruments in an environment of high uncertainty and very favorable financial conditions.


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

ECB Minutes Show Policymakers Saw Risks To Growth Clearly Tilted To Downside

Trading 26 Nov 2020 Commentaire »

European Central Bank policymakers saw the risks to the euro area growth outlook as clearly tilted to the downside and agreed that this warranted an adjustment in its monetary policy measures in December, the minutes of the latest policy session showed on Thursday.

"Overall, members considered the risks surrounding the growth outlook to be clearly tilted to the downside," the minutes, which the ECB calls the 'account', of the October 28-29 Governing Council session revealed.

In the post-decision press conference on October 29, ECB President Christine Lagarde had clearly signaled that the ECB is set to take policy action in December as policymakers will be presented with the latest set of ECB staff macroeconomic projections.

Policymakers' comments thereafter have hinted at a possible expansion of the pandemic emergency purchase programme, or PEPP, and more targeted lending to banks in the form of TLTROs.

Rate-setters felt that the sharper slowdown in growth momentum and the weakening of underlying inflation dynamics, as well as the deterioration in the balance of risks, would warranted a recalibration of the monetary policy instruments in December, the minutes said.

"It was noted that taking monetary policy decisions in December would be consistent with prevailing market expectations," the minutes added.

That said, they also stressed on the need to reaffirm that the Governing Council stands ready to act at any time, when needed.

The resurgence in the coronavirus or Covid-19 pandemic has seen countries like Germany and France return to lockdown. While the market reaction to this has been relatively muted, they remain fragile and the threat of a price correction persists in case of a no-deal Brexit or a further worsening of the pandemic.

A delay in the disbursement of funds under the Next Generation- EU programme could also affect market sentiment, the ECB minutes said.

Policymakers also pointed out that more than half of the PEPP envelope was still available to conduct ongoing purchases in a flexible manner in case of renewed market turbulence.

ECB rate-setters also expressed concern regarding the side-effects and "diminishing returns" of existing policy instruments in an environment of high uncertainty and very favorable financial conditions.


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

Euro Falls As ECB Signals Recalibration Of Monetary Policy Instruments In December

Trading 26 Nov 2020 Commentaire »

The euro drifted lower against its major trading partners in the European trading session on Thursday, after minutes from the European Central Bank's recent meeting showed that members broadly agreed that the sharper slowdown in growth momentum and the weakening of underlying inflation dynamics could warrant recalibration of the monetary policy instruments in December.

While there was wide agreement on the need to signal the necessity of recalibrating the ECB's monetary policy instruments at the December monetary policy meeting, it was cautioned that the Governing Council should not pre-commit itself to specific policy actions, the minutes of the bank's October 28-29 meeting showed.

Members noted that taking monetary policy decisions in December would be consistent with prevailing market expectations.

ECB policymakers, however, stressed that the Governing Council is prepared to act at any time, if needed.

"It was stressed that any sign of complacency - even inadvertent - could be detrimental in the present circumstances."

An ambitious and coordinated fiscal stance remained critical and was the most effective policy in the current situation to deal with the effects of the pandemic and the associated containment measures, it added.

Survey results from the market research group GfK showed that German consumer sentiment deteriorated notably due to the partial lockdown.

The forward-looking consumer sentiment index fell to -6.7 in December from revised -3.2 in October. The expected reading was -5.0.

The currency climbed against its major counterparts in the Asian session, except the franc.

The euro eased 0.5 percent to 1.1885 against the greenback, after rising to near a 3-month high of 1.1941 at 2:45 am ET. The pair had closed Wednesday's deals at 1.1912. Immediate support for the euro is likely seen around the 1.16 level.

The euro was down by 0.5 percent at a 2-day low of 123.91 against the yen, pulling back from a fresh 2-week high of 124.57 it set at 1:15 am ET. The EUR/JPY pair was worth 124.44 when it ended deals on Wednesday. Should the euro falls further, it is likely to test support around the 119.5 region.

Final data from the Cabinet Office showed that Japan's leading index rose less than estimated in September.

The leading index, which measures the future economic activity, rose to 92.5 in September from 88.5 in August. In the initial estimate, the reading was 92.9.

The EUR/CHF pair dropped 0.1 percent, hitting a 2-day low of 1.0806. At Wednesday's close, the pair was valued at 1.0822. Further fall in the currency may challenge support around the 1.05 level.

Having climbed to a 2-day high of 1.5519 at 3:15 am ET, the euro slipped to 1.5466 against the loonie. The euro was trading at 1.5492 a loonie at yesterday's close. Next likely support for the euro is found around the 1.52 level.

The euro was lower at 1.6155 versus the aussie, down from a high of 1.6213 it recorded at 12:30 am ET. The euro-aussie pair was worth 1.6172 at Wednesday's close. The euro is seen locating support around the 1.58 mark.

Data from the Australian Bureau of Statistics showed that Australia's capital expenditure declined more than expected in the third quarter.

Total new capital expenditure decreased 3 percent sequentially in the September quarter, which was bigger than the expected decline of 1.5 percent. Nonetheless, the pace of drop eased from -6.4 percent in the second quarter.

The European currency remained weaker against the kiwi, with the pair trading at 1.7001. The euro is on track to pierce a 2-day low of 1.6981 seen at 5:15 pm ET. At yesterday's trading close, the pair was quoted at 1.6996. Extension of downward trading may see the euro finding support around the 1.66 region.

In contrast, the euro was trading higher against the pound, at 0.8923. The euro-pound pair had finished yesterday's trading session at 0.8897. On the upside, key resistance is seen near the 0.92 level.


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EUR/CHF : l’euro cède du terrain, le franc suisse progresse

Trading 26 Nov 2020 Commentaire »
Malgré les bonnes nouvelles autour des vaccins, le franc suisse se renforce face à l’euro.

Italy Non-EU Trade Surplus Falls In October

Trading 26 Nov 2020 Commentaire »

Italy's surplus in the merchandise trade with countries outside the European Union decreased in October, preliminary data from ISTAT showed on Thursday.

The non-EU foreign trade surplus fell to EUR 7.085 billion from EUR 7.450 billion in the same month last year. In September, the trade surplus was EUR 5.273 billion.

Exports decreased 10.0 percent year-on-year in October, after a 2.8 percent rise in September. Imports declined 12.4 percent following a 12.3 percent fall in the previous month.

Compared to the previous month, exports fell a seasonally adjusted 2.6 and imports grew 1.7 percent in October.

Excluding energy, the non-EU trade surplus fell to EUR 8.740 billion from EUR 10.317 billion in the same month last year.


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

Austria Manufacturing Sector Growth Slows In November

Trading 26 Nov 2020 Commentaire »

Austria's manufacturing sector grew for the fifth month in a row in November, but at a softer pace, survey results from IHS Markit showed on Thursday.

The headline UniCredit Bank Austria Manufacturing Purchasing Managers' Index fell to 51.7 in November from 54.0 in October. Any reading above 50 indicates expansion in the sector.

New order growth slowed in November as the new lockdown measures to halt the spread of Covid-19 infection led to reduction in demand.

Output increased for the fifth month in a row in November, albeit at the weakest pace in this sequence.

Firms expectations towards production for the next 12 months were positive and the degree of confidence rose from the previous month, remaining lower than in September.

Employment decreased in November and payroll numbers declined for the ninth month in a row, albeit at a softer rate. Stocks of finished goods declined to the lowest since February 2010.

Input prices rose in November with the rate of inflation rising quickest since March last year. Factory gate charges rose for the second straight month.


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Gold price pauses decline, still vulnerable for a move even lower

Trading 26 Nov 2020 Commentaire »

Gold price is moving sideways after the sharp decline at $1,800 which was our first target. Gold price has now formed a bearish channel and is also forming a bearish flag pattern. Gold price could continue sliding higher but I believe the upside potential is limited to $1,820-25. I expect Gold to break down lower.

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Blue lines - bearish channel

Red lines - bearish flag pattern

Support is at $1,800 and a break below it will validate the bearish flag pattern and will initiate a move towards $1,770-50 area. Trend remains bearish as long as price is below $1,875. Gold price is most probably going to push lower towards $1,770, but bears do not want to see price start making higher highs and higher lows. That is why it would not be a good sign for the bearish scenario if Gold price moves above $1,820-25 area where we also find the upper channel boundary. If price breaks below $1,800 bears should lower their stops to the recent highs. Currently at $1,817.

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