EUR/USD. False dollar strengthening: buying the pair on downturns

Trading 07 Déc 2020 Commentaire »

Forex traders continue to play against the US currency. Simple tactics bear fruit, and in almost all dollar pairs - with the exception of the GBP/USD pair. The pound lives its own life and only focuses on Brexit, while ignoring the weakening or strengthening of the dollar. The greenback continues to lose its positions after a short-term correction in the remaining pairs of the so-called major group.

Take note that the US dollar has tried several times over the past few weeks to show its character and go into correction. Even against the euro. But the EUR/USD bulls are using the decline in prices as a good reason to open longs. As a result, the price only weakened by several tens of points for a short period of time, afterwards buyers pulled it to new heights due to their activity.

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It happened this time too. Rather ambiguous data were published on the growth of the US labor market - Nonfarm. On the one hand, we saw a decline in unemployment and an increase in wages. But on the other hand, all other components came out in the red zone, which means they turned out to be below the forecast values. We are talking, in particular, about the growth rate of the number of people employed in the non-agricultural sector, in the production sector and in the private sector of the economy. The market decided that the glass is half full rather than the other way around, so it focused on the positive aspects of the release.

In addition, on the last trading day of the week, traders massively took profits after the pair soared to 1.2177 - this is the price high not only of the current year, but also of the previous one. Market participants did not hold back from opening trading positions over the weekend, afterwards they began to leave them en masse. The immediate reason for the dollar's growth was the news that the United States imposed sanctions against China because of the situation with Hong Kong. The new sanctions measures will affect at least 14 officials of the PRC. The sanctions will be imposed due to China's decision to remove four opposition members of the Hong Kong Legislative Council. The pair plummeted by almost 70 points amid a surge in anti-risk sentiment, dropping to the bottom of the 21st figure. The dollar has become temporarily in demand as a defensive asset.

Today, the EUR/USD bears tried to develop a downward momentum, but they met quite strong resistance from buyers as soon as they entered the area of the 20-figure. As a result, their attack failed: the notorious Chinese factor could not reverse the trend. First, according to some experts, the White House, under the sensitive leadership of Donald Trump, is deliberately increasing pressure on China before Joe Biden takes his place. The current head of state does not intend to leave American politics after vacating the Oval office, so his current steps must be viewed through the prism of this fact. Secondly, the above-mentioned personal sanctions are not able to shake the situation in the market, provoking an increase in anti-risk sentiment, especially in the light of Biden's election victory.

In light of these conclusions, demand for the US currency has declined again, while the euro has once again been in the spotlight. First of all, this is due to the growing interest in risky assets. Despite the second wave of coronavirus in Europe, traders are optimistic about the future, amid news of the start of mass vaccination against COVID-19. It will start on Tuesday in the UK. This process should start a little later in Europe, but the estimated time frame is calculated in weeks, not months. The European Medicines Agency is expected to approve a vaccine from Pfizer on December 29, and from Moderna early next year. If these drugs are approved, vaccination in the EU countries will begin in the second half of January. Such prospects push up risky assets, despite the increase in the number of cases in some EU countries.

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Thus, the current fundamental background continues to contribute to the pair's growth. Corrective price dips can be used to open longs and the initial target would be 1.2177 (the 2.5-year high reached last week) and the primary target at 1.2200. This strategy will be relevant until Thursday, when the European Central Bank's final meeting for this year will take place. On the eve of this event, it is advisable to take a wait-and-see position, as the dovish rhetoric of the ECB members may exert significant pressure on the euro.

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

Buying the euro remains relevant

Trading 07 Déc 2020 Commentaire »

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The dollar received short-term support today due to the growing appetite for safer assets. This was also due to new signs of strained relations between the US and China. Washington is considering another round of sanctions against Chinese officials. Nevertheless, the greenback is still under pressure, as investors have many reasons to be optimistic in the future. The introduction of vaccines will allow the world's economies to return to normal lifestyles over the next year. This should outweigh the current deterioration of the epidemiological situation in the world. Recall that Britain will start vaccination from December 8, then other countries will follow its example.

The dollar index remained near 2.5-year lows as weak US employment data reinforced expectations of stimulus measures. Negotiations aimed at providing fresh aid were revived in Congress last Friday. Lawmakers may approve the package of measures as soon as possible, possibly on Monday, experts believe.

In addition, the Federal Reserve may make adjustments to its quantitative easing at its upcoming December meeting.

"Growing speculation about looser fiscal and monetary policy in the United States is supporting risky assets and weighing on the dollar," analysts wrote.

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The euro slightly weakened against the dollar, but its decline is limited by statistics that turned out to be better than the forecast. Industrial production in Germany expanded by 3.2% in October compared to September, the markets expected an increase of only 1.6%. Optimistic data suggest that the German economy will avoid contraction in the fourth quarter.

As for US statistics, the next important report will be released on Thursday – the inflation indicator. Until then, traders will focus on the prospects of a new fiscal stimulus package from the US Congress. The possibility of further easing of monetary policy in the country will also be actively discussed. Given these factors, the dollar will retain its potential to decline, which means that the downward trend in the euro is a just temporary phenomenon.

This week's ECB meeting could also be another potential trigger for bringing back the euro's growth. The central bank's management is expected to announce new measures to stimulate the economy. Estimates of the growth of the eurozone economy will increase, therefore, market optimism will increase. At the beginning of the year, the ECB's soft rhetoric supported the EUR/USD pair, and history may well repeat itself.

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After maintaining the balance between 1.16 and 1.19 for an extended period, the EUR/USD pair made a successful breakout. In the last two weeks, its growth looked good enough in order to continue this trend. The main goal is 1.25.

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

Analytics and trading signals for beginners. How to trade GBP/USD on December 8? Analysis of Monday deals. Getting ready

Trading 07 Déc 2020 Commentaire »

Hourly chart of the GBP/USD pair

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The GBP/USD pair fell by 200 points on Monday, afterwards it quickly grew by 120 points. Thus, the nature of the pair's movement remains unchanged. It is very difficult, especially for novice traders, and is something that is between a flat and high-volatility movements. In fact, there is no trend right now (this is clearly seen from the chart). The pair is trading quite volatile, but at the same time in different directions. There is no classic trend, when the pair moves mainly in one direction, correcting from time to time. Thus, beginners are encouraged to continue to wait for a better time to trade. Logically, we can expect a new round of downward movement after such a strong fall, correction and recovery of the MACD to the zero level. However, with the same degree of probability the pair may also grow back to the 1.3515 level now. As you can see from the chart, there are no trend lines now. This makes it much more difficult to analyze the pair and predict its further movement.

Everything still revolves around Brexit and negotiations on a trade deal between the UK and the EU when it comes to the British pound. And it was just announced that talks would RESUME. And that's it. No more information available. It is unclear how long this will last. How the parties want to have time to ratify the agreement on time is also unclear. It seems that the markets are tired of being optimistic, since it has not yet been concluded, and therefore the pound should collapse. If so, then according to this logic, a new round of decline may follow by today or tomorrow. However, we would like to remind you that the erratic movement is still present, and the pair has no technical constructions now.

No major events or reports scheduled in the UK and the US on Tuesday. However, as shown on Monday, traders don't really need them now. Therefore, volatility may remain quite high. In the current situation, we can only assume that the downward movement will resume after the correction ends. From the fundamental background, novice traders can only expect news on the trade talks between London and Brussels. There is nothing to do but wait. It is fundamentally calm in America right now. Nothing that could affect the pair's movement in the short or medium term.

Possible scenarios for December 8:

1) No particular trend at the moment, like any trend lines and channels. Therefore, although there is no trend now, there is no classic flat either. We advise you to wait a few days for a more convenient and better technical picture. In any case, even if you trade without a trend in the current situation, you will have to wait a long time for a new buy signal from MACD.

2) Sell positions, from our point of view, are also not convenient. There is neither a downward trend nor a signal about the end of an upward trend, and market participants are not particularly interested in the fundamental background. Even today's 200 point-drop cannot guarantee a new downward trend. Therefore, you can try to work out the next sell signal from the MACD (if it is formed near the zero level), but take note that trading is now associated with increased risks.

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 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

Analytics and trading signals for beginners. How to trade EUR/USD on December 8? Analysis of Monday deals. Getting ready

Trading 07 Déc 2020 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair dropped to the first support level of 1.2095 on Monday, December 7 and after that a round of upward movement began, which ended near the resistance level of 1.2162. Therefore, the pair showed decent volatility since there wasn't any news on Monday. The most important thing is that the quotes have not been able to update last Friday's high, which gives grounds to assume a new round of downward movement. In our previous review, we advised you to buy the euro based on a buy signal from MACD. This signal was generated this morning. Although it was not that successful, nevertheless, novice traders could earn 15-20 points. Now, taking into account the rebound from the 1.2162 level, we believe that quotes will start to drop, so we need to look for sell signals. Unfortunately, traders only have one formal trend line, which the quotes crossed a couple of days ago. This formality also preserves good chances for bringing back the upward trend. And the fundamental background has long been ranked third or fourth in importance among the factors that are taken into account by market participants.

No important news or fundamental event in the European Union on Monday. Therefore, we would like to draw your attention to any event, but to do so now would just end up confusing newcomers. The most important thing that they should understand is that there are no visible reasons for strengthening the euro and there have not been any in recent weeks. Thus, there is a high degree of probability that the euro is strongly overbought. We still believe that a downward trend is very likely in the near future, but at the same time, the higher timeframes signal good chances for the pair to rise. Therefore, the situation is very ambiguous. You should be careful.

No important publications or events scheduled in the EU and the US on Tuesday. All the topics that could theoretically interest traders are not momentary, they are unlikely to be followed by a reaction of "straight away". Novice traders can now follow the news regarding the conflict between Poland and Hungary and the European Commission. The development of this conflict could lead to an ideological split in the EU or to blocking the budget for 2021-2027 and the pandemic recovery fund for longer than a couple of weeks.

Possible scenarios for December 8:

1) Long positions have ceased to be relevant at the moment, since the price overcame the trend line. Thus, since it rebounded from the 1.2162 level, we recommend closing long deals on the pair. We advise you to consider new long positions but there should be a new upward trend or the downward trend should end. Such a development is not expected in the next 10-12 hours.

2) Trading down on Tuesday is more appropriate. We believe that the euro/dollar pair can and should make a new downward spurt, and it can begin now. Thus, either you should wait for a sell signal from the MACD (it may take some time to appear), or do so right now, but with a Stop Loss above 1.2162, you can open short positions while aiming for 1.2095 and 1.2069.

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

U.S. Dollar Strengthens On U.S.-China Tensions, Brexit Uncertainty

Trading 07 Déc 2020 Commentaire »

The U.S. dollar appreciated against its most major counterparts in the European session on Monday, as heightened tensions between the U.S. and China and continued uncertainty over a Brexit trade deal dampened risk sentiment.

The U.S. is preparing to sanction at least a dozen more Chinese officials over their role in the recent disqualification of Hong Kong legislators, media reports suggest.

Chinese Foreign Ministry spokeswoman Hua Chunying said that Beijing would take countermeasures should the U.S. continue down the "wrong path."

Traders have started pricing in the prospect of a 'no deal' outcome to EU-UK trade negotiations after the Sun newspaper reported that Prime Minister Boris Johnson was ready to walk away from negotiations "within hours" amid stubborn differences over fishing rights in U.K. waters, fair competition and ways to solve future disputes.

Johnson will call time on a Brexit-deal if Brussels refuses to budge from their "outrageous" demands, it was said.

Weak U.S. jobs data released last week helped raise expectations of fiscal stimulus being passed before year-end.

The greenback climbed to near a 3-week high of 1.3224 versus the pound from Friday's closing value of 1.3429. If the dollar continues its uptrend, 1.31 is possibly seen as its next resistance level.

Data from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house price growth increased at a faster pace in November.

House prices grew 1.2 percent in November from October, when prices were up 0.3 percent. Economists had forecast prices to climb 0.5 percent.

Continuing its early rally, the greenback firmed to a 4-day high of 104.31 versus the yen. Next key resistance for the currency is seen around the 108.00 mark.

The greenback spiked up to 1.2079 against the euro, registering a 5-day high. The greenback is seen finding resistance around the 1.17 region.

Data from Destatis showed that German industrial output grew more-than-expected in October, driven by the higher production of automobile and capital goods.

Industrial production climbed 3.2 percent month-on-month, faster than the 2.3 percent rise in September. Economists had forecast the monthly growth to ease to 1.6 percent in October.

The greenback moved up against the kiwi and the aussie, reaching near a 2-week high of 0.7006 and a 5-day high of 0.7373, respectively. The currency is poised to target resistance around 0.68 against the kiwi and 0.72 against the aussie.

The greenback approached 1.2833 against the loonie, climbing from a 2-1/2-year low of 1.2773 set at 5:15 pm ET. If the greenback continues its uptrend, 1.33 is possibly seen as its next resistance level.

In contrast, the greenback pulled back to 0.8900 against the franc, from a 4-day high of 0.8947 seen at 4:15 am ET. On the downside, 0.86 is possibly seen as its next support level.

Looking ahead, Canada Ivey PMI for November will be out in the New York session.


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

China's Forex Reserves Increase In November

Trading 07 Déc 2020 Commentaire »

China's foreign exchange reserves increased to its highest level in more than four years in November, data from the People's Bank of China showed on Monday.

Forex reserves rose about $50.5 billion to $3.178 trillion at the end of November. This was the highest level since August 2016.

However, the value of gold reserves decreased to $110.4 billion at the end of November.

Data released earlier in the day showed that exports advanced 21.1 percent on a yearly basis in November, while imports grew moderately by 4.5 percent, resulting in a surplus of $75.4 billion.


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

Eurozone Sentix Investor Confidence Improves In December

Trading 07 Déc 2020 Commentaire »

Eurozone investor confidence strengthened notably in December on vaccine hopes, survey data from Sentix showed on Monday.

The investor sentiment index advanced to -2.7 in December from -10.0 in November. The score was forecast to rise moderately to -8.3.

"Hopes for an early use of vaccines are fuelling the fantasy that the economy in 2021 will recover more clearly than previously expected from the consensus," the think tank said.

The current conditions indicator rose to -30.3 from -32.3 in the previous month. The expectations index came in at 29.3 in December, up from 15.3 a month ago.

In Germany, the investor confidence index climbed to 6.9 in December from 1.3 a month ago, the survey showed.


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

Sweden Industrial Production Recovers In October

Trading 07 Déc 2020 Commentaire »

Sweden's industrial production grew in October after falling in the previous month, data from Statistics Sweden showed on Monday.

Industrial production gained a calendar-adjusted 0.4 percent year-on-year in October, after 2.1 percent decline in September. In August, output rose 0.2 percent.

The overall private sector output fell 1.7 percent year-on-year in October, following a 3.3 percent decrease in the previous month.

The largest upward contribution to total private sector development came from petroleum products, by 139.3 percent year-on-year in October.

Services output fell 2.6 percent yearly in October.

On a month-on-month basis, industrial production increased 1.9 percent in October, after a 2.5 percent fall in the prior month.

The total private sector output rose 1.3 percent from the previous month.

Manufacturing output grew 1.8 percent monthly in October, after a 2.7 percent decrease in the previous month.

Separate data from the statistical office revealed that a calendar adjusted industrial orders rose 1.3 annually in October.

Orders received from the domestic market decreased 2.0 percent in October, while those from foreign markets rose 3.4 percent.

On a month-on-month basis, industrial orders rose a seasonally adjusted 1.3 percent in October.


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

Czech Retail Sales Fall In October

Trading 07 Déc 2020 Commentaire »

The Czech retail sales fell in October, data from the Czech Statistical Office showed on Monday.

Retail sales fell by a working-day adjusted 0.2 percent annually in October, after remaining unchanged in September. Economists had expected a 3.3 percent fall. In August, sales had climbed 1.5 percent.

On an unadjusted basis, retail sales fell 0.9 percent yearly in October.

On a month-on-month basis, retail sales excluding automobile trade fell a seasonally adjusted 1.9 percent in October.

Sales of food grew 3.2 percent, while sales of non-food goods declined 3.9 percent. Sales of automotive fuel decreased 8.8 percent.


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

Taiwan Trade Surplus Rises In November

Trading 07 Déc 2020 Commentaire »

Taiwan's trade surplus grew in November as exports and imports increased from last year, figures from the Ministry of Finance showed on Monday.

The trade surplus increased to US$5.269 billion in November from US$4.270 billion in last year. Economists had expected a surplus of US$6.43 billion. In September, the trade surplus was US$7.463 billion.

Exports rose 12.0 percent year-on-year in November, following an 11.2 percent increase in October. Economists had expected an increase of 8.4 percent.

Imports grew 10.0 percent annually in November, reversing a 1.0 percent decrease in the preceding month. Economists had forecast a rise of 0.3 percent.

Exports of parts of electronic products, information, communication and audio-video products, base metals and articles of base metal, plastics and rubber and articles thereof, and machinery grew in November.

Imports of parts of electronic product, information, communication and audio-video products increased in November, while those of mineral products, machinery and chemicals declined.

Exports to Mainland China and Hong Kong, U.S.A, ASEAN and Europe grew in November.

In the January to November period, exports rose 4.2 percent and imports gained 0.2 percent from a year ago.


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