EUR/USD: dollar continues its troubling path, not abandoning attempts to turn away from it

Trading 22 Déc 2020 Commentaire »

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At the beginning of this week, it would seem that a long-awaited correction took place in the overheated stock markets. The emergence of a new mutation COVID-19 in Britain has triggered a wave of sales of risky assets. This allowed the defensive greenback to reach ten-day highs around 90.9 points.

However, by the end of Monday, the key stock indexes brushed aside fears and were able to win back most of the losses at the end of the day.

As for the greenback, after a confident start, it was forced to almost completely abandon the previously received profit.

The statement of representatives of the European Medicines Agency (EMA) helped calm market participants. The new COVID-19 mutation is highly contagious, they said, but there is no evidence that it is vaccine resistant.

Meanwhile, politicians in Washington have finally agreed on a $900 billion stimulus package.

This event neither caused a rally in shares, nor did it lead to another greenback selloff, since, apparently, it was already taken into account in the quotes.

The dollar was trading higher again on Tuesday, near 90.4 points, but remains below the peak levels reached on Monday.

"The recent breakthrough of the USD index below 90 points supports our view that the weakness of the US currency may continue into the next year. However, in the next two to four weeks, the dollar sale may slow down or even be replaced by an upward correction," said Bank of America strategists.

It is assumed that in the near future the market will be influenced by traditional financial flows for the end of the year.

2020 was marked by a weak dollar and a strong US stock market. The former fell to its lows in two and a half years, while the latter regularly updated record highs. Balancing investment portfolios at the end of the year could lead to profit-taking in the US stock market, which will support the greenback.

According to experts, in the coming weeks, statements that can slow the spread of vaccines against COVID-19 may worsen the risk sentiment. They include reports of potential side effects of vaccines and logistical problems.

"At the moment and until the end of the year, when the positive and negative factors are quite comparable and are likely to have been taken into account in the price, it is the positioning and activity at the end of the year that will contribute to the weakening of the downward momentum in the USD, which may also limit the performance of the euro," Citigroup analysts said.

"The single currency is holding up very well despite a broad strengthening of the dollar, stricter measures to combat the coronavirus and closing borders in Europe," ING analysts said.

"Any progress in a post-Brexit trade deal would of course be welcome, since the EU medicines regulator approved the use of Pfizer's vaccine yesterday. However, it is too early to rule out a correction of the EUR/USD pair towards the 1.2015 area in the thin December markets, as well as to expect that it will reach new highs. Therefore, we may well see trading in the range between 1.2130 and 1.2270," they added.

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

Analytics and trading signals for beginners. How to trade GBP/USD on December 23? Analysis of Tuesday deals. Getting ready

Trading 22 Déc 2020 Commentaire »

Hourly chart of the GBP/USD pair

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The GBP/USD pair traded very similarly to the euro/dollar pair on Tuesday. A sell signal also appeared at night, which we recommended novice traders to work out. Just like in the EUR/USD pair, the price made an upward spurt in the morning, which violated the night signal. However, in the pound's case, novice traders could even get out of the sale with minimal profit (about 10 points). A little later, a new sell signal from MACD was generated (circled in the chart), which we also recommended to work out in the morning. Those traders who entered new short positions are now in profit by around 60 points. Again, beginners can decide for themselves whether to close trades with the current profit level or wait for an even greater decline. We would recommend leaving the market with a profit of 60 points, which is very good. Volatility has dropped today, so it is possible that the price will spend some time (especially at night) in a correction. But you can also rely on the MACD indicator: if it does not turn down in the coming hours, then the downward movement may continue until the morning. In this case - Stop Loss, Take Profit and you can go to bed.

The pound fell quite naturally on Tuesday, although it is difficult to find specific reasons again. On the one hand, the British GDP, which was published this morning, turned out to be higher than forecasts, which could have caused the pound to slightly rise, but the US published a strong report in the afternoon - on the American GDP, therefore the dollar's growth in the afternoon is logical. And in general, the British pound has had a reason to fall since a long time ago, due to the ongoing negotiations on a Brexit trade deal between the UK and the EU. According to the latest data, the parties continue to discuss the deal, and, in particular, the issue of fishing, which is most acute. However, what about the deadlines? Many experts are inclined to believe that the deal can be ratified "retroactively", because there is no other way out but to declare the failure of the negotiations. And no one needs failure.

No major reports scheduled for release in the UK on Wednesday, so the focus is on macroeconomic reports from the US. We believe that traders will only react to these reports if the forecast and actual values differ greatly. In addition, news of progress or failure in the London-Brussels negotiations may trigger a strong market reaction. If negotiations are still ongoing, then there are still chances of reaching an agreement. And it is not on the agenda as to how the MPs would ratify this final agreement.

Possible scenarios for December 23:

1) The upward trend is temporarily canceled since the price has settled below the upward trend line. So in order for novice traders to consider trading up again, they need to wait for the end of the downward trend, that is, the price should settle above the downward trend line. Until then, it is not recommended to buy the pound.

2) Sales, from our point of view, are practical right now, since a new trend line has formed. So now you can keep short positions open while aiming for 1.3266 or slightly below until the MACD indicator turns up. You can close deals right now and be content with a profit of around 60 points. You are advised to open new short positions on a new sell signal, not earlier than tomorrow morning.

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 23? Analysis of Tuesday deals. Getting ready

Trading 22 Déc 2020 Commentaire »

Hourly chart of the EUR/USD pair

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The EUR/USD pair was trading very anxiously on Tuesday, but less volatile than the day before. The pair seemed to have started a new round of downward movement at night, but during the day it also made a breakthrough to the upside by 50 points, afterwards it slumped again. The overnight sell signal from MACD looked quite promising in the morning, however, as a result, sell deals had to be closed almost at zero due to this upward spurt. It is good that a new sell signal was formed from the same MACD in the afternoon, which should also have been worked out according to our morning recommendations. Those who did so are now in profits by around 40 points. The pair has reached the first target - the support level of 1.2164, but so far there are no signs of ending the downward movement. Therefore, if the pair manages to overcome this level, then short positions can be left open. Although we believe that 40 points of profit in the current environment is quite good. In any case, novice traders can decide for themselves whether to be content with such a level of profit or take the risk and wait for more. We would like to note that the downward trend is still present since the price has already left the rising channel earlier. A new downward trend line has appeared today, which currently supports those who are trading down.

No important news from the European Union on Tuesday, meanwhile, the US released its GDP report for the third quarter in the third estimate. Despite the fact that few people expected the discrepancy between the forecast and the actual value, this is how everything turned out in the end. US GDP in the third quarter grew not by 33.1% q/q, but by 33.4% q/q. The difference is not that big, but still. Thus, market participants could react to macroeconomic statistics for the first time in a long time, and the US dollar rose in price and it began to grow when this report was released.

The US is set to publish the number of jobless claims and the number of orders for durable goods on Wednesday. Let us remind you that the number of initial orders has been increasing recently, while the number of repeated ones has decreased. If the number of initial applications increases this week, it will already be a wake-up call for the unemployment rate, which has also been declining recently. Traders have ignored all the recent reports on durable goods orders, so we believe that they would only react to this report if the actual values differ greatly from the forecast.

Possible scenarios for December 23:

1) Long positions are currently irrelevant, since a downward trend has formed and there is a trend line. Therefore, we would not recommend going long until a new upward trend has been established.

2) Trading for a fall looks more appropriate now. Today novice traders can continue to hold open short positions while aiming for 1.2130 if the price surpasses the 1.2164 level. You can also close sales now and be content with a profit of 40 points. Short deals should be opened when the MACD indicator discharges and creates a new signal.

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. Consumer Confidence Unexpectedly Decreases In December

Trading 22 Déc 2020 Commentaire »

Consumer confidence in the U.S. has unexpectedly decrease in the month of December, according to a report released by the Conference Board on Tuesday, with the report also showing a substantial downward revision to the reading on consumer confidence in November.

The Conference Board said its consumer confidence index slid to 88.6 in December from a downwardly revised 92.9 in November.

Economists had expected the consumer confidence index to inch up to 97.0 from the 96.1 originally reported for the previous month.

The unexpected decrease by the headline index partly reflected a steep drop in consumers' assessment of current conditions, with the present situation index tumbling to 90.3 in December from 105.9 in November.

"Consumers' assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

"As a result, consumers' vacation intentions, which had notably improved in October, have retreated," she added. "On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen."

Consumers claiming business conditions are "good" decreased to 16.0 percent from 18.8 percent, while those claiming business conditions are "bad" increased from to 39.5 percent 34.9 percent.

The assessment of the labor market was also less favorable, as the percentage of consumers saying jobs are "plentiful" fell to 21.8 percent from 26.3 percent and those claiming jobs are "hard to get" rose to 22.0 percent from 19.4 percent.

Meanwhile, the report showed consumers were moderately more optimistic about the short-term outlook, driving the expectations index up to 87.5 in December from 84.3 in November.

Consumers expecting business conditions will improve over the next six months increased to 29.0 percent from 26.5 percent, while those expecting business conditions will worsen decreased to 21.9 percent from 22.5 percent.

The outlook for the job market also improved, with consumers expecting more jobs in the months ahead rising to 27.5 percent from 25.0 percent. However, those anticipating fewer jobs also inched up to 22.2 percent from 21.6 percent.

On Wednesday, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of December.

The consumer sentiment index for December is expected to be downwardly revised to 81.3 from a preliminary reading of 81.4, which was up from 76.9 in November.


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

U.S. Existing Home Sales Pull Back After Spiking For Five Straight Months

Trading 22 Déc 2020 Commentaire »

After reporting sharp increases in U.S. existing home sales for five consecutive months, the National Association of Realtors released a report on Tuesday showing existing home sales pulled back in the month of November.

NAR said existing home sales tumbled by 2.5 percent to an annual rate of 6.69 million in November after jumping by 4.4 percent to a revised rate of 6.86 million in October.

Economists had expected existing home sales to slump by 2.2 percent to a rate of 6.70 million from the 6.85 million originally reported for the previous month.

"Home sales in November took a marginal step back, but sales for all of 2020 are already on pace to surpass last year's levels," said NAR chief economist Lawrence Yun. "Given the COVID-19 pandemic, it's amazing that the housing sector is outperforming expectations."

Despite the monthly decrease, existing home sales in November were up by 25.8 percent compared to the same month a year ago.

The report said the median existing home price for all housing types was $310,800 in November, down 0.7 percent from $313.100 in October but up 14.6 percent from $271,300 in November of 2019.

Housing inventory totaled 1.28 million units at the end of November, down 9.9 percent from 1.42 million at the end of October and down 22.0 percent from 1.64 million a year ago.

The unsold inventory represents an all-time low of 2.3 months of supply at the current sales pace, down from 2.5 months in October and down from 3.7 months in November of 2019.

NAR also said single-family home sales slumped by 2.4 percent to a rate of 5.98 million, while existing condominium and co-cop sales tumbled by 2.7 percent to 710,000.

"Circumstances are far from being back to the pre-pandemic normal," Yun said. "However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021."

On Wednesday, the Commerce Department is schedule to release a separate report on new home sales in the month of November.

Economists expect new home sales to dip by 0.3 percent in November, matching the modest decrease seen in October.


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

*U.S. Consumer Confidence Index Drops To 88.6 In December

Trading 22 Déc 2020 Commentaire »

U.S. Consumer Confidence Index Drops To 88.6 In December


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

*U.S. Existing Home Sales Tumble 2.5% In November

Trading 22 Déc 2020 Commentaire »

U.S. Existing Home Sales Tumble 2.5% In November


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

U.S. Economy Rebounds Slightly More Than Previously Estimated In Q3

Trading 22 Déc 2020 Commentaire »

Revised data released by the Commerce Department on Tuesday showed the U.S. economy rebounded by slightly more than previously estimated in the third quarter of 2020.

The report showed the spike in gross domestic product in the third quarter was upwardly revised to 33.4 percent from the previously reported 33.1 percent. Economists had expected the jump in GDP to be unrevised.

The Commerce Department said the unexpected upward revision primarily reflected larger increases in consumer spending and non-residential fixed investment.

The substantial increase in GDP in the third quarter came following a record contraction in the second quarter, when GDP plunged by 31.4 percent.

A measure of an industry's contribution to GDP showed private goods-producing industries increased 47.2 percent, private services-producing industries increased 35.1 percent, and government increased 10.1 percent.

"The leading contributors to gains were manufacturing, healthcare, accommodation and food services, retail trade, and wholesale trade," said Gregory Daco, Chief U.S. Economist at Oxford Economics.

However, he added, "The recovery remains far from complete, with output sill below pre-Covid levels across several industry groups."

On the inflation front, the report said core consumer prices, which exclude food and energy prices, were up 1.4 percent year-over-year in the third quarter, reflecting an acceleration from the 1.0 percent increase in the second quarter.

The annual rate of core consumer price growth remains well below the Federal Reserve's 2.0 percent target, which the central bank has said it wants to moderately exceed for some time before considering raising interest rates.

"As we gaze into 2021, the outlook will be one of contrasts," Daco said. "The economy will start the year gingerly, and it'll be prone to hiccups during the delicate vaccine diffusion phase."

"But, as the cocktail of increased government transfers and broad-based vaccinations takes shape, we should expect gradually firming activity leading to a mini-summer boom," he added. "We anticipate real GDP growth around 4.5% on average in 2021 after a 3.4% contraction in 2020."


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

Dollar Mixed After U.S. GDP Data

Trading 22 Déc 2020 Commentaire »

The U.S. dollar was trading mixed against its major counterparts in the European session on Tuesday, after a data showed that the U.S. economy grew slightly more than previously estimated in the third quarter of 2020.

Data from the Commerce Department showed that the spike in gross domestic product in the third quarter was upwardly revised to 33.4 percent from the previously reported 33.1 percent. Economists had expected the jump in GDP to be unrevised.

The Commerce Department said the unexpected upward revision primarily reflected larger increases in consumer spending and non-residential fixed investment.

Congressional leaders approved a $900 billion relief package on Monday and a $1.4 trillion government spending bill to keep the government running until December 28.

The package includes temporary $300 per week supplemental jobless benefit and a $600 direct stimulus payment to most Americans.

The package was passed by the Senate in a 92-6 vote, following the House's passage earlier on Monday.

The greenback advanced in the previous session, as concerns about the spread of the covid variant weighed on sentiment.

The greenback dropped to a 4-day low of 1.2257 against the euro, from a high of 1.2204 seen at 5:00 am ET. The pair had closed Monday's deals at 1.2241. The greenback is seen finding support around the 1.25 level.

Survey results from the market research group GfK showed that German consumer confidence is set to fall in January due to the severe lockdown measures introduced to withstand the second wave of Covid-19 infections.

The forward-looking consumer sentiment index fell to -7.3 in January from -6.8 in December. The score was forecast to drop to -8.8.

The greenback eased off to 1.3447 against the pound, after rising to 1.3362 at 5:00 am ET. The GBP/USD pair had finished yesterday's trading session at 1.3458. If the greenback falls further, 1.38 is possibly seen as its next support level.

Data from the Office for National Statistics showed that the UK economy rebounded at a faster than estimated pace in the third quarter, reflecting the effects of the easing of lockdown restrictions and also some recovery of activity from the steep contraction in April.

Gross domestic product grew by a record 16 percent sequentially instead of 15.5 percent expansion estimated previously. GDP had fallen by revised 18.8 percent in the second quarter.

The greenback held steady against the franc, after having fallen to 0.8845 at 7:15 am ET. At Monday's close, the pair was valued at 0.8855.

The greenback rebounded to 103.50 against the yen, from a low of 103.28 set at 7:15 pm ET. The pair was worth 103.29 when it ended deals on Monday. The next possible resistance for the greenback is seen around the 105.00 level.

U.S. consumer confidence index for December and existing home sales for November are due at 10:00 am ET.


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

Gold price approaches key short-term support

Trading 22 Déc 2020 Commentaire »

Gold price is moving lower again today at $1,866 after getting rejected at $1,900. Price is still respecting the recent low at $1,819 and the upward sloping trend line support connecting this low and the November 30th major low at $1,763.

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Green line -resistance

Red line - short-term support

Gold price is pulling back after a whipsaw move yesterday. Rejected at $1,900 but supported at $1,855, Gold price is again under pressure. If price breaks below the red trend line support then we should expect a test of the $1,820 low. Breaking below it will increase the chances of making new lower lows relative to the November $1,763 low. Bulls need to continue the sequence of higher highs and higher lows and recapture $1,900. This will be a major win for bulls and will indicate that a move towards $2,000 is next.

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