EUR/USD: dollar weakens and slows down, allowing euro to take the lead

Trading 08 Fév 2021 Commentaire »

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At the end of last year, most experts predicted further weakening of the greenback. They proceeded from the fact that an increase in the US national debt and an increase in the money supply in the country would put pressure on the dollar.

However, since then, the dollar has not only managed to bounce back from multi-year lows, but it also demonstrated the strongest growth in the last three months.

The positive dynamics of the USD was primarily due to increased hopes for the early adoption of the next package of fiscal incentives in the United States.

Another factor that supports the greenback was the rise in the yield of treasuries to the highest levels since March 2020.

Last Friday, the USD index rose above 91.6 points for the first time since the beginning of December 2020, but then corrected to 91 points.

The January US employment report cooled the fervor of dollar bulls, which indicated that the US economy added only 49,000 jobs last month, which was significantly lower than market forecasts based on leading indicators.

Although speculators are cutting short positions on the dollar, some analysts say that the US currency will need stronger economic data for the United States and further progress in the fight against the COVID-19 pandemic in the country to continue to grow.

Reports on US consumer prices and local consumer sentiment, which will be released this week, will help to understand whether the recent increase in inflation expectations and Treasury yields has been justified. Any disappointing numbers can bring down the dollar.

Also, investors continue to closely monitor the debate in Washington about additional fiscal incentives.

US President Joe Biden is promoting a $1.9 trillion aid package to the US economy from COVID-19.

It is obvious that in order to push through his plan, the newly minted head of the White House needs to have more supporters. Senators Joe Manchin of West Virginia and Kirsten Sinema of Arizona, who are considered moderate politicians at the moment, can vote for the Biden package.

If the stimulus package is adopted in its original form, it will cause the dollar to rise, while the reduction in aid will negatively affect the US currency.

Taking advantage of the fact that weak growth in the number of jobs in the non-agricultural sector knocked the dollar out of the rut, and finding a local bottom around 1.1950, the EUR/USD pair was able to recover to 1.2050 on Friday.

Some corrections also contributed to the strengthening of the euro. Since the beginning of last week, the exchange rate of the European currency against the dollar has declined as concerns about the prospects for the recovery of the European economy have increased. Investors were betting on a faster recovery in the US.

In addition, the vaccination campaign against COVID-19 has developed in America at a much more active pace compared to the eurozone. More than 9% of citizens have already been vaccinated in the United States, compared to 2-3% in many European countries.

The EUR/USD pair is trading in a narrow range on Monday, trying to continue the growth that began on Friday.

The bulls' chances of success will increase if the pair recovers above 1.2060 (the 38.2% Fibonacci retracement level relative to the November-January rally). The next strong resistance is at 1.2100, and then at 1.2130 and 1.2170.

Support is located at 1.2000, 1.1950, 1.1930 and 1.1880.

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EUR/USD. Euro stays in the wake of the dollar

Trading 08 Fév 2021 Commentaire »

The euro-dollar pair tested the resistance level of 1.2060 today, gradually gaining momentum against the background of a widespread decline in the US currency. Although on Friday, on the eve of the Nonfarm release, the pair updated the two-month low, dropping to 1.1960. However, the disastrous data on the growth of the US labor market, as well as the general optimism associated with the adoption of the budget resolution in the Senate, prevented the dollar bulls from continuing the rally. The safe greenback has ceased to enjoy the former demand, while weak macroeconomic reports have only increased the pressure on the currency.

The US dollar index stayed above 91.00 for almost the entire day on Monday – but this level of support was broken at the beginning of the US session. This allowed EUR/USD buyers to get close to the first price barrier of 1.2060 (the Tenkan-sen line on D1). This resistance level is intermediate, while for the development of the growth trend, the bulls need to break through the middle line of the Bollinger Bands indicator, which corresponds to the 1.2100 level. In this case, the pair will return to the price range of 1.2100-1.2170, where the last mark corresponds to the upper limit of the Kumo cloud on the daily chart. In this price range, the price was traded from January 20 to the first days of February – until the dollar began to enjoy increased demand against the background of the weakening of the euro (rumors of an ECB rate cut and the political crisis in Italy).

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To date, the situation has changed. Weak January nonfarm and simply disastrous December results (which were revised downwards) completely negated rumors that the US central bank may begin to curtail stimulus programs at the end of this year. Moreover, many Federal Reserve members who have spoken over the past few days have actually confirmed these assumptions. And many of them are optimistic about the future – in their opinion, the US economy will recover at a stronger pace than the previous forecasts of the Fed.

But even the most prominent representatives of the hawks admit that the Fed is likely to start raising interest rates no earlier than mid-2022 (this forecast was voiced by Raphael Bostic and Charles Evans). While most of their colleagues adhere to a more pessimistic scenario – in their opinion, this will happen a year and a half later. Similar expectations are reflected in the December dot chart of forecasts. Fed Chairman Jerome Powell will deliver a speech on Wednesday, and he will comment on the current situation in the light of recent Nonfarm (the topic of his speech will focus on the state of the US labor market). Given his previous rhetoric following the January Fed meeting, we can assume that he may allow QE to expand. Such a scenario will put additional pressure on the greenback.

In addition, the dollar has ceased to be in demand as a protective asset. The political battles over the massive package of additional aid to the US economy, in fact, ended at the end of last week, when the Democrats were able to approve a budget resolution. This means that in the near future (approximately – until February 20), congressmen will adopt a resonant bill – after all, this now requires the support of only a simple majority (and not a "super majority"). This fact has returned investors' interest in risk, in particular in stocks. During periods of increased turbulence in the US stock market, the dollar was in high demand, while now the opposite situation is happening: against the background of the growth of key stock indexes, the greenback it isn't. Today's dynamics of the US dollar index (especially at the start of the US session) is an eloquent confirmation of this.

At the same time, it is worth noting that the gradual growth of the EUR/USD pair is primarily due to the dollar's weakness. The euro is still under background pressure from the dovish remarks of the ECB representatives and the political crisis in Italy.

As you know, the former head of the European Central Bank, Mario Draghi, is now trying to form a new coalition government, which he will later lead. Rumors around this process are contradictory, although most experts are inclined to believe that it will be able to complete a difficult task, preventing the holding of early parliamentary elections. Although the intrigue in this matter remains. According to Italian media reports, it will become clear in the near future (approximately until Wednesday) whether Draghi will confirm his reputation as a successful negotiator or whether the political crisis will continue in the form of early elections. The euro is focused on this fundamental factor against the backdrop of a half-empty economic calendar. For example, traders ignored the Sentix index of investor sentiment for the eurozone published today. The indicator fell back into the negative area, falling to -0.2 points from 1.3 points in January. At the same time, preliminary forecasts indicated a possible increase to the value of 1.9.

However, the euro paired with the dollar continues to move in the wake of the US currency. Therefore, in the coming days, the dynamics of EUR/USD will depend on the dollar's behavior – especially in light of the release of data on the growth of US inflation and Powell's speech (February 10).

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Technically, buyers need to settle above the Tenkan-sen line at D1 (1.2060) in order to claim the stronger resistance at 1.2100. That is, you can consider long positions (for a short distance - up to 1.2100) only when the quote surpasses the target. When the middle line of the Bollinger Bands is crossed, the EUR/USD bulls will open the way to the resistance level of 1.2170 (upper border of the Kumo cloud) and to the main growth target in the medium term - 1.2210 (upper line of the Bollinger Bands on the same timeframe). In other words, the path to growth consists of peculiar steps, the interval between which is 40-60 points. The support level is located at around 1.2000.

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Technical analysis of EUR/USD for February 08, 2021

Trading 08 Fév 2021 Commentaire »

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Outlook in coming 2 days :
  • If the EUR/USD pair fails to break through the resistance level of 1.2038 today, the market will decline further to 1.1900. The pair is expected to drop lower towards at least 1.1860 with a view to test the support 2. Also, it should be noted that the weekly pivot point will act as minor resistance today. However, if a breakout happens at the resistance level of 1.2093, then this scenario may be invalidated.

Overview :

  • The EUR/USD pair has dropped sharply from the spot of 1.2038 - 1.2005 towards 1.1950. Now, the price is set below the price of 1.2038 to act as a daily pivot point. It should be noted that volatility is very high for that the EUR/USD pair is still moving between 1.2038 and 1.1860 in coming hours. Furthermore, the price has traded below the strong resistance at the levels of 1.2038 and 1.2064, which coincides with the 38.2% and 50% Fibonacci retracement level respectively. Additionally, the price is in a bearish channel now. Amid the previous events, the pair is still in a downtrend. From this point, the EUR/USD pair is continuing in a bearish trend from the new resistance of 1.2038 - 1.2005. The price spot of 1.2038 - 1.2005 remains a significant resistance zone. Therefore, a possibility that the EUR/USD pair will have downside momentum is rather convincing and the structure of a fall does not look corrective. In addition to, the RSI is still signaling that the trend is downward as it remains strong below the moving average (100). This suggests the pair will probably go downig coming hours. Accordingly, the market is likely to show signs of a bearish trend. In other words, sell orders are recommended below the region of .2038 - 1.2005 with the first target at the level of 1.1900. If the trend is be able to break the first support at the level of 1.1900, then the market will continue falling towards the weekly support 2 at 1.1860.
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Analytics and trading signals for beginners. How to trade EUR/USD on February 9? Overview of trade on Monday. Getting ready

Trading 08 Fév 2021 Commentaire »

1-hour chart of EUR/USD.

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On the first day of the trading week, EUR/USD made a minor downward correction within the overall short-term uptrend which was formed by having overcome two downward lines at the end of the last week. Later today, the currency pair carried on with its moderate climb. On the whole, the pair traded with weak volatility today. The pair's move today measures just 46 pips that is no surprise amid the empty economic calendar on Monday. As a rule, the market trades under lower volatility on Monday than on the other trading days for obvious reasons. Traditionally, the economic calendar lacks macroeconomic data and the market needs some time to wake up after a weekend.

In the last article, beginners were recommended to trade EUR/USD upwards provided that the MACD indicator generates a new strong buy signal. This has not happened on Monday. So, it was the wrong idea to open long positions. On the other hand, we should not have traded EUR/USD downwards. Hence, traders should have refrained from opening any positions on EUR/USD. Now the market is right for action. Beginners can make trading decisions bearing in mind the important and strong level of 1.2059. If the price surpasses it, the door will be open upwards. Alternatively, a pullback will trigger a new downward move.

On Monday, February 8, the market lacked any catalysts. ECB President Christine Lagarde spoke in front of the European Parliament policymakers. However, it is clear that she did not say anything significant as EUR/USD was drifting very quietly for the whole day. Thus, beginners have to trade now, adjusting their decisions for technical indicators. Another factor to price in is a new round of the US dollar's weakness across the board in case the US Congress and the Senate eventually pass a coronavirus relief package worth $1.9 trillion. If this actually happens, supply of the US dollar will increase under the same demand. Such market conditions could entail the US dollar's weakness or, in other words, growth of EUR/USD.

Tomorrow, on Tuesday, no events are scheduled either in the US or in the EU. Hence, the market volatility will remain low. Again, EUR/USD should be traded entirely on the grounds of technical indicators. This is to the advantage of beginners because they don't have to couple fundamental analysis with technical one. So, what we have to do is wait for new strong technical signals. Remember that they should be clear-cut and precise but not dubious and vague.

The following scenarios are possible on February 9

1)Long positions on EUR/USD are still relevant because the price has surpassed the trendline for the second time. Therefore, beginners are recommended to wait for a new correctional stage and discharge of MACD to the zero level. Once this happens, let's wait for a new buy signal and open pong positions on EUR/USD with upward targets coinciding with resistance levels of 1.2059 and 1.2081. Another option is to open buy orders if 1.2059 is tested. We should keep such positions open until MACD reverses downwards.

2)Trading the pair downwards is out of the question at present. Thus, beginners should wait until a new downtrend is formed. Only in this case, it will make sense to consider short positions on EUR/USD. Formally, it is possible to try trading the pair at a retracement off 1.2059, but this strategy is not recommended for beginners.

What's on the chart:

Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.

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

Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.

MACD indicator (14,22,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend patterns (channels, trend lines).

Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners in the forex market should remember that every trade cannot 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

Russian Ruble Climbs To More Than 2-week High Against U.S. Dollar

Trading 08 Fév 2021 Commentaire »

The Russian Ruble firmed against the U.S. dollar in the European session on Monday, as oil prices broke $60 a barrel amid the U.S. stimulus optimism.

Global markets rallied as the progress in vaccine rollouts and the U.S. stimulus plan revived hopes of a faster economic recovery.

As global supplies tighten and the demand outlook improves with the rollout of vaccines, analysts expect to see further upside in oil prices.

The Russian Ruble appreciated to more than a 2-week high of 74.15 against the greenback from Friday's closing value of 74.61. If the Russian currency rises further, 72.00 is possibly seen as its next resistance level.


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EUR/USD : l’euro rebondit après une incursion sous les 1,20 dollar

Trading 08 Fév 2021 Commentaire »
L’euro reprend de la hauteur à la suite des données décevantes de l’emploi américain.

Gold starts the week in a strong note

Trading 08 Fév 2021 Commentaire »

Gold price ended last week with signs of strength and at the beginning of this week the bullish momentum continues. However we believe that this is most probably just a counter trend bounce. Major resistance is found ahead at $1,850 as we have been saying for some time now.

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Red line -resistance

Black lines - Fibonacci retracement levels

Gold price is bouncing strongly towards the red resistance trend line. $1,850 is the resistance by the trend line and $1,840 is the 61.8% Fibonacci retracement resistance level of the last leg down. Breaking above the 61.8% Fibonacci retracement level is key for the short-term trend. Such a break out will be supportive of the bullish momentum. Bulls will gain more chances for a move above the key pivot level of $1,850. We observe for several weeks now a great battle around $1,850 key level. A rejection at $1,850-40 area will lead to a move back towards $1,750.

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

February 8, 2021 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 08 Fév 2021 Commentaire »

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Recently, the EURUSD pair looked overbought while approaching the price levels of 1.2250 (138% Fibonacci Level).

That's why, conservative traders were advised to look either for SELL Positions around the previous price levels at 1.2330 (150% Fibonacci Level) in the previous article.

Recently, Bearish closure and persistence below 1.2160 was needed to abort the ongoing bullish momentum. This allowed the recent bearish movement to pursue towards 1.2050 where the depicted key-zone is located.

However, Intraday traders should were advised to look for short-term BUY Trade around the price zone of 1.2000.

This price zone provided temporary bullish SUPPORT for the EURUSD. However, lack of sufficient bullish momentum was recently demonstrated.

Early Exit was suggested for the previous BUY Position while waiting for a possible bearish continuation Pattern.

Bearish persistence below the price level of 1.2000 would enhance the continuation of the current bearish Head and Shoulders Pattern towards lower targets around 1.1950 and probably 1.1860. Otherwise, further bullish continuation towards 1.2100 should be considered.

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February 8, 2021 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 08 Fév 2021 Commentaire »

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In December, the price levels of (1.3380-1.3400) have prevented further bullish movement for a few weeks.

Bearish target was projected towards 1.3300. However, the pair has failed to pursue towards lower targets.

Instead, a bullish spike was expressed towards 1.3480-1.3500 where the upper limit of the depicted movement channel has previously provided bearish pressure on the pair.

Shortly after, another bullish spike has recently been demonstrated towards 1.3600 where the upper limit applied considerable bearish rejection again.Recently, the GBPUSD pair looked overbought while consolidating above the key-level of 1.3400.

As expected, bearish reversal was recently initiated around 1.3600. A quick bearish decline was demonstrated towards 1.3200.

However, the GBP/USD pair has failed to maintain bearish decline below 1.3200 in the previous attempt. Instead, bullish persistence above 1.3400 invalidated the bearish scenario for the short-term.

Another temporary bullish movement is being expressed to test the previous WEEKLY High around 1.3700. Further upside movement may be expected towards the upper limit of the current movement channel around 1.3900 where bearish rejection and a possible SELL Entry are suggested.

Short-term outlook can turn into bearish if only the GBP/USD pair could break below and maintain movement below 1.3550. If so, a quick bearish decline initially towards 1.3400 would be expected.

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

EURUSD back tests broken trend line

Trading 08 Fév 2021 Commentaire »

EURUSD has broken the trend line support and pulled back as low as 1.1957. In our previous analysis we noted that it is justified to see a back test at the break out area around 1.20-1.2020.

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Red line - previous support now resistance

EURUSD is testing the red trend line from below. A rejection here will lead to a move lower below recent low of 1.1957. Most probable target is the 38% Fibonacci retracement around 1.17. Short-term trend remains bearish as long as price is below 1.21. We consider this bounce as a selling opportunity for a move lower.

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