Markets are on standby. USD, CAD, JPY overview

Trading 11 Fév 2021 Commentaire »

Negative reports on inflation and budget stopped the dollar from strengthening further. Consumer inflation rose 0.3% in January, 1.4% annual growth, while 1.5% growth was predicted, and the root value of inflation showed zero growth, which was a complete surprise. At the same time, tellingly, the yield on 5-year TIPS bonds remained unchanged at 2.31% during the day, that is, despite the negative report, the business environment does not adjust its inflation expectations. Such insistence may indicate that a weak inflation report will not be considered important enough by the market.

As for the budget report, the reality was noticeably worse than the forecast. The deficit was 144 billion in December, while it was predicted at 150 billion in January, when in reality it was 163 billion. The Congressional Budget Committee drew attention to the fact that the deficit growth in January was significantly higher than the deficit in the last three months, while no additional factors were observed that could ensure such growth.

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It would seem that such significant factors should have caused the reaction of the management of the Federal Reserve or the Ministry of Finance, but we did not hear anything interesting. Fed Chairman Jerome Powell used a large set of streamlined language in his speech, from which absolutely nothing followed. In addition, perhaps, to the recognition that real unemployment is closer to 10%, and not to 6.3%, which, in general, is no secret to anyone, and the statement of the obvious fact that "downside risks to the economy prevail". In other words, Powell warned that the situation should be expected to worsen, and therefore the dollar began to drop even lower after the speech.

In general, the situation for the dollar has become more bearish in the short term, but it is unlikely to change in the long term. As soon as there is news from Congress on the new stimulus package, the US economy will suddenly become very attractive, and the dollar will be in demand. Accordingly, we are guided by the fact that the dollar has entered a growth phase, and minor troubles in the form of bad reports will be of a short-term nature.

USDCAD

The report on the Canadian labor market was worse than in the United States, but only at first glance. 213,000 jobs were lost, but this is the loss of part-time jobs, but there was an increase of 12,000 for full-time employment. The number of hours worked also increased, which directly indicates the likelihood of higher GDP growth rates.

This mixed report was the reason for the change in forecasts for the Bank of Canada rate, the probability of a first increase of 0.25% by the end of 2022 is already higher than a similar move by the Fed. The spread on 10-year bonds, which rose in March/April last year, has halved, meaning market expectations for the loonie are shifting in favor of strengthening it.

These changes are visible by the nature of the change in the estimated price. Unlike NZD and AUD, investors did not reduce, but instead they increased their long position on CAD, which reached 1.258 billion. The estimated price turned down and went below the long-term average, which gives reason to expect a continuation of the decline.

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Thus, a return to 1.2590 became more likely. It is not yet certain whether the low will be updated or a double bottom will form, but we must proceed from the fact that investors are waiting for the Canadian dollar to strengthen.

USDJPY

The yen looks rather weak as it turns out that wages fell by 3.2% in December, which turned out to be significantly worse than forecasts and increases the pressure on inflation - traditionally the weakest point of the Japanese economy.

The first attempt to overcome the resistance at 105.20/40 turned out to be unsuccessful, the target price is rapidly going up, which gives reason to expect the growth to resume after a slight correction.

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A 38.2% retracement from the peak will make it possible to form a support zone around 104.57, we expect a return to 105.80, targets at 106.12 and 106.74, but growth is unlikely to be rapid, since the dollar has not yet received support from Congress.

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

EUR/USD. European Commission’s pessimistic forecast and stress-resistant euro

Trading 11 Fév 2021 Commentaire »

The euro reacted poorly to the rather pessimistic forecast of the European Commission regarding the growth of the EU economy this year. EUR/USD traders focused on other fundamental factors, thanks to which the price tested the resistance level of 1.2150 (the Kijun-sen line on D1). However, buyers failed to gain a foothold higher – market participants clearly lack a powerful information impulse.

In general, the fundamental background of the pair contributes to further price growth. The economic report of the European Commission has become a minor irritation that spoils the enjoyment. The essence of the document is that the euro zone economy will recover from the coronavirus crisis this year at a slower pace than previously expected. In dry numbers, the European economy was projected to accelerate by 4.2 percent in 2021 (and by three percent in 2022), according to the November forecast. But, according to the updated data, the economy of the European region will grow by only 3.8% (and by the same amount in 2022). At the same time, the results of the past year were revised to the upside: for example, if the economic downturn was predicted at -7.8% in November, at the moment, the European Commission economists "increased" this value to -6.8%.

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The main message of the forecast is that this year the financial world will see the light at the end of the tunnel, although the recovery process will be too slow and uneven – due to the ongoing pandemic and lockdowns. Actually, for this reason, the forecast was revised downwards. But here, analysts from the European Commission recognize that the pan-European vaccination campaign is gaining momentum, so the pressure on the health system will decrease over the course of the year. Consequently, the EU countries will ease restrictive quarantine measures, which will affect key macroeconomic indicators. Therefore, more or less steady growth in indicators will be seen in the second half of 2021, while in the first quarter the eurozone economy will contract again - as in the fourth quarter of last year.

This verdict of the European Commission was not a revelation for traders, as a similar scenario was voiced by representatives of many financial conglomerates and members of the European Central Bank. Therefore, the report did not exactly weigh on the euro. But at the same time, it also restrained EUR/USD bulls from being able to settle above the resistance level of 1.2150. The disappointing news from Germany kind of added to the European Commission's report, whose authorities decided to extend the lockdown until March 7. This fact served as an eloquent confirmation that the European economy will recover at a leisurely pace.

However, the news from Germany was also expected, so it did not have much effect. Buyers of EUR/USD were forced to retreat, but only under the mark of 1.2150, while continuing to besiege this level of resistance. After all, on the other side of the scale is Italy, which, apparently, managed to avoid early parliamentary elections. The former head of the ECB, who has been trying to form a new cabinet since last Friday, seems to have fulfilled the task set by the Italian president. According to local media, 294 of the 315 senators and 597 of the 630 deputies of the lower house can vote for the "government of technocrats" led by Mario Draghi. By and large, the former head of the European Central Bank was supported by almost all political forces, with the exception of the Brothers of Italy party. Therefore, with a high degree of probability, we can assume that a new cabinet of ministers will appear in the country within the next few days. By the way, according to the same media, Brussels was very enthusiastic about the news that against the background of the coronavirus crisis, the Italian government will be headed by "anti-crisis manager" Mario Draghi.

Thus, despite the European Commission's pessimistic forecast and disappointing news from Germany, the euro is on the defensive, especially against the background of the weak position of the US currency. The final resolution of the political crisis in Italy will allow buyers of EUR/USD to test the resistance level of 1.2150 again with an eye to reaching the 22nd figure.

The US dollar index, in turn, continues to slowly fall to the bottom of the 90th level. Against the background of an almost empty economic calendar, the greenback plays back the accumulated fundamental factors of a negative nature – weak Nonfarm, an inarticulate increase in US inflation, and a dovish speech by the head of the Federal Reserve. Today's report on the US labor market only added to the fundamental picture: the growth rate of initial applications for unemployment benefits came out in the red zone (793,000 instead of the expected 750,000). This fact increased the pressure on the dollar, which is already under pressure from such circumstances.

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From a technical point of view, the growth scenario should also be prioritized – however, it is advisable to open longs when buyers have finally surpassed the Kijun-sen line at D1 (1.2150). Today, they attempted an assault, but quickly retreated back against the background of European Commission's pessimistic forecasts. But, in my opinion, this is not the last attempt to attack– if the EUR/USD bulls gain a foothold above this target, they will open their way not only to the next resistance level of 1.2200 (the upper line of the Bollinger Bands on the daily chart), but also higher – to the 1.2240 mark, which coincides with the upper limit of the Kumo cloud on the same timeframe.

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

Analysis and trading signals for beginners. How to trade EUR/USD on February 12. Analysis of Thursday trades. Getting ready

Trading 11 Fév 2021 Commentaire »

EUR/USD hourly chart

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Trading activity on the EUR/USD pair was again very slow today. The pair's movement during the day was just 36 pips. With such low volatility, it can be difficult to make money in the foreign exchange market. In this case, trading makes no sense. Thus, beginners could safely take a break today. On the chart, you can see a sideways channel where the price has moved. The channel is quite narrow, and it will not be difficult to get out of it. However, the price needs to leave this channel so that we can confirm the resumption of the trend. After a 200-pip rally without a pullback, we should definitely expect a downward correction. However, anything can happen. We need to be prepared for any scenario. Interestingly, novice traders could have earned 15-20 pips on the current flat movement. Yesterday, we recommended buying the pair if the MACD indicator reaches the zero level and forms a new buy signal. In this case, the target was set at the level of 1.2144. The signal was finally generated (marked with a circle on the chart), and the price has tested the target. Therefore, newcomers could even finish this slow trading day with a small profit.

On Thursday, February 11, the macroeconomic background was rather weak. There were no important releases during the day apart from the report on initial jobless claims in the US. The actual figures did not differ greatly from preliminary estimates. Besides, the data on jobless claims is not considered crucial. More important were the words of Jerome Powell a day earlier. He said that the real unemployment rate in the US was significantly higher than 6.3% reported by the official statistics. It is actually close to 10%. In general, the US dollar remains under pressure, but we still expect to see a correction.

Tomorrow, the fundamental picture will not impress traders as well. In the EU, the Industrial Production Index will be published, while the US will release the data on consumer confidence. Usually these reports do not generate much interest among traders even in times when markets take this data into account. Thus, tomorrow we should not expect any drastic changes. The only thing that novice traders need to be prepared for is possible profit taking by bulls (buyers). We have already mentioned this scenario with a possible correction. Traders do not always make trading decisions based on fundamental factors or macroeconomic data. They may decide to close some of their positions to take profit before the weekend. This may also cause a drop in the pair.

Possible scenarios on February 12

1) Long positions remain relevant at the moment although the pair is trading flat. So, we recommended that beginning traders wait for the price to settle above the level of 1.2144 (the upper boundary of the sideways channel). Only then can you consider opening long positions with the targets at 1.2159 and 1.2184.

2) Trading short is currently not relevant. However, if the price consolidates below the sideways channel, that is, below the level of 1.2113, you can consider opening short positions with the targets at the support levels of 1.2089 and 1.2071.

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 trendlines 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, and 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 patterns (channels and trendlines).

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

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. Weekly Jobless Claims Dip From Upwardly Revised Level

Trading 11 Fév 2021 Commentaire »

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits dipped from an upwardly revised level in the week ended February 6th but came in above expectations.

The Labor Department said initial jobless claims edged down to 793,000, a decrease of 19,000 from the previous week's revised level of 812,000.

Economists had expected jobless claims to drop to 757,000 from the 779,000 originally reported for the previous week.

The report said the less volatile four-week moving average also slid to 823,000, a decrease of 33,500 from the previous week's revised average of 856,500.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also decreased by 145,000 to 4.545 million in the week ended January 30th.

The four-week moving average of continuing claims fell to 4,748,750, a decrease of 157,500 from the previous week's revised average of 4,906,250.

"Additional fiscal stimulus and broader vaccine diffusion will eventually allow the labor market to heal," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She continued, "But as the January employment data showed, current conditions are still quite weak and declines in new jobless claims are likely to occur only gradually in the near term."

Last Friday, the Labor Department released a separate report showing a modest rebound in U.S. employment in the month of January.

T he report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs compared to the loss of 140,000 jobs originally reported for the previous month.

Meanwhile, the report also showed the unemployment rate slid to 6.3 percent in January from 6.7 percent in December. The unemployment rate was expected to come in unchanged.


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

U.S. Weekly Jobless Claims Come In Above Expectations

Trading 11 Fév 2021 Commentaire »

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits dipped from an upwardly revised level in the week ended February 6th.

The Labor Department said initial jobless claims edged down to 793,000, a decrease of 19,000 from the previous week's revised level of 812,000.

Economists had expected jobless claims to drop to 757,000 from the 779,000 originally reported for the previous week.

The report said the less volatile four-week moving average also slid to 823,000, a decrease of 33,500 from the previous week's revised average of 856,500.


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

Dollar Little Changed After U.S. Weekly Jobless Claims

Trading 11 Fév 2021 Commentaire »

The U.S. weekly jobless claims for the week ended February 6 have been released at 8:30 am ET Thursday. Following the data, the greenback changed little against its major counterparts.

The greenback was trading at 1.2148 against the euro, 1.3840 against the pound, 104.65 against the yen and 0.8894 against the franc around 8:31 am ET.


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

*U.S. Initial Jobless Claims Dip To 793,000 In Week Ended 2/6

Trading 11 Fév 2021 Commentaire »

U.S. Initial Jobless Claims Dip To 793,000 In Week Ended 2/6


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Ethereum short-term analysis

Trading 11 Fév 2021 Commentaire »

While trend remains bullish in Ethereum with price reaching new all time highs, in the short-term we could see a pull back towards $1,700 or lower. Price has tested the last three days the $1,800-$1,820 zone but got rejected.

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Blue lines - bullish channel

With the RSI providing bearish divergence signs and price very close to the upper channel resistance, I feel the upside potential is limited and price should pull back in order for bulls to gain a better momentum for more upside.

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Red rectangle- short-term resistance

Price has visited the $1,800 zone several times the last few days but each time sellers were stronger. It is justified to see a pull back towards the $1,700-$1,650 zone. Short-term traders need to be very cautious if long as the chances of such a pull back are high. If price starts moving lower and breaks below $1,650, we could see a move towards the lower channel boundary towards $1,550.

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

Dollar Mixed Before U.S. Weekly Jobless Claims

Trading 11 Fév 2021 Commentaire »

The U.S. weekly jobless claims for the week ended February 6 will be released at 8:30 am ET Thursday. Ahead of the data, the greenback traded mixed against its major rivals. While it dropped against the franc and the euro, it held steady against the pound and the yen.

The greenback was worth 1.2145 against the euro, 1.3843 against the pound, 104.67 against the yen and 0.8896 against the franc as of 8:25 am ET.


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

Short-term analysis on USDJPY

Trading 11 Fév 2021 Commentaire »

USDJPY has stopped the pull back from 105.50 just above the 50% Fibonacci retracement level. As we mentioned in previous posts, we prefer to be bullish between 104.65-104.30 and we are expecting the up trend to resume.

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Blue line - support

USDJPY continues to trade above the blue upward sloping support trend line. Trend remains bullish as long as price is above 103.30. However if trend is about to change to bearish we will get warnings. A warning of an imminent trend change would for price to break the blue trend line support and the 61.8% Fibonacci retracement. Until then we prefer to be bullish.

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