EUR/USD and GBP/USD. US GDP fell 4.8% in Q1 and could lose 20-30% in Q2. Traders await Fed’s communique on the state of the

Trading 29 avr 2020 Donner votre avis

4-hour timeframe

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Average volatility over the past five days: 81p (average).

The EUR/USD pair was indistinctly trading on the third trading day of the week. The total volatility of the day at the moment is 56 points. And this is the day when the most important data on the state of the economy were to be published in the United States, and the results of the Fed meeting are scheduled for the evening. However, traders did not show any interest in active trading during the day. Moreover, there was still no reaction even when macroeconomic data began to come at the disposal of market participants. Thus, our fears from yesterday came true. Traders continue to simply ignore any macroeconomic data, even the most important. Consequently, the markets have not returned to normal, but only reduced their activity. But there is still no logic in the movement, except for the technical one. And even that, technical factors recently also do not particularly help in predicting the movement of the euro/dollar currency pair, since there is no pronounced trend now. As a result, we have a picture that is not too pleasant when quotes often change direction, but there is no such trend.

Several minor indicators were published in the European Union this morning. However, looking ahead, traders ignored data on US GDP today, so there was no chance at all that they would respond by opening positions after the publication of data on the mood in the EU economy. Nevertheless, we cannot fail to note that the sentiment index in the EU economy fell from 94.5 to 67.0, the sentiment indicator in the services sector fell from -2.2 to -35, the level of consumer confidence remained unchanged at -22.7 , the business climate indicator fell from -0.28 to -1.81, while the business optimism index in industry fell from -10.8 to 30.4. Thus, 4 out of 5 indicators in April deteriorated and all five remain in the negative area. Consequently, the mood of managers, top managers and consumers remains extremely negative. Based on this, it follows that business, workers and consumers do not expect an improvement in the economic situation in the near future. Recall that the European Council has not yet adopted a 2-trillion-dollar program to help the economy, failing to agree on funding sources and the exact amount. Accordingly, you need to wait for the next EU video summit and hope that the necessary decisions are made at it. In addition, inflation for April was published in Germany today (preliminary value), which turned out to be slightly higher than forecasted values - 0.8% in annual terms and 0.3% in monthly terms.

Meanwhile, a preliminary GDP indicator for the first quarter was published today in the United States. According to forecasts, this indicator was to lose from 4.0 to 5.0%. In reality, it turned out to be 4.8%. A stronger drop in US Gross Domestic Product over the past 25 years was observed only at the height of the mortgage crisis in 2008. Then the decline was about 8% relative to the previous quarter (not a total annual indicator). However, according to most experts and financiers, the first quarter is only the beginning of the coronavirus crisis. Recall that the epidemic, quarantine and crisis began only in March. This applies to both the European Union and the United States. Thus, the beginning of the year was not a crisis and in the first months there was an increase in many indicators. But the second quarter will be completely disastrous for both the American economy and the European one. Moreover, indicators like business activity in various fields are unlikely to continue to decline, since it is very difficult to continue to fall, and so from minimal levels. But indicators of retail sales, GDP, industrial production, orders for durable goods, unemployment, ADP and NonFarm Payrolls reports are likely to continue to be depressing. The same applies to the European economy and its indicators.

And the most interesting thing is that now it's impossible to say how all these macroeconomic statistics will affect the rate of the euro/dollar pair. What, for example, are now the reasons for the euro's growth? Falling US GDP? This report, even in the short term, did not support the euro. In addition, the reduction is likely to be no less in the EU. Actions of central banks? Tonight we will find out what the Fed is going to do in the near future. However, most likely, there will be no serious adjustment of monetary policy parameters in April. The Fed has already sufficiently lowered the key rate, expanded the program of quantitative easing (QE) to almost unlimited volumes, and also poured trillions of dollars into the economy, so now we need to wait for the results of all these actions. But even if the Fed announces a new incentive program or additional funds to fight the pandemic, this is unlikely to change anything. Thus, with a high degree of probability one should not expect any serious price changes. Nevertheless, we recommend that you keep your finger on the pulse of the market, do not forget about Stop Loss orders, since you can never be completely sure how most traders (including large players who have their own logic) will react to such a high-profile event like the Fed meeting .

4 hour timeframe

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Average volatility over the past five days: 102p (high).

The GBP/USD pair is trading as indistinctly as the EUR/USD pair on April 29. Quotes of the pair fell to the critical Kijun-sen line during the day, losing about 50 points, but it is impossible to connect this event with macroeconomic events, since the most important US report showed a strong decline (GDP). Thus, with such a contraction in the economy, it would be reasonable to see the dollar fall, rather than to strengthen. However, as we already found out in the first part of the article, traders continue to ignore all statistics. Thus, we believe that the reasons for the pair's fall today cannot be associated with reports. Accordingly, there was just a retreat, one of the upward trends, which began to form on April 21. Even the important Senkou Span B line, which always acts as a serious support/resistance, now has no effect on the pound/dollar pair. Formally, the upward trend persists, however, when growth resumes and on what grounds, it is now difficult to assume. Even the evening Fed meeting might not affect quotes. Based on this, we believe that the technique is still the most important factor in analyzing any pair in the Forex currency market at this time. A price rebound from the Kijun-sen line may provoke a resumption of the upward movement, and it should be considered as a specific signal for purchases.

Recommendations for EUR/USD:

For short positions:

The EUR/USD continues an upward movement that is not too confident on the 4-hour timeframe. Thus, you can consider selling the euro but first you have to consolidate below the Kijun-sen line with the first targets of 1.0750 and 1.0733.

For long positions:

Long positions are formally relevant at this time, but we would recommend not to take risks until the Ichimoku cloud has been overcome and only then should you start trading for an increase with the targets of 1.0903, 1.0912 and 1.0985.

Recommendations for GBP/USD:

For short positions:

The pound/dollar pair , after a rebound from the resistance level of 1.2494, continues to adjust as part of an upward trend. Thus, traders are advised to return to selling the British currency with the goal of a volatility level of 1.2334 not before you consolidate the pair below the Kijun-sen line.

For long positions:

Purchases of the GBP/USD pair are formally relevant now, since a rebound from the critical line has been made, but in general, all the upward movement is quite indistinct now.

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

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