*Indonesia Cuts Key Interest Rate By 25 Bps To 4.75%

Trading 20 fév 2020 Commentaire »

Indonesia Cuts Key Interest Rate By 25 Bps To 4.75%


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GBP/USD Turned To The Downside

Trading 20 fév 2020 Commentaire »

The pound loses ground versus the USD again after a minor bullish movement. A valid breakdown below 1.2904 and another lower low will confirm a GBP/USD further drop in the nearest days.

GBP/USD is trading inside of a critical support area, that's why we should wait for a confirmation that the price will drop deeper. The UK is to release the Retail Sales data today, the indicator is expected to increase by 0.7% in January after a 0.6% decrease in the previous month. Poor US data and good UK figures could push GBP/USD higher again in the short term, but if the UK numbers disappoints, the pound should drop aggressively.

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GBP/USD has increased a little to retest the broken uptrend line (ascending channel's support) and the median line (ML) of the major blue ascending pitchfork. The pair could drop significantly if it closes and stabilizes below the 1.2904 static support.

The price has tested the former chart pattern as well, it was rejected by the major confluence area formed at the intersection of the resistance levels, so GBP/USD is under selling pressure right now. In case of a valid breakdown below the 1.2904 - 1.2900 area, the next downside targets are seen at 50% retracement level and at the inside sliding line (sl) of the orange descending pitchfork.

We have a down channel between the inside sliding lines (sl1 and sl) of the orange descending pitchfork, GBP/USD is expected to approach and reach the downside line (sl) of this pattern after the failure to retest the upside line (sl1).

  • Trading Tips

A valid breakdown below the 1.2904 level and another lower low, a drop below the 1.2871 low, will give us a great chance to go short on this pair with the target at the 50% level and lower at the sliding line (sl). GBP/USD will register a major drop if the price ignores the next downside targets. The major downside targets are seen at the lower median line (LML) of the ascending pitchfork and at the median line (ml) of the descending pitchfork.

The potential bearish movement could be invalidated only by a false breakdown below 1.2904 static support, so a pin bar or a bullish engulfing here could signal another bullish momentum.

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Technical analysis recommendations for EUR/USD and GBP/USD on February 20

Trading 20 fév 2020 Commentaire »

Economic calendar (Universal time)

Among the various statistics of today's economic calendar, the most important indicators can be distinguished:

9:30 UK retail sales;

12:30 publication of the ECB protocol on monetary policy;

13:30 index of industrial activity (USA);

16:00 crude oil reserves (USA).

EUR / USD

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The weekly target on the first target (1,0791) was worked out and a slight inhibition took place. So, what's next? Either the players on the upside will be able to realize a corrective rise in a given place, or the opponent will achieve overcoming support and continuing the decline. The next bearish reference point at the upper time intervals is 1.0595 (100% performance of the weekly target for the breakdown of the Ichimoku cloud). In the case of a correction, the nearest resistances are now joining their efforts in the region of 1.0870-79 (daily short-term trend + historical level).

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The main advantages while retaining the players on the decline. Updating yesterday's low (1.0782) will allow them to continue the downward trend, while the classic Pivot levels S2 (1.0769) and S3 (1.0757) will support the day. At the same time, opportunities for the development of an upward correction will reappear when consolidating above the central Pivot level (1.0799). The next upward reference point in the lower halves, which will allow us to count on the implementation of a full-fledged correctional upward turn to the daily short-term trend (1.0870), is the weekly long-term trend (1.0826).

GBP / USD

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The players to decline returned to the key support zone 1.2882 - 1.2920 (Fibo Kijun of the week and month), limiting the scope of consolidation. The breakdown and consolidation below will allow you to take a closer look at new bearish benchmarks and build new plans. On the other hand, the formation of rebound is another return to consolidation. Its center of attraction can be identified as the daily medium-term trend (1.3039).

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At the moment, a downward trend is developing on H1. Support within the day can be identified on S1 (1.2876) - S2 (1.2834) - S3 (1.2761). Meanwhile, key resistance of the lower timeframes today are located at 1.2949 (central Pivot level) and 1.3004 (weekly long-term trend). The rise to these levels and consolidation above will change the current balance of forces of the lower time intervals. In addition, the formation of the next rebound from the met and tested lower boundaries of the consolidation zone of the higher halves will be indicated.

Ichimoku Kinko Hyo (9.26.52), Pivot Points ( classic ), Moving Average (120)

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Trading plan for EUR/USD and GBP/USD on 02/20/2020

Trading 20 fév 2020 Commentaire »

Honestly, what is happening on the market surprises more and more. The pound completely ignores its own statistics, but reacts extremely violently to the American currency. And in theory, the single European currency also had to decline under the influence of American statistics. However, it stood still, as if nothing had happened. Thus, it cannot be said that the market definitely pays attention only to American statistics.

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At the same time, inflation data in the UK turned out to be incredibly good, as it increased from 1.3% to 1.8% instead of the forecast of 1.4%. Indeed, such a sharp increase in inflation clearly indicates that the Bank of England will not lower the refinancing rate for at least the first half of the year. And inflation itself is a factor favorable for the currency market. Nevertheless, investors did not seem to see this data.

Inflation (UK):

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The market behaved exactly the same way at the time of publication of data on construction in Europe, the volume of which decreased by 3.7%. That is, after the news that instead of growth by 1.2%, construction is generally declining, investors behaved in the most usual way - nothing, as if this data was not there.

Scope of construction (Europe):

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The market revived, and even then, in a strange way, only during the publication of producer prices in the United States. Indeed, their growth rate accelerated from 1.3% immediately to 2.1% instead of the expected 1.7%. Considering the fact that this is an extremely inflationary factor, and indicates not only a further increase in inflation, but also that the Federal Reserve is likely to think about raising the refinancing rate, the dollar growth is quite understandable. However, the dollar increased only against the pound, while the single European currency continued to stand still.

Manufacturer Prices (United States):

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The stability of the single European currency is even more surprising if we take into account the fact that the data on construction in the United States were significantly better than forecasts. The number of new buildings decreased by 3.6%; but, this happened after an increase of 17.7%, and they expected a reduction of 11.7%. So the decline in construction should not be scary, as it is simply the result of extremely strong growth in the previous month. However, what is much more important is that the number of construction permits issued increased not by 2.2%, but by 9.2%. Therefore, it is worth waiting for further growth in construction volumes in the near future. So we can assume that if everything is clear to the pound to investors and no one expects anything good from Brexit, then what is going to happen with the single European currency is not yet clear especially, that it was already quite seriously weakened.

Number of Building Permits (United States):

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To some extent, the market's indifference to any statistics other than the US can provide support to the pound today as well as a single European currency. Moreover, they are clearly oversold, and the market needs a local rebound. The fact is that they expect a slowdown in retail sales growth from 0.9% to 0.5% in the UK, which completely levels inflation growth. Thus, it would be better if investors did not see this data.

Retail Sales (UK):

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Moreover, excessive attention to American statistics should be the reason for the rebound in the currency exchange market. The fact is that the total number of applications for unemployment benefits should increase by 17 thousand. Yes, the total change is insignificant, but growth is expected for both primary and repeated applications. So, the number of initial applications should increase by 10 thousand, and repeated applications by another 7 thousand. The general negative tonality of both indicators will definitely be perceived not in the most joyful way.

Repeated Unemployment Insurance Claims (United States):

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The EUR / USD currency pair continues to follow the downward trend, where the quote has already descended to the level of 1.0780. It is likely to assume that short positions are already overheated and it's time for a pullback, but if the inertial move is still maintained, then a descent towards 1.0750 will be another goal.

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The GBP / USD currency pair managed to accelerate after hanging within the level of 1.3000, and going down to the support area of 1.2885. It is likely to assume a local slowdown in the region of 1.2880 / 1.2900, where it is worthwhile to carefully monitor the behavior of the quote and fixation point relative to the values of 1.2880 / 1.2915.

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USD Remains Favorite Versus EUR

Trading 20 fév 2020 Commentaire »

The US dollar seems unstoppable as it has managed to appreciate significantly versus other major currencies. EUR/USD maintains a bearish outlook as the USDX has ignored the near-term upside obstacles and it has reached fresh new highs.

The US dollar index has increased as much as 99.82 and it could climb even higher after the breakout above 99.67 high. The index hasn't been at such elevated levels since May 2017. The USDX's further increase will send the EUR/USD pair towards fresh new lows in the short term.

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I've said in yesterday's analysis that EUR/USD was under selling pressure and it could drop anytime as long as it is located below the lower median line (lml). The pair has rebounded from the 150% Fibonacci line and from the S1 (1.0785) level, but it has failed to approach and reach the lower median line (lml) signaling that the price would drop deeper.

I want to remind you that the next downside obstacles are represented by the first warning line (wl1) of the descending pitchfork and by the S2 (1.0741). Stochastic and MACD are still indicating a bullish divergence, but we cannot consider going long unless we'll see a reversal pattern right here on the confluence area formed at the intersection between the 150% line and S2 level.

  • Trading Tips

EUR/USD is putting pressure on the confluence area, you should know that a false breakdown (Pin Bar) could announce that the bearish movement is finished and the price could develop a bullish movement with targets at the lower median line (lml), PP (1.0871) and higher at the median line (ml) of the descending pitchfork, near R1 (1.0915).

However, a valid breakdown through the confluence area will send the pair towards S2 (1.0741) level, the warning line (wl1) could attract the price as well.

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Gold and the coronavirus

Trading 20 fév 2020 Commentaire »

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While US stocks continue to show record growth, the gold market, despite its historical highs, has been weakening recently.

The shiny metal increased by 4% this year, while SPDR Gold (GLD A-) shares increased by 3%. Although at the beginning of last month, the prices of gold reached their highest level since April 2013, it became more subdued when February started.

Since the end of January, gold has been trading in a sideways trend, as investors accumulate in stocks.

Problems with the precious metal continue in the Chinese gold market, where demand for jewelry is expected to decline, due to the growing concerns about the coronavirus.

The demand for jewelry is expected to decline in the global gold consumption market. "People are not in the mood to buy jewelry. Stores and shopping centers are closed due to the virus. Sales of gold jewelry and bullion will fall significantly this year, " Zhang Yongtao, executive director of China Gold Association, said in a recent interview with Bloomberg.

Usually, the value of gold moves back to the dollar, since the value of the precious metal in the international market is indicated in US currency.

"Gold prices have already increased as much as possible," Georgette Boelle, senior analyst for foreign exchange and precious metals at the Dutch Bank, said in a report published last Friday. "We still expect a price correction in the coming weeks and months."

Considering the fact that, in general, bullish gold positions are becoming more crowded, it may be better for investors to wait for a correction.

Besides the current technical data, what can end gold's growth?

To begin with, the coronavirus outbreak is increasing and receding. China is taking quick steps to normalize its economy, to show the world that it is back in business. In addition, rising inflation may also reduce consumer interest in gold, although this is unlikely to happen because of the modest growth for several years. In order to understand the movement of the precious metal, gold traders should closely monitor the bond market, as well as the credit market.

New statistics on those infected in China have been published today. It recorded the lowest number of cases since January 23, indicating 394 newly infected, compared to 1,693 on Wednesday:

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Good luck in trading and control your risks!

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Indicator analysis. Daily review of GBP/USD on February 20, 2020

Trading 20 fév 2020 Commentaire »

The pair moved down on Wednesday and tested the support line 1.2912 (red bold line). Today, strong calendar news for the pound is expected at 09:30 UTC, and for the dollar at 13:30 and 16:00 UTC. The downward movement may continue today with the first target 1.2872, the lower fractal (red dashed line).

Trend analysis (Fig. 1).

Today, from the resistance line 1.2922 (red bold line), a downward movement is possible with the target 1.2872 - the lower fractal (red dashed line). If this level is reached, work upward with the target 1.2922, the resistance line (red bold line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly schedule - down.

General conclusion:

Today, the price may continue to move down.

An unlikely but quite possible scenario is from the bottom fractal 1.2872 (red dashed line), work down with the target 1.2700, the retracement level of 61.8% (yellow dashed line).

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Decline in the growth of the Chinese economy will hurt AUD and NZD (we expect AUD/USD and NZD/USD pairs to further decline)

Trading 20 fév 2020 Commentaire »

Today, the Chinese Central Bank decided to lower the base credit rate to 4.05% from 4.15%. This action of the regulator is connected with the desire to support economic growth in the country, not only in the context of the coronavirus epidemic, but also later, when this attack ends.

The decision of the NSC is reasonable and logical. According to forecasts that have already appeared, the growth rate of the Chinese economy in the first quarter may be reduced from the last value of GDP 6.0% in the 4th quarter of last year to 3.0%. Of course, the reason for this fall is a sharp decline in production activity in the country since the beginning of this year due to the coronavirus epidemic, which caused a significant number of companies, both public and private, to stop working. And the fact that the drop may be noticeable, says a lot about the statement of Apple Inc this Monday regarding a strong reduction in profit expectations due to reduced sales of its products against the background of falling production in China.

Given these prospects, we believe that the Australian and New Zealand dollars will be under strong pressure, since the economies of Australia and New Zealand are strongly linked by exporting their products to the Middle Kingdom.

Such prospects are perfectly confirmed by the dynamics of sentiment of large investors (Large Traders) in futures contracts for these currencies. So, according to an indication of investor sentiment (Commitments of Traders), the decline in the March futures on Australian and New Zealand dollars can only increase. Such an attitude of the market towards their prospects, and through them to the underlying assets - the Australian and New Zealand dollars in the currency market, is justified because a strong slowdown in the growth of the Chinese economy will force the RBA and the RBNZ, most likely, to resort to measures to protect producers in Australia and New Zealand. Also, regulators will most likely be forced to soften their monetary policies to stimulate economic growth.

In this situation, the American dollar will definitely enjoy support in pairs with these currencies, since the US economy, in the opinion of the Fed, and more precisely its leader J. Powell and other members of the American Central Bank, is doing fine. The minutes of the last meeting of the Federal Reserve, released on Wednesday, clearly confirms this.

Given the current situation in the markets and around the effects of coronavirus on the Chinese economy, we believe that the US dollar will receive general support in the markets in general and against the Australian and New Zealand currencies in particular.

Forecast of the day:

AUD/USD is trading above the level of 0.6640. We believe that a decrease below this level will lead to a continued fall in prices to the level of 0.6600.

NZD/USD pair is trading below the level of 0.6375. We believe that it will continue to decline to 0.6315, and then, probably, to 0.6300.

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Indicator analysis. Daily review of EUR/USD on February 20, 2020

Trading 20 fév 2020 Commentaire »

Trend analysis (Fig. 1).

The market may continue to move down today with the target at 1.0783, the lower fractal (red dashed line). Breaking down the lower fractal is unlikely but work up is possible from the level of 1.0783.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger Lines - up;

- Weekly schedule - up.

General conclusion:

A continued downward movement is expected today with the target of 1.0783, the lower fractal (red dashed line).

An unlikely but possible scenario is from the lower fractal 1.0783 (red dashed line), a continued work down with the goal of 1.0664, the retracement level of 85.4% (yellow dashed line).

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Markets are clearly tired of the negative, dollar dominates in every area, EUR and GBP remain bearish

Trading 20 fév 2020 Commentaire »

The dollar is growing across the entire spectrum of the currency exchange market on positive statistics and encouraging news about COVID-19. At the same time, production prices in January showed growth significantly above forecasts, while the construction market significantly increased its growth, building permits were issued in January by 9.2% more than a month earlier, easing the monetary policy of the Fed is recouped almost without a delay in time.

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As for the coronavirus, the number of people recovered exceeded the number of cases for the first time since the start of the epidemic, according to reports from China. Market participants regarded this news as a signal that the spread of the virus was taken under control, a sharp reduction in danger led to large-scale sales of the Japanese yen and an increase in demand for commodity assets.

Asian exchanges on Thursday morning in a steady positive following the American ones, the positive was strengthened by the decision of the People's Bank of China to lower rates for first-class borrowers, markets expect stimulus measures to stop there. According to some reports, China is considering the possibility of direct cash injections to support the aviation industry, since the impact of the virus blocks companies' cash flows, many companies cut salaries and delay employee payments.

In addition, the probability of a rate cut at the September meeting is currently less than 30% after the publication of the minutes of the FOMC meeting; however, a certain advantage of dovish sentiment remains, but overall the assessment of the economic situation in the USA has become more positive. The risks of a trade war and harsh brexit were reduced, and geopolitical risks in the Middle East and coronavirus replaced them.

Particular attention was paid to the position of the Fed on repo operations, but the markets did not learn anything new. They will remain in effect at least until April, then their gradual reduction will begin, T-bills purchases will also begin to decline starting from the 2nd quarter. Apparently, the US presidential election will be approached in a stable development trend, but with minimal stimulating measures on the part of the Fed. If this scenario is implemented and does not lead to a deep correction in the markets, then the chances of Trump's victory will increase, and "what's good for Trump is good for the dollar."

In any case, the development of events is aimed at maintaining the trend for the dominance of the dollar. The correction time has not come yet.

EUR/USD

The euro is trying to start consolidation after a long decline, the lack of significant news forces players to take a break until Friday, when the PMI Markit for February will be published in the eurozone, Germany and France to assess the impact of coronavirus against the backdrop of the expected recovery after a tumultuous fourth quarter.

Moreover, the euro is in a state of free fall after the loss of support 1.0878, which is restrained except by the lack of correction and oversold. However, these are just technical factors, and fundamentally, the dollar looks much stronger and there are no reasons for a turn up.

Perhaps, the correction will be blocked near 1.0878, which is a good level for sales with the target of 1.0725, long-term target of 1.0338.

GBP/USD

Consumer inflation in the UK surprised at 1.8% growth in January against the forecast of 1.6% and 1.3% a month earlier.

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However, the pound did not respond to the publication, which could reduce the chances of adopting a stimulus package in March or at least the composition of this package. The reason probably lies in the fact that the increase in inflation is largely due to rising electricity prices, that is, it is a temporary factor.

At the moment, the pound is oriented not so much on macro statistics, but on expectations about future negotiations with the EU on a trade agreement. The UK is trying to reserve the right not to obey the common EU standards, while the European Union is determined to exert strong pressure on the pound.

These fears have already offset the positive effect of the appointment of Rishi Sunak to the post of Minister of Finance. The pound is aimed at testing support 1.2869, and if successful, the downward movement will increase. But since verbal interventions on the topic of future negotiations are likely at any time, caution must be exercised, since from a technical point of view, the pound has currently no direction. The resistance is at 1.3025 and further 1.3071, if you try to increase to the first of them, you can sell with an intermediate target of 1.2869.

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