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  • EUR/USD. Trump again made the dollar nervous

    Company does not offer investment advice and the analysis performed does not guarantee results

    "Fear has big eyes": something like this can be said about the situation on the foreign exchange market on the eve of the last Federal Reserve meeting this year. The dollar index dives down, showing the weak position of greenback against a basket of major currencies, and the yield of 10-year treasuries fell to 2.83%, finally leaving the area of three percent. It is likely that panic in the near future will only increase, especially after the recent comments of US President Donald Trump.

    It is worth noting here that members of the American regulator are forced to observe a "silence regime" for 10 days prior to the meeting itself – this rule is strictly observed by them. But the president of the country is not burdened with such restrictions. And although Trump's predecessors tried not to comment on the Fed's actions at all, the current owner of the Oval Office has been putting verbal pressure on the Fed for several months. In the summer of this year, he rather rigidly commented on the next rate hike, saying that the actions of the central bank harm the economic growth of the country. After that, Trump returned to this issue several times, calling the Fed's policy "insane."

    Jerome Powell diplomatically ignored the criticism of the head of state and did not change the tone of his rhetoric. This fact calmed the markets for a while — until the end of autumn, the Fed members started talking about the level of the neutral rate. Initially, Richard Clarid said that the interest rate has almost reached its neutral level, so further tightening of monetary policy may have a negative impact on the key indicators of the US economy. Then Powell touched on this topic: in his opinion, the rate is "just below" the neutral range. And although this range is quite wide (2.5%-3.5%), this position of the Fed chief has disappointed market participants. After all, not so long ago he said that the regulator may exceed the neutral level if the main indicators of the economy grow at an advancing pace.

    In other words, traders have well-founded fears that the regulator will take a more cautious position regarding future prospects. That is why the dollar feels rather uncertain at the beginning of this week. Donald Trump also added fuel to the fire, which a few hours before the beginning of the two-day meeting again criticized the possible tightening of monetary policy. In his Twitter account, he said that raising the rate in the current conditions is "unbelievable." In his opinion, in the conditions of a strong dollar, low inflation and a slowing economy of China, it is absolutely impossible to raise the rate.

    Today he supplemented his opinion with another tweet, the text of which is worth quoting: "Do not let the market become even less liquid than it is now. Feel the market, don't just chase the meaningless numbers." I think any comments are unnecessary here. And although de jure Trump has no direct influence on the Fed, the position he voiced complemented the gloomy picture on the eve of the key meeting for the dollar.

    The weakening of the US currency allowed the euro-dollar pair to demonstrate a more or less clear correction: the price again approached the boundaries of the 14th figure. The single currency has also found a reason for its growth: an epic with the problem of the Italian budget could end tomorrow. According to the European press, the European Commission will announce its verdict on Wednesday. If the parties still come to a compromise, the euro will receive a strong enough support, since this issue has kept traders in suspense since the beginning of autumn.

    In addition, against the background of an empty economic calendar, a report from the IFO was published today: on the one hand, the indicators came out worse than the forecast values, but, on the other hand, the comments to the report offset the negative effect. According to experts of the research institute, although the German economy is slowing, it does not show signs of recession. This is a very weak reason for optimism, but against the backdrop of a weakening dollar, it was the impetus for a small increase in EUR/USD.

    From a technical point of view, the situation is as follows. On the four-hour chart, the pair reached the upper line of the Bollinger Bands indicator (1,1401), but failed to break it, so it retreated by several dozen points. Despite an unsuccessful assault attempt, the price still remains within the short-term upward movement, as the Ichimoku Kinko Hyo indicator formed a bullish "Parade of lines" signal. The nearest target of the impulse is the 1,1401 mark, when overcoming which it will be possible to talk about the development of the upward movement (up to the 15th figure, that is, to the upper limit of the Kumo cloud on the daily chart). But this growth can only be due to the "dovish" results of tomorrow's Fed meeting.

    Analysis are provided by InstaForex

    Comment


    • Technical analysis: Intraday Level For EUR/USD for December 20, 2018

      Company does not offer investment advice and the analysis performed does not guarantee results

      When the European market opens, some economic data will be released such as Current Account. The US will also publish the economic data such as Natural Gas Storage, CB Leading Index m/m, Unemployment Claims, and Philly Fed Manufacturing Index, so amid the reports, the EUR/USD pair will move in a low to a medium volatility during this day.

      TODAY'S TECHNICAL LEVEL:

      Breakout BUY Level: 1.1440.
      Strong Resistance: 1.1433.
      Original Resistance: 1.1422.
      Inner Sell Area: 1.1411.
      Target Inner Area: 1.1384.
      Inner Buy Area: 1.1357.
      Original Support: 1.1346.
      Strong Support: 1.1335.
      Breakout SELL Level: 1.1328.

      Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors.The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

      Analysis are provided by InstaForex

      Comment


      • Technical analysis: Intraday level for USD/JPY for December 21, 2018

        Company does not offer investment advice and the analysis performed does not guarantee results

        In Asia, Japan will release the National Core CPI y/y and the US will also publish some economic data such as Revised UoM Inflation Expectations, Personal Income m/m, Revised UoM Consumer Sentiment, Personal Spending m/m, Core PCE Price Index m/m, Final GDP Price Index q/q, Durable Goods Orders m/m, Final GDP q/q, and Core Durable Goods Orders m/m. So there is a probability that the USD/JPY pair will move with a low to a medium volatility during this day.

        TODAY'S TECHNICAL LEVEL:
        Resistance. 3: 111.78.
        Resistance. 2: 111.56.
        Resistance. 1: 111.85.
        Support. 1: 111.07.
        Support. 2: 110.86.
        Support. 3: 110.64.

        Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

        News are provided by InstaForex

        Comment


        • Technical analysis: Intraday Level For EUR/USD for December 27, 2018

          When the European market opens, some economic data will be released such as ECB Economic Bulletin. The US will also publish the economic data such as New Home Sales, CB Consumer Confidence, HPI m/m, and Unemployment Claims, so amid the reports, the EUR/USD pair will move in a low to a medium volatility during this day.

          TODAY'S TECHNICAL LEVEL:
          Breakout BUY Level: 1.1425.
          Strong Resistance: 1.1418.
          Original Resistance: 1.1407.
          Inner Sell Area: 1.1396.
          Target Inner Area: 1.1369.
          Inner Buy Area: 1.1342.
          Original Support: 1.1331.
          Strong Support: 1.1320.
          Breakout SELL Level: 1.1313.

          Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

          *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

          Analysis are provided by InstaForex

          Comment


          • EUR/USD: US consumer confidence weakened the dollar

            The dollar index froze in flat today: on the one hand, the indicator was able to return to the area of 96 points, but on the other hand, further growth was questionable. The fundamental background for the US currency is quite controversial, so traders are in no hurry to open large positions - neither in favor of the greenback nor against it.

            Bulls of EUR/USD situationally took advantage of the situation, making up for yesterday's losses, however, the northern dynamics is also under a certain question. Throughout the trading day, traders stormed the 14th figure, but it is not yet possible to finally gain a foothold in this area. The European currency was not able to attract investors even against the background of the shaken demand for the dollar. As a result, the EUR/USD pair was also stuck in a flat, despite the predominantly bullish sentiment of investors.

            In general, the foreign exchange market today is balanced between two border states. In the morning, there was clearly a thirst for risk in the background of recent events. Traders "changed their anger to mercy" when the main indices of the US stock market showed rapid growth. News from China also encouraged the market, as the date of talks between Beijing and Washington became known: the American delegation will visit the Chinese capital in the second half of January. This fundamental picture has weakened the interest of traders in the dollar, which has recently enjoyed the status of a "defensive asset".

            In turn, this situation allowed the EUR/USD bulls to return the pair to the area of the 14th figure, although the northern dynamics of the price were under serious threat. The reason for this is the economic bulletin, which was published today by the ECB. The European equivalent of the "minutes" of the Federal Reserve rarely causes strong volatility in the market, but against the background of an almost empty economic calendar and low liquidity, today's release played a role for the euro.

            By and large, the published Bulletin in many respects duplicates the already voiced information from the last meeting on monetary policy. Today, traders did not see anything new in the report: according to members of the central bank, the eurozone economy still needs significant amounts of stimulation against the backdrop of increasing downward risks. The central bank expects to see further expansion of the economy, although the momentum of growth by the end of the year slowed noticeably. In addition, the regulator is quite pessimistic about the dynamics of the EU economic growth in 2019 against the background of the expected slowdown in the global economy.

            All these theses were almost literally voiced by Mario Draghi at the ECB's last meeting this year. However, he was more optimistic in his assessments, while the Bulletin compiled only negative factors. Therefore, among the experts today there is a fairly reasonable assumption that at the beginning of the year the European Central Bank will soften its rhetoric.

            In their opinion, the regulator will first of all change the wording regarding the approximate term of the rate increase. If at the moment the ECB plans to tighten the monetary policy "not earlier than autumn 2019", then in the text of the January or March accompanying statement of the wording may be subject to adjustment. The essence of the possible changes is obvious: the regulator will move the date of rate increase for an indefinite period, so that, on the one hand, not to entertain the market with unrealistic illusions, and on the other hand, not to drive itself into the framework of its own forecasts.

            In my opinion, these concerns are justified, but only if the key inflation indicators show a further decline in the first quarter of next year. That is, the ECB can adjust its position only at the March meeting, while the January meeting is likely to be "passing". Apparently, the market also came to the conclusion that it is too early to worry about this, so after a small southern pullback, the EUR/USD pair shot up, after all having overcome the price outpost of 1.1400.

            This price movement contributed to the US statistics. The consumer confidence indicator published today turned out to be much worse than forecast: with the forecast of 133.7, it came out at 128.1 - this is the weakest result since July of this year. The indicator has weakened quite sharply and unexpectedly, since over the past five months it has not decreased below the 130th mark.

            As you know, this index is a leading indicator of consumer spending, so traders returned to the problem of inflation growth in the United States. The market was again concerned about the pace of the rate hike next year – after all, according to some experts, the Fed may even pause the process of tightening monetary policy - or just raise the rate once at the December 2019 meeting. And although these arguments are also too generalized, the dollar was under quite strong pressure.

            Technically, the bulls of the EUR/USD pair still need to consolidate above the upper line of the Bollinger Bands indicator on the daily chart (1.1430) and the upper limit of the Kumo cloud (1.1515). Having overcome these price barriers, traders will indicate the priority of the northern movement. Until then, there is a risk of a downward rollback to the middle line of the Bollinger Bands, that is, to the level of 1.1360.

            *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

            Analysis are provided by InstaForex

            Comment


            • Trading plan for 02/01/2019

              The start of the new year brings a revival of trade, which for the currency market mainly means USD sales. EUR / USD and USD / JPY are gaining new levels closer to 1.15 and 109 respectively. More pressure concerns only AUD and NZD in the company of the stock market in Asia, where the pressure was created after disappointing data from China.

              On Wednesday, the 2nd of January, the event calendar is light in important data releases, but the global investors should keep an eye on PMI Manufacturing data from Germany, France, Spain, Italy, UK and the whole Eurozone being released early in the morning. During the US session, Canada and the US itself will publish their PMI Manufacturing data as well.

              EUR/USD analysis for 02/01/2018:

              China's December Caixin manufacturing PMI fell from 50.2 in November to 49.7, in line with the official manufacturing PMI, which fell from 50.0 to 49.4. Together with a fall in industrial profits of 1.8%YoY in November from +3.6%YoY in October, and softer retail sales growth (8.1% in November from 8.6% in October), the global investors have a clear indication that the economy is weakening.

              The Chinese HSBC Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy. Flash figures are released approximately 6 business days prior to the end of the month. Final figures overwrite the flash figures upon release and are in turn overwritten as the next Flash is available. The Chinese HSBC Manufacturing PMI is concluded from a monthly survey of about 430 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

              Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has broken through the local technical resistance zone located between the levels of 1.1442 - 1.1471 and made a new local high at 1.1495 on its way up. The zone between 1.1493 - 1.1499 is a resistance zone as well so the bulls might have some problems there, but the momentum is still strong and positive, which supports the short-term bullish outlook. In a case of a further rally, the next target for bulls is seen at the level of 1.1533 and 1.1550.

              Analysis are provided by InstaForex

              Comment


              • GBP/USD. And again Brexit: the pound fell into the zone of turbulence

                The situation in the foreign exchange market is changing rapidly: in the morning the pound-dollar pair showed a positive attitude, taking advantage of the weakness of the US currency – but in the second half of the day the British sharply fell throughout the market, testing the 25th figure paired with the greenback. It was followed by the euro, which was unable to hold local highs and hastily returned to December positions. After the New Year holidays, traders again remembered Brexit, the prospects of which are still very vague.

                The immediate reason for the price collapse of the GBP/USD was the message that Theresa May is holding an emergency meeting of the cabinet ministers today, on the agenda of which there will be only one issue – preparation for a "hard" Brexit. Traders reacted anxiously to this news, although, in my opinion, today's situation should be considered from a slightly different angle.

                The fact is that since the beginning of December, when Theresa May canceled the Brexit vote, the general mood among British parliamentarians has not changed. It would be possible to talk about any changes if Brussels went to a meeting and outlined the validity period of the backstop. But Europe refused, so the prime minister returned to London with nothing, refusing to even hold a press conference. May's behavior is quite understandable: after all, the Europeans not only refused her request, but even criticized her for the lack of structural elements. Brussels expressed bewilderment: what kind of "legal guarantees" can we talk about if the draft agreement already approved by the European Union and British ministers provides for consideration of this issue during the transition period?

                In other words, over the past three weeks, the situation has not changed, whereas after two weeks the British deputies must render their verdict to the proposed deal. Theresa May still needs to consolidate the votes of not only her fellow party members (117 of whom voted for her resignation), but also find 10 more votes outside the Conservative Party. The task, to put it mildly, is not easy, so the prime minister needs to act "decisively and convincingly."

                And apparently, May decided to play the "no alternative" card of the proposed agreement again. The previous attempt ended in failure: according to preliminary estimates, on the eve of December 11, the prime minister lacked a few dozen votes, which was the reason for the cancellation of the vote. Now the situation is somewhat different, so the prime minister will certainly try her luck again - especially since there are simply no other options.

                Let me remind you that since around the end of September, May has been actively focusing on the catastrophic consequences of chaotic Brexit, recalling that the proposed deal is a single alternative to this scenario. This position was repeated by the European Union: according to the European side, the members of the Alliance will under no circumstances reconsider any points of the agreement reached. Speaking with a "united front", Brussels and London tried to convince members of Parliament that they have little choice: either they vote for the deal (with all its shortcomings), or let the country "derail", allowing a chaotic scenario.

                But shortly before the key vote, the deputies began to discuss possible alternatives. Among them is the rejection of Brexit as such (the European court at the end of 2018 allowed such an option) or a new referendum. As a result, Theresa May's script has lost its trump card, which lay in the proverbial no alternative.

                Why does May again begin to escalate the situation, "scaring" politicians with hard Brexit? The fact is that in late December, the leader of the British opposition, Jeremy Corbyn, disappointed supporters of the second referendum with his unexpected statement. He said that his party supports Brexit, but at the same time the Labour Party will try to change the terms of the deal if they win the early elections in 2019 (if they are held, of course). Thus, the probability of holding a second referendum has largely decreased, since now only small parties defend this idea, which are unable to change the situation as a whole.

                Other proposed scenarios look too ephemeral to "compete" with the draft deal proposed by May. That is why in the coming days the situation will only escalate: supporters of the prime minister will, under any pretext, "scare" the public and politicians with catastrophic consequences of a hard Brexit. This strategy can persuade doubting MPs that a bad deal is better than a chaotic option – especially in the absence of clear alternatives.

                Traders of GBP/USD, in turn, will have to be patient: the pound reacts sharply to any comments or events related to the prospects of the "divorce process". Therefore, the period of "panic" will be perceived by the British quite painfully. At the moment, the pair is heading to the nearest, strongest support level of 1,2505 (the lower line of the Bollinger Bands on the daily chart), where a corrective pullback may follow.

                Analysis are provided by InstaForex

                Comment


                • [B]EUR/USD. Friday's Jackpot: Nonfarm and European inflation

                  The foreign exchange market is experiencing a period of increased volatility, showing strong price impulses. The dollar/yen pair has passed more than 400 points in the last day, the pound/dollar – almost 150, the "kiwi" and "loonie" – about 100. In all cases, the dollar for some time significantly strengthened its position, but then just as rapidly fell throughout the market. This difference in mood is due to the changeable fundamental background, which is clearly confusing traders.

                  The fact is that the dollar last year (especially in the second half of it) actively enjoyed the status of a defensive instrument – even the negative events in the United States increased the demand for the greenback. The US currency had a powerful trump card in the form of the hawkish policy of the Fed, especially against the background of the uncertainty of the rest of the central banks of the leading countries of the world. Now the situation has changed somewhat: the problems in the US are still growing like a snowball, but the position of the Federal Reserve has softened significantly. The results of the December Fed meeting will "chase" the dollar for a long time, especially if the key US economic indicators show a decline in the first half of the year. Some representatives of the American regulator, who had recently voiced the "hawkish" position, added fuel to the fire. Now their rhetoric has changed significantly.

                  For example, the head of the Federal Reserve Bank of Dallas, Robert Kaplan, said today that the regulator should take a wait-and-see position for at least two quarters of 2019. The essence of his position boils down to the fact that the US-Chinese trade conflict has harmed not only the world economy and not only China – but also the United States. In view of this fact, he expects a slowdown in US GDP growth and inflation this year. The Fed, in his opinion, should react accordingly, so as not to aggravate the already precarious situation. Here it is worth recalling that in the autumn of last year Kaplan stated that 4 rounds of increase would follow to the neutral level of the rate (that is, the neutral level would be at the level of 3.25%). As we see, now his opinion has changed dramatically: now he stands for a six-month pause.

                  If the rest of the Fed members move to the "dovish" camp in the same way, the dollar finally loses its foothold. In this context, it is important to listen to Jerome Powell, who will speak at the economic conference tomorrow with his predecessors, Janet Yellen and Ben Bernanke. If the incumbent Fed chief also softens his rhetoric (or at least repeats the main points of the December meeting), the dollar index will continue its downward trend.

                  However, tomorrow is full of other events. First of all, we are talking about the Nonfarm, which can give an additional impetus to dollar pairs. According to preliminary estimates of experts, the number of people employed in the non-agricultural sector in December should increase by 180 thousand, while the unemployment rate will remain at the previous level of 3.7%. This is a good forecast, so if real numbers meet expectations, then the dollar will avoid another wave of sales.

                  But as shown today, experts can make a big mistake in their estimates: the American manufacturing index ISM, contrary to all forecasts, fell to the mark of 54.1 - this is the weakest result since September 2016. This unexpected result discouraged dollar bulls, after which the EUR/USD pair was able to return to the 14th figure for a short time. If tomorrow's Nonfarm will present a similar "surprise", then the market reaction will be more extensive.

                  Another important release on Friday is the dynamics of wages. The indicator of the average hourly wage in the USA has been fluctuating in the range of 0.1% to 0.3% (m/m) for a long time, although in annual terms the indicator has grown slightly (up to 3.1%). For EUR/USD bears, it is important that the indicator does not cross the zero line on a monthly basis and does not "dive" under the three percent mark in annual terms. This indicator is closely monitored by the Fed, so its negative dynamics will affect the position of the US currency.

                  Also, we should not forget that tomorrow the release of data on the growth of European inflation is expected. The consensus forecast suggests that the consumer price index will drop again - to 1.8%. Core inflation should remain at the same level - 1%. Any deviations from the forecast scenario will cause strong volatility - depending on the direction in which the pendulum will swing. The recovery of inflation indicators will inspire the bulls of the EUR/USD pair, as the chances of a rise in the ECB rate this year will increase. If the price pressure continues to weaken, the euro will be too vulnerable - even against the background of an uncertain greenback.

                  Analysis are provided by InstaForex

                  Comment


                  • Technical analysis for EUR/USD for January 10, 2019 EUR/USD has finally broken above and out of the trading range it has been in for the last two months. This is a bullish sign. We could see a pullback as a back test towards 1.1450-1.1480 but I remain bullish on EUR/USD looking for at least a move towards 1.17. Light blue dots - medium strength support Blue dots - maximum strength support Green line - trend line support Blue lines - extension targets EUR/USD after three attempts at 1.15, buyers have finally broken above it and closed above it as well. We were favoring the bullish scenario despite being in a neutral sideways trend, because of the warning we had seen by the Daily RSI bullish divergence. Our target is now at 1.17 and any move higher will increase the chances of a major low to be in place at 1.1215 and a new up trend to start. A daily close below 1.1435 is something bulls do not want to see. *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

                    Comment


                    • GBP/USD: do not succumb to the illusions of growth

                      The pound/dollar pair is now extremely unreliable in the context of any forecasts – and in the short term, and even more so in the long term. The general weakness of the US currency can create the illusion of the northern trend of GBP/USD, but in this case it is absolutely impossible to focus on the dynamics of the dollar. "Cable "for two and a half years is completely subject to Brexit, so the vector of price movement here depends only on the fate of the "divorce process".

                      However, sometimes emotional news related to the prospects of the Federal Reserve's monetary policy still drowns out Brexit. One of those rare occasions happened yesterday. The resonant statement of the head of the Federal Reserve of Atlanta that the regulator can hypothetically reduce the interest rate coincided with the failure of the British parliament to vote for Theresa May's government. The GBP/USD pair remained in its positions (showing even the northern dynamics) only at the expense of the dollar that had sharply fallen throughout the market.

                      Although in reality there are no reasons for optimism among bulls of the pair, and there was no. Although in reality there are no reasons for optimism among bulls of the pair, and there is no.

                      On the one hand, the amendments adopted yesterday by British MPs do not entail any serious consequences - at least for today. Members of the House of Commons have adopted amendments to the tax law, thereby limiting the powers of the Cabinet of Ministers in this area in the event of the development of a "hard" Brexit scenario. Now the Ministry of Finance will not be able to change the amount of taxes (thus offsetting the negative effect of "hard" Brexit), if this step is not approved by the deputies. According to legislators, this rule will prevent the country's chaotic exit from the EU: "Now Theresa May must by all means reach a compromise solution with the European Union and the British Parliament," said Labour leader Jeremy Corbyn.

                      The logic of this law is to "force negotiations": as many politicians believe, Theresa May has largely conceded to Brussels, and now "frightens" the Parliament by the lack of any alternative to the agreement reached. The above norm, in the opinion of the deputies, will incline the prime minister to additional negotiations with the EU.

                      British MPs adopted another rule and is very significant of character. Parliament ordered the government to prepare a new Brexit plan if the members of the House of Commons do not vote on January 15 for the proposed draft deal. Moreover, ministers are obliged to present a "plan B" within three days after the failed vote. 308 of the 618 deputies of the lower house of Parliament voted in favour of the proposal, while 297 opposed the idea.

                      It is not even the essence of the adopted bills that is important here (although their content also speaks volumes) - yesterday's voting showed a preliminary political alignment in the Parliament. And apparently, it is clearly not in favor of "soft" Brexit. The results of the vote suggest that the majority of deputies in the House of Commons are opposed to leaving the EU without an agreement – May's opponents are not only among Labour and other opposition parties, but also among "their" conservatives.

                      Thus, the British prime minister's "saving strategy" seems to be a fiasco. Let me remind you that the local press this week discussed a possible scenario in which the Parliament approves the deal, but only if Brussels provides additional guarantees regarding the duration of the special regime on the Northern Ireland border. As you can see, the Parliament decided to go its own way, playing ahead. In addition, representatives of the European side also hurried to assure their British colleagues that they will no longer discuss the terms of the deal – under any conditions.

                      What are the options then? According to the majority of experts, there are not so many of them, or to be more precise, only two: either the prime minister will postpone the vote again, as it was in December, or she will postpone the country's exit from the EU for an indefinite period, using the decision of the European Court of Justice, which at the end of last year clarified the provisions of the 50th article of the Treaty of Lisbon. Both options are negative for the British currency, despite the fact that they save from the "hard" Brexit. The market is quite exhausted by the two-year period of uncertainty, so the prolongation of this regime will be bad news for GBP/USD bulls.

                      That is why the northern dynamics of the pair now looks unreliable and unconvincing. Long positions on the pair are too risky, especially on the eve of January 15, when a key vote in the British Parliament is to be held. If Theresa May takes one of the two decisions listed above at the weekend, the pound may collapse on Monday for several figures, as it was in mid-December. It will be possible to speak about the confident growth of the "cable" only when the "soft" Brexit becomes a reality – that is, when it receives the approval of the British parliamentarians.

                      Analysis are provided by InstaForex

                      Comment


                      • Brexit: Scenarios of the movement of the British pound. May, Tusk and Juncker exchanged courtesies

                        The euro fell in the first half of the day to the area of a minimum amid weak industrial production data, indicating the likelihood of a slowdown in economic growth in 2018. A further bearish trend in the EUR/USD pair gets more real.

                        Eurozone

                        According to the report, industrial production in the eurozone in November last year declined more significantly than expected. As noted in Eurostat, industrial production in the euro area fell by 1.7% in November compared with October. This is the biggest drop since February 2016. Economists had expected a decline in production of 1.3%. Germany, where production fell by 1.9%, and Spain, where the decline was marked by 1.6%, were among the leaders in countries where production was falling the fastest.

                        Thus, the decline in industrial production in many European countries only confirms the weakening of the global economy.

                        This was noted in today's report of the Organization for Economic Cooperation and Development, which states that the growth rates of the United States and many other developed countries will continue to slow down this year. The only exception may be the Chinese economy, which shows signs of stabilization. But even here, a lot will depend on the trade agreement with the United States.

                        According to the data, the leading indicator for the US fell for the third month in a row, being at the level of 99.6 points. China's indicator rose to 98.9 points, indicating a less active slowdown in economic growth. The leading indicator of the eurozone is below the level of 100 points, indicating a continued slowdown in the pace of activity.

                        As for the technical picture of the EUR/USD pair, it remained unchanged compared with the morning forecast. Buyers of risky assets need to go back to the resistance level of 1.1490 since the future direction will depend on it. If this fails to be done, then it is likely that the bears will continue to push the euro down to the support of 1.1425 and 1.1370.

                        UK and Brexit

                        The British pound continues its growth, which, apparently, is still more speculative. Traders positively perceived the information that the Prime Minister of Great Britain today sent a letter to Tusk and Juncker, in which she confirmed her intentions to carry out the decision made during the referendum. However, despite this, May is concerned about the fate of the Brexit deal, which is under threat due to concerns over Northern Ireland. The Prime Minister of Great Britain assured that the EU's concerns about the threat of a rigid border are groundless and negotiations will continue immediately after the vote in the UK. The focus of these negotiations will be on technology that will give up the guarantee of the absence of a rigid border.

                        In turn, Juncker and Tusk responded to May in the same style, sending her a letter with assurances regarding the Brexit deal, but adding that they would not agree to anything that changes the agreement or does not correspond to it. Juncker also noted that the EU will quickly work on a trade agreement in order to avoid applying the guarantee of the absence of a rigid border in Ireland.

                        All of these suggest that if the deal with the EU in the framework of a vote does not receive the support of parliamentarians tomorrow, the British pound may remain in the side channel until a final decision is reached since there are a lot of future development scenarios. Starting from the postponement of the exit of the UK from the EU, ending with indiscriminate exit without the adoption and approval of the basic laws.

                        The prospect of complete abolition of Brexit also has a place to be that will support the British pound when information appears about the next referendum on this matter.

                        Analysis are provided by InstaForex

                        Comment


                        • EUR/USD. Spotlight on China and Brexit

                          The economic calendar of the foreign exchange market is nearly empty today. Nevertheless, the most important release of the day caused quite a strong resonance among traders. We are talking about the publication of data on the state of China's foreign trade.

                          The importance of this indicator is due to the general concern of investors about the slowdown in the world economy. Any facts that somehow confirm this concern have a strong impact on the dynamics of trading – both in the currency and stock market. Today's figures once again reminded the market of the consequences of the trade war, which is still ongoing, despite the intention of the parties to conclude a broad deal.

                          On the one hand, the surplus of Chinese foreign trade was at an impressive level – the December figure came out at 57.1 billion dollars, reaching a three-year high. Immediately after the publication, the market was optimistic about these figures. But the structure of this release is frankly disappointed, as the performance of imports and exports showed weak dynamics, continuing the trend of slowdown. Thus, according to China's General Administration of Customs, exports from the country (in dollar terms) fell by 4.4% year-on-year. Imports fell more significantly-immediately by 7.6% year-on-year. In other words, Chinese exports and imports in the last month of last year showed the sharpest decline in two years.

                          According to experts, the lion's share of Chinese imports is imported into the country not for final consumption, but for further production of goods. That is, a significant decrease in imports is a wake-up call, which indicates the upcoming slowdown in the Chinese economy as a whole. According to preliminary data, last year the Chinese economy grew by only 6.6% - this is the lowest rate in the last 19 years. Naturally, such weak results of the second world economy in nominal GDP will provoke a "domino effect". In particular, at the end of last year, the head of Apple sharply reduced the forecast for revenue for the first quarter of 2019 – by 8 percent, that is, from 91 to 84 billion dollars. It is noteworthy that Apple has revised downward quite a fresh forecast: the target of 91 billion was set just two months ago. According to Tim Cook, the negative dynamics associated with the slowdown of the Chinese economy and the "tough" policy of the Federal Reserve.

                          The situation with Apple is just one example, which is the most recent and revealing. If the economic momentum of the PRC continues to lose its strength, such situations will be repeated more often, not to mention the slowdown of the commodity market with all the ensuing consequences.

                          A broad trade deal between the US and China could change this state of affairs – at least in the long run. But the parties are in no hurry to disclose the details of the latest negotiations, although the officials promised to publish them "in the near future". More than a week has passed since then, but the cart is still there. The very fact of such silence suggests certain thoughts, the essence of which is reduced to the presence of unresolved problems between Washington and Beijing. And although all this is still speculation, the overall situation in the market remains uncertain.

                          The EUR/USD pair also cannot determine the vector of its movement. The dollar index drifted at the base of 95 points, and the European currency is under pressure from the uncertain prospects of Brexit and negative data on the growth of industrial production in the eurozone. The indicator came out much worse than expected: year-on-year at – 3.3% (with a forecast of -2.2%), and month-on-month at –1.7% (with a growth forecast of 0.3%). In France, this figure subsided due to long-term protests of "yellow vests" in Germany – because of problems in the automotive industry, and a general decline in the entire industry was recorded in Italy.

                          Conflicting fundamental picture does not allow EURUSD to demonstrate a strong momentum, so traders have to bargain in a flat in anticipation of a strong infopovod. It is obvious that Brexit, or rather today's discussion of this issue in the British Parliament, will become such an occasion.

                          At the moment, it is known that the European Union has sent a written appeal to London, which assures the British that the subsequent negotiations in the transition period will avoid the use of the backstop mechanism. In the evening, during Theresa May's speech to the Parliament, we will learn the details of this letter, and so far the market is in limbo – and regarding the prospects of the "divorce process", and regarding the prospects of the US-Chinese trade conflict.

                          On the technical side, the EUR/USD bulls need to gain a foothold above 1.1530 to demonstrate their advantage. In this case, the Ichimoku Kinko Hyo indicator on the daily chart will form a bullish "Parade of lines" signal , increasing the probability of price growth to the borders of the 16th figure. If the general interest in the risk fades, the pair may already return to the average line of the Bollinger Bands indicator on D1, that is, to the level of 1.1410. A break of this level will send the pair to the lower boundary of the Kumo cloud, that is, to the level of 1.1350.

                          Analysis are provided by InstaForex

                          Comment


                          • EUR/USD: Italy, Draghi, Brexit

                            The foreign exchange market in anticipation of key events of today, month, and possibly - the year. The British Parliament will deliver its verdict on Brexit late tonight (and possibly late at night), so today's trading is cautious and quite volatile. In particular, at the beginning of the US session, the euro/dollar pair surprised traders with a downward impulse toward the founding of the 14th figure. Considering the fact that the pound was relatively calm at the same time, it was possible to conclude that Brexit had nothing to do with it.

                            Later it became known that the single currency reacted so keenly to the statements of the Italian prime minister, who criticized the European Central Bank. Italy again reminded of itself, although traders turned over this Chapter at the end of last year, when Rome and Brussels agreed on a budget, thus preventing a disciplinary procedure. However, now conflict situations have arisen in a somewhat different plane. The fact is that the ECB is seriously concerned about the state of the Italian banking sector, especially after a number of recent events. I recall that in early January, the European regulator took control of the tenth largest bank in Italy, Banca Carige. The European Central Bank has appointed three temporary administrators and a supervisory committee, thereby replacing the bank's board of directors.

                            And here it is worth noting that Banca Carige is one of the most troubled Italian banks, which was provided with assistance in the amount of 320 million euros from the Italian Interbank Fund last fall. But because of the frankly inept management and the conflict of shareholders, the bank failed to restructure and get rid of "bad" debts. The Fitch rating agency, in turn, lowered the bank's credit rating to CCC + with a negative outlook, while warning that Carige could go bankrupt. As a result, the Italian National Commission on Companies and Stock Exchanges ceased trading in bank shares, as the board of directors wereunable to reach an agreement on raising capital. This was the last straw for the majority of the members of the Board of Carige, after which the leadership was transferred to the temporary administrators appointed by the European Central Bank. By the way, after that, both Italian and German government bonds collapsed, putting significant pressure on the euro.

                            The above situation did not remain without consequences. Two weeks later, that is, today, the ECB demanded that Italian banks prepare reserves to cover the so-called "bad loans" for seven years. Italy's Vice Prime Minister Silvio Matteo "with hostility" took this demand, calling it "irresponsible." In his opinion, the European regulator demonstrates double standards and abuses its powers, using them for political purposes. He also noted that the central bank's intervention on banks which are "undesirable", can be an expensive cost for Italy- Matteo announced the amount of 15 billion euros. In addition, the Italian Deputy prime minister warned that the European regulator by its actions could provoke political and financial instability in the country.

                            Such harsh statements came as a complete surprise, so the single currency reacted accordingly. Mario Draghi, who spoke today in the European Parliament, added fuel to the fire. He said that the latest macroeconomic indicators turned out to be "much weaker" than forecasts, and this fact suggests that stimulating the economy through soft monetary policy is "still necessary."

                            He also said that the regulator will pursue an accommodation policy in the foreseeable future until inflation rises to the target level. Given the fact that inflation has recently shown only negative dynamics, it is not difficult to build an appropriate logical chain. In other words, the chances of an ECB rate hike within the current year are melting before our eyes, especially in the face of uncertain prospects for Brexit.

                            By the way, it was Brexit's question that put pressure on the pound and the dollar in the second half of today: and the closer the time to "X hour", the more volatility is expected in the market, and for no apparent reason. For example, the dollar index fluctuated without any enthusiasm throughout the day, but by the end of the day it soared up, although the producer price index in the United States and the Empire Manufacturing index were worse than expected (the last figure dropped to 1.5-year lows). The general nervousness of the market affects the dynamics of the US currency, although there are still no significant reasons for strengthening the greenback.

                            All this suggests that before a vote in the British Parliament, traders are best to take a wait-and-see attitude: events in London will have an impact not only on the pound or the euro, but also determine the mood of the entire foreign exchange market.

                            Analysis are provided by InstaForex

                            Comment


                            • GBP/USD. Results of the day. Cancel Brexit, Brexit transfer, new Brexit negotiations?

                              The amplitude of the last 5 days (high-low): 94p - 73p - 156p - 112p - 246p.

                              Average amplitude for the last 5 days: 136p (106p).

                              The British pound sterling on Wednesday, January 16th, is not moving. Traders, with such a feeling, do not know what to do next. On the one hand, yesterday, a fateful decision was made for Britain. On the other hand, the situation with Brexit did not become clearer. It only became clear that the UK is not exactly leaving the EU according to the Chequers plan. However, whether it will leave the European Union at all and under what conditions it is now is unknown. Today on the agenda in the British Parliament is the question of distrust of Theresa May, initiated by the leader of the main opposition party (Labour), Jeremy Corbyn. If the majority of deputies vote in favor, Theresa May will be dismissed. We believe that this is exactly what will happen. But again, it is not known how traders will react to this event. From our point of view, the resignation of Theresa May will give a chance for new negotiations with the EU, perhaps more productive and beneficial for the United Kingdom, as well as a chance for the country not to leave the EU at all. Thus, Theresa May's resignation could provoke ... the growth of the British currency. In any case, it is best to wait for the evening and find out how the debate in Parliament will end. Inflation, published today in the UK, did not cause any reaction from the market, as it corresponded to the predicted value - 2.1% y/y in December. In his speech today, the head of the Bank of England, Mark Carney, noted that the loss of Theresa May and the strengthening of the British pound means that markets believe in reducing the chances of a disorderly exit of the country from the EU.

                              Trading recommendations:

                              The GBP/USD currency pair remains in an upward trend on the eve of a new vote in the British Parliament. Once again, we do not recommend opening any positions in the current situation, as it is associated with increased risks. The pair can again be extremely volatile in the next few hours.

                              The same applies to sell orders. Any positions you can open, aware of the increased risks and always placing protective Stop Loss orders.

                              In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.

                              Explanation of illustration:
                              Ichimoku Indicator: Tenkan-sen-red line. Kijun-sen – blue line.
                              Senkou span a – light brown dotted line.
                              Senkou span B – light purple dotted line.
                              Chikou span – green line.
                              Bollinger Bands Indicator:
                              3 yellow lines.
                              MACD:
                              Red line and histogram with white bars in the indicator window.

                              Analysis are provided by InstaForex

                              Comment

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