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  • Technical analysis of GBP/USD for 03/07/2019:

    Technical Overview:
    The GBP/USD pair has broken below the 61% Fibonacci retracement located at the level of 1.2611 and is heading lower. The next technical support is seen at the level of 1.2559 and 1.2529. The key support is seen at the level of 1.2505 and if this level is violated the downtrend will accelerate. On the other hand, the nearest technical resistance is seen at the level of 1.2605.

    Weekly Pivot Points:
    WR3 - 1.2870
    WR2 - 1.2829
    WR1 - 1.2757
    Weekly Pivot - 1.2708
    WS1 - 1.2629
    WS2 - 1.2585
    WS1 - 1.2508

    Trading Recommendations:
    The best strategy for the current market conditions is to buy the corrections in anticipation of the uptrend to resume. This strategy is valid as long as the level of 1.2505 is clearly violated. The larget time frame trend is still down and the recent rally up is the first sign the trend might be reversing. The key long-term technical resistance is seen at the level of 1.2775 and only if this level is violated, there is a chance for the trend reversal.

    Analysis are provided by InstaForex

    Comment


    • AUD/USD: commodity market growth and the "hangover" of dollar bulls

      The Australian dollar continues to gain momentum: the AUD/USD pair confidently overcame the key mark of 0.7000 and consolidated in the middle of the 70th figure. For two days, the pair shows a nearly recoilless growth, returning lost positions. It is noteworthy that the aussie turned 180 degrees after the July meeting of the RBA, at which the regulator lowered the interest rate and allowed a further easing of monetary policy. Such an abnormal market reaction is primarily associated with the general weakening of the US currency. In addition, the aussie continues to receive support from domestic data and the commodity market - in particular, the cost of iron ore continues to stay above $100 per ton.

      And yet the main driving force behind the growth of AUD/USD is a weak greenback. After the unjustified euphoria, which was associated with the outcome of the G20 summit, a regular "hangover" gradually ensues, aggravated by loud statements by top White House officials. The essence of their comments comes down to the fact that, firstly, relief from Washington is more of a formal nature - for example, Chinese technology giant Huawei remains on the United States' blacklist, despite certain concessions processors).

      Secondly, the very fact of the truce is under a big question mark - after all, a non-aggression pact was concluded rather than an armistice agreement in Osaka. Today, the White House announced a meeting between US Trade Representative Robert Lighthizer and Chinese Deputy Prime Minister Liu He, which will clear the future prospects for the negotiation process. Washington did not say exactly when this meeting will take place, but noted that it will occur "in the near future."

      In general, the initial optimism of traders was replaced by concern and uncertainty that another attempt to find a compromise will be crowned with success. Similar doubts from investors have background pressure on the US dollar. To one degree or another, this also affects the US currency's postions in dollar pairs. Weak macroeconomic reports in the US only exacerbate the position of the greenback. The slowdown is demonstrated by both key and secondary economic indicators.

      Take, for example, the latest releases: an indicator of consumer confidence in the US, an indicator of growth in orders for durable goods, a report on the labor market from ADP, regional indicators of production activity — all of these indicators came out in the red zone, not reaching weak forecast levels. Almost every day, US statistics disappoint investors to some extent, and today is no exception. Thus, activity in the service sector slowed to 55.1 points - this is the weakest result since July 2017. The extremely low influx of new orders (this component of the indicator updated a 2.5-year low) caused a decline in employment in this area, having a mediated effect on the overall slowdown in the US labor market.

      Experts have previously warned that the service sector will begin to slow down after the manufacturing sector, and now, apparently, these predictions are beginning to materialize. By the way, the indicator of production orders published today came out at the lowest values since the summer of 2016. The indicator is actively decreasing for the second consecutive month, and the May indicator was revised downward (-1.2% instead of the previous -0.8%). This fundamental picture does not allow the dollar to develop to feel comfortable, even with continued demand. And together with the Australian dollar, the greenback is losing its position at the expense of the aussie's "independent" growth.

      The Australian dollar won back a decline in the interest rate by 0.25% and after the announcement of the expected decision, it began to recover throughout the market. Although Philip Lowe did not rule out further easing of monetary policy, the market focused on current events, pulling up the aussie. First, the strategically important raw material for Australia - iron ore - continues to grow. To date, the cost of a ton of this raw material is already $124 (for comparison, in April this figure was in the level of $80). Secondly, due to the growth in the value of exports of iron ore, Australia recorded a growth in the trade surplus by 16.2% to $4 billion in May compared with April. Judging by the price dynamics of iron ore, the June figures will exceed the May results. High demand for this type of raw materials from Chinese steel mills only confirms this assumption.

      Thus, despite the RBA's dovish position, AUD/USD buyers use the market's current situation to their advantage. Uncertain positions of the US currency against the background of a substantial growth in the commodity market makes it possible for the aussie to open new price horizons. The first resistance level is the mark 0.7060 - this is the upper line of the Bollinger Bands indicator on the daily chart. When it is overcome, the Ichimoku trend indicator will form a bullish "Parade of lines" signal, which will open the way for AUD/USD bulls to the next resistance level of 0.7180 (the top line of the Bollinger Bands indicator is already on the weekly chart). Support is the aussie's key for a 0.7000 mark.

      Analysis are provided by InstaForex

      Comment


      • EUR/USD. Calm before the storm: the market hid in anticipation of the Nonfarm report

        Today, the windless weather on the foreign exchange market: the European session was not rich in macroeconomic reports, and the US trading platforms are completely closed: Independence Day is celebrated in the United States. The nearly empty economic calendar allows you to take a wait-and-see position, especially on the eve of Friday's releases, which will certainly provoke strong volatility. It is noteworthy that on the eve of a "stormy Friday" the market ignored a rather alarming signal, which was voiced by US President Donald Trump. He again accused China and Europe of using currency manipulations, also complaining that Washington only obediently observes this process. The Chinese Foreign Ministry has already responded to this statement by Trump, publishing a concise refutation of the voiced accusations. Brussels ignored the words of the American president, although the reaction of Europe would hardly be different from the Chinese.

        On the one hand, the situation has exhausted itself - Donald Trump often voices his thoughts or complaints with the help of Twitter. On the other hand, the concern of the US president about this issue is alarming for some currency strategists (in particular, Bank of America), given Trump's ability to take unconventional steps in his policy. Therefore, after the head of the White House once again accused Europe and China of manipulating currency, experts began saying that the president could initiate the use of currency intervention in the coming months. Analysts estimate the likelihood of this scenario in different ways. But almost all of the economists surveyed by Bloomberg do not exclude such a scenario. Especially - if the Fed in July does not reduce the interest rate, and the ECB, in turn, will prepare the ground for the introduction of additional incentives in the autumn.

        As some currency strategists believe, the White House needs a substantial dollar drawdown across the entire market - by 10-20%. In the context of the euro-dollar pair, this means that the price should rise to levels five years ago, to the area of 1.31-1.37, up to level 40. Naturally, this will cause a domino effect - eurozone inflation is not the only thing that will suffer, but the entire EU economy as a whole, after which the ECB will resort to appropriate mitigation measures. But, as they say, "in war - as war": by launching a flywheel of currency manipulations, the White House will understand perfectly well that central banks of other countries will take a defensive position, devaluing their currencies.

        As you know, there are several types of interventions, among them sterilized and unsterilized. In the first version of the intervention, the New York Fed will acquire or sell securities on the open market, but will not interfere with monetary policy. Unsterilized intervention directly affects the money supply and rates. And if during sterilized currency intervention the value of the monetary base is maintained, in the second case, the intervention leads to a change in the monetary base. What kind of tool the White House will apply is an open question, and it has become increasingly discussed in the foreign exchange market. According to many analysts, Trump's rhetoric in this regard will only become tougher in the near future.

        But the traders actually ignored the important, in my opinion, signal from the US president. The market is focused on the upcoming events, namely the Nonfarm, which will be published tomorrow. According to preliminary forecasts, the growth rate of people employed in the non-agricultural sector will grow to "acceptable" values, that is, to 164 thousand. This is much less than the levels at which the indicator went out during the past year and the first quarter of the current year: the indicator practically did not fall below the 200 thousandth mark, and often exceeded the 300 thousandth level. But compared to May, when the number of employed has grown by only 74 thousand, this result will look quite good - but only if the real figures coincide with the predicted ones.

        Let me remind you that, according to the latest ADP report, the number of people employed in June increased by only 102 thousand. This report is the main guideline on the eve of the publication of official data. Given the relatively weak result from ADP, the June Nonfarm may also disappoint traders. In this case, the dollar is unlikely to be able to hold its position and weaken throughout the market. You should also pay attention to the indicator of the average hourly wage, which is an inflationary indicator. On a monthly basis, over the past three months, it has been at the same level - 0.2%. And on an annualized basis, the index in May is minimal, but unexpectedly dropped from 3.2% to 3.1%. In June, wages should demonstrate a positive trend - both in monthly and annual terms. If this forecast is not justified, the US currency will fall under additional pressure.

        In general, tomorrow's release either eliminates concerns about the aggressive easing of the monetary policy of the Fed, or, conversely, returns concern about this. In the second case, the EUR/USD pair will get another chance to gain a foothold in the 13th figure, breaking the resistance levels of 1.1305 (the Bollinger Bands average line on the daily chart) and 1.1340 (the Tenkan-sen line on the same timeframe). Otherwise, the bears will finally seize the initiative on the pair, up to the achievement in the medium term, up to the lower limit of the Kumo cloud on D1, that is, to the level of 1.1185.

        Analysis are provided by InstaForex

        Comment


        • EUR/USD. 5th of July. Results of the day. NonFarm Payrolls - the killer of European currencies

          4-hour timeframe

          The amplitude of the last 5 days (high-low): 42p - 90p - 47p - 44p - 22p.

          Average amplitude for the last 5 days: 49p (51p).

          The last trading day of the current week has passed with the US currency having full advantage. There was only one reason for this - the publication of the NonFarm Payrolls report for June. Analysts' forecasts predicted 162,000 new jobs outside the agricultural sector, but in reality there were 224,000. Such a strong excess of the real value over the forecast naturally provoked strong purchases of the US dollar and so the US currency rose by 60 points against the euro. Against the background of strong NonFarms, traders ignored unemployment in the United States, which rose to 3.7%, as well as weaker wage growth than originally estimated. However, the key question for the entire currency market now is: do strong NonFarm mean the end of a period of failed macroeconomic statistics in the US or is it just an accident? As we all see, the US dollar has almost completely offset all losses against the European currency, which suffered during the month when reports from the United States could not please even the most ardent optimists. Only 120 points are left to reach the year lows and such a resurrection of the US dollar occurred, by and large, without particularly strong support from the foundation. Now a new question arises: if the macroeconomic statistics ceases to disappoint, the Fed may not soften the monetary policy in 2019, respectively, the main advantage of the euro, which bulls of the euro/dollar pair could plummet into oblivion. What should the euro count on in this case? There is no answer to this question yet, but we state the fact: the US dollar is very close to "returning to the game" and in the near future it will be possible to state the resumption of a downward trend.

          Trading recommendations:

          The EUR/USD pair resumed its downward movement. Thus, it is now again recommended to sell the euro with the target of 1.1177. At the beginning of the new trading week, new levels of support and resistance will be formed.

          It is recommended that you buy the euro/dollar pair not earlier than when prices have consolidated above the Kijun-sen line. However, this will require a strong fundamental basis for the bulls.

          In addition to the technical picture should also take into account the fundamental data and the time of their release.

          Explanation of the illustration:
          Ichimoku indicator: Tenkan-sen - the red line.
          Kijun-sen - the 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 Indicator:
          Red line and histogram with white bars in the indicator window.

          Analysis are provided by InstaForex

          Comment


          • Technical analysis of GBP/USD for 09/07/2019:

            Technical Market Overview:
            The GBP/USD pair has broken through the technical support at the levels of 1.2559, 1.2529 and 1.2505 on its way down to the new swing low made at the level of 1.2476. As we can see the price is now out of the descending channel, which is a very bearish sign. There is a Pin Bar made at the new swing low at the level of 1.2476, but so far there is not much bullish pressure on the market and the bears are still in full control of the market. The nearest technical resistance is located at the level of 1.2559 and it might be tested soon due to the oversold market conditions.

            Weekly Pivot Points:
            WR3 - 1.2853
            WR2 - 1.2772
            WR1 - 1.2630
            Weekly Pivot - 1.2551
            WS1 - 1.2402
            WS2 - 1.2319
            WS3 - 1.2180

            Trading Recommendations:
            The best strategy for the current market conditions is to follow the larger timeframe trend. The larger time frame trend is still down and there are no signs of any trend reversal. The key long-term technical support is seen at the level of 1.2431 and the key long-term technical resistance is seen at the level of 1.2775 and only if this level is violated, there is a chance for the trend reversal.

            Analysis are provided by InstaForex

            Comment


            • Forecast for USD/JPY on July 10, 2019

              USD/JPY
              Yesterday and today, the price is testing the strength of the resistance of the embedded line of the price channel at around 109.00. As we expected, the reversal of the signal line of the Marlin oscillator from the border with the territory of the decline on the daily chart took place. Now, the pair USD/JPY needs to overcome this resistance to pass only 25 points to the next resistance on the daily chart – the MACD line, which is an indicator of the current trend.

              As seen on the four-hour chart, the growth of the Marlin oscillator slowed down, the price may roll back from the current level. But the general upward trend remains stable – the price is above the balance line (red indicator) and the MACD line. The level of 108.20 in this case is not the goal of a possible correction, it marks the "last line of defense" of the bulls. With the departure of the price below this line, a deeper drop is possible.

              Analysis are provided by InstaForex

              Comment


              • EUR/USD. 1-0 in favor of the euro

                The US dollar did not rest long on its laurels: after Friday's take-off on strong Nonfarm, today it began to swoop down just as rapidly throughout the entire market. Contrary to the hopes of dollar bulls, the Federal Reserve chief did not revise his position on the prospects for monetary policy and in fact confirmed the previously announced intention to lower the interest rate at the July meeting. The tone of his rhetoric was quite categorical and key messages were not ambiguous. Powell made it clear that the Fed is ready to ease monetary policy, and will proceed to this step in the very near future.

                The key message of the Fed head is that the US economy is in a strong form, but assistance from the regulator is needed in order to maintain it - in the form of lower interest rates. Throughout his speech, he cited facts arguing this idea. In general, despite the fact that Powell has positively assessed the state of the US economy, he expressed serious concern about its prospects.

                The head of the US Federal Reserve noted that after the June Fed meeting (at which, in fact, the dovish intentions of the regulator were announced), the overall uncertainty only increased. Powell actually offset the optimism of traders associated with the outcome of the US-China talks in Osaka. He said that a truce is certainly a positive signal, but in general the situation has not changed. Global trade conflicts, according to Powell, have slowed the economic momentum in many countries, and this fact has a negative effect on the US economy. A temporary truce, unfortunately, does not solve these problems. Denoting problems of a global nature, Powell also mentioned Brexit (which is likely to follow the "hard" scenario), as well as the issue of federal debt.

                As for internal problems, the key "headache" of the Fed is inflation. According to Jerome Powell, inflation continues to be weak, and this weakness may be more stable and systemic. It is worth recalling that during the first half of the year, the Fed chief assured investors that the slowdown in key inflation indicators is a temporary phenomenon, and that the situation will change for the better in the second half of the year. Now Powell is by no means certain of that.

                According to him, the latest indicators of wage growth are "very weak" for accelerating inflation (the June figures were in the red zone, not reaching the forecast values). Early inflation indicators suggest that inflationary pressure will remain muted this year. The latest published releases were really not in favor of the dollar. For example, the indicator of consumer confidence in Americans slumped to two-year lows, and the volume of orders for durable goods disappointed traders with negative dynamics. The indicator remained in the negative area (-1.3%), thus continuing the April trend. It is also worth noting the fall in business investment, the slowdown in global growth and the decline in investment in housing and manufacturing. I'm not even talking about the release of the consumer price index (general and pivotal), which also showed weak growth.

                In other words, Powell's dovish position looks quite justified. It even "got" to the US labor market, which showed growth last Friday. Powell stated a fact, but noted that for many residents of the United States, this growth was "uneven". He voiced the structure of Nonfarms, according to which Asians and whites found work more often, unlike African Americans and Latin Americans. Powell also assured Congress that the labor market is not "overheated", and therefore there is no need to restrain with high rates.

                Thus, Jerome Powell made it clear that the Fed will cut interest rates by 25 basis points at the end of this month. But the next steps of the regulator will depend on the incoming data, above all - inflation. The head of the Fed has mentioned that the real numbers may show a lower result relative to the preliminary forecasts of the regulator. In this case, he assured members of Congress that the Fed "will use all its means to keep economic growth and key indicators in the right path." In other words, inflation indicators will particularly strongly influence the dollar position - and in this context, tomorrow's release can cause increased volatility for the EUR/USD pair.

                We are talking about the publication of data on the growth of US inflation. The overall consumer price index should show a negative trend, dropping to 1.6% in annual terms and down to zero - on a monthly basis. Core inflation, excluding prices for food and energy, can demonstrate minimal growth in monthly terms (from 0.1% to 0.2%) and remain at the same level (2.0%) in annual terms. If the real numbers are below fairly weak forecast values, the dollar may again fall under the wave of sales.

                Tomorrow, Powell will continue his speech in the US Congress - this time in the Banking, Housing and Urban Affairs Committee. Today's round of "correspondence" has ended in favor of the euro. On Thursday, EUR/USD bulls can consolidate their results and enter the area of the 13th figure, hinting at the restoration of the upward trend.

                Analysis are provided by InstaForex

                Comment


                • EUR/USD: US inflation drowned out the upward impulse

                  Data on the growth of US inflation was very controversial. The general consumer price index showed mixed dynamics: on a monthly basis, it remained at the level of May (that is, at the level of 0.1%) with the forecast of decline to zero. In annual terms, the index came out in accordance with the forecast, being at the level of 1.6% (previous value - 1.8%). But core inflation has pleased investors with minimal growth. On a monthly and annual basis, CPI turned out to be better than forecast, coming out in the "green zone" (0.3 m/m and 2.1% y/y)

                  After the release of this report, the market hesitated for a while - on the one hand, the inflation rate was pleasantly surprising (especially the base one), on the other hand, the growth of the main indicators was minimal. But an hour later, the market decided that "the glass was half full" than vice versa, and so the US currency gradually began to restore its position. The dollar index moved away from lows of the day (and week), rising from 96.417 to the current value of 96.620. Although the growth of the greenback is not of a large scale, this situation indicates that the upward impulse of the EUR/USD pair is too unsteady and uncertain, and the dollar, in turn, retains the potential for further growth. After Powell's pessimistic comments and the release of the dovish Fed minutes, such dynamics from the greenback looks abnormal. But if we consider this situation in terms of market expectations, many things fall into place.

                  By and large, the Fed follows the expectations of the market, and to be more precise, it prepared the traders fairly smoothly and well in advance for their further steps. Representatives of the dovish wing of the Fed (James Bullard, Rafael Bostic, Lael Brainard) first spoke about the need to mitigate monetary policy. Then the likelihood of such a scenario did not exclude Jerome Powell, however, as a necessary (extreme) measure. Over the coming weeks, the Fed chief strengthened the dovish tone, allowing for a rate cut this year. In the end, at its June meeting, the Fed excluded from the text of the accompanying statement the phrase "showing patience" regarding the prospects for monetary policy, thus opening the door to the first rate cut. Thus, the probability of monetary policy easing gradually grew and reached almost 100% at the end of last month. Moreover, the market began to exaggerate information that the Fed would reduce the rate immediately by 50 basis points or start a rate reduction cycle (one decrease in July, one more in the fall). Against the background of such conversations, the dollar has noticeably weakened - in particular, the EUR/USD pair even tested the 14th figure for the first time since March of this year.

                  But strong Nonfarm weakened the fears of traders about an aggressive rate cut. At the same time, the likelihood of a July decline was still preserved. That is why the dollar relatively calmly survived Jerome Powell's unambiguously dovish report to Congress. Despite the clear hints of the Fed, the dollar just moved away from annual lows against the euro, but buyers could not even enter the area of the 13th figure. The thing is that the market was ready for the July rate cut - the only question was how aggressive the Fed's actions would be after this "preventive" step. In turn, today's data on inflation has suggested that the Fed will take a wait-and-see position following the decline in July.

                  In other words, the Fed has been preparing the markets for monetary policy easing for quite a long time. Therefore, the Fed chief's semi-annual report did not provoke a large-scale weakening of the dollar. If we talk about the EUR/USD pair, in this case, Powell only interrupted the downward trend and allowed the pair's bulls to go for a correction, the "ceiling" of which is 1,1300. This ceiling is not only due to the growth of core inflation in the United States.

                  The single currency is also under pressure from the fundamental background, primarily from the ECB. So, the minutes of the last meeting of the European regulator was released today, which demonstrated the dovish intentions of the ECB. In the opinion of the members of the Governing Council, the regulator needs to prepare for easing monetary policy in view of the reduction in inflation expectations. Almost all representatives of the ECB agreed that the central bank needed to change its position, demonstrating readiness for "retaliation". Arsenal of possible measures includes both the resumption of QE and lower interest rates. It is not known what algorithm of actions the regulator will choose for itself, but at the same time it is obvious that the ECB will take the path of easing monetary policy - just like the Fed.

                  This fact limits the potential correctional growth of the EUR/USD pair. The first resistance level is the mark of 1,1285 (the middle line of the Bollinger Bands indicator on the daily chart, which coincides with the Tenkan-sen line). Today, the pair has reached this level, but was unable to break through it, and after the publication of the US CPI, it retreated to the level of today's opening. Just above - at around 1.1300 - is the next resistance level, which corresponds to the Kijun-sen line. But if the demand for the dollar will increase (especially if tomorrow's producer price index will be released in the "green zone"), then the pair will most likely return to the base of the 12th figure, namely, to the support of 1.1205, which corresponds to the lower Kumo cloud on D1.

                  Analysis are provided by InstaForex

                  Comment


                  • Is gold going higher and higher and higher?

                    After many years of waiting, the hopes of investors who invest in gold were finally rewarded, as gold showed an impressive trend in the first half of 2019, which was caused by several reasons. Is it worth it to invest money in gold now and is it time to take profits to those who bought gold from the levels of $1,300, we will analyze in this article.

                    If we consider gold from the point of view of distant investment horizons, then investors should have no questions at all. Regardless of the behavior of gold in the derivatives market, it should be in the portfolio of each investor in a volume of up to 20% or more if the portfolio is denominated in reserve currencies. Even if gold falls short in price in the short term, it should be taken as the foundation of a house: you don't want to bury money in the ground, but you have to, because you need to build a house on stone and not on sand. Moreover, in the long run, gold is the most profitable asset in any currency.

                    Since 2001, gold has increased by five times in price against the dollar. The price of gold was $287 per troy ounce on September 11, 2001 but now gold is worth $1,415. Over the same period, investments in S&P 500 stocks, inflated from free money in the last ten years, have brought a yield of "just" 2.8 times the return - it was 1,050, it was 3,000. No one argues, 285% is good, but you have to agree that 500% is better, and if you take 2008-2009, then there were no questions at all as to where money should be invested - in gold or shares.

                    It seems to me that the best investment in order to save money for retirement or the education of children will be an investment in gold coins. Yes, there are periods of recession, but long-term gold is a very stable and profitable asset. Over a period of 20 years, gold gives an annual increase of 8% on invested capital.

                    Of course, it's easy to talk about a distance of two decades, it's more difficult to figure out shorter periods, but we'll try. If we talk about the current time, then, according to the World Gold Council, now the following factors influence the situation:

                    Financial market uncertainty and adaptive monetary policies are likely to support investment demand for gold; Price momentum and positioning can stimulate rallies and create kickbacks, as investors constantly revise their expectations based on new information; Weaker economic growth in the near term could soften consumer demand for gold, but structural economic reforms in India and China are likely to support long-term demand.

                    Regarding monetary policy easing, Federal Reserve Chairman Jerome Powell and the Open Market Committee now occupy a balanced policy and would rather prefer not to lower the rate at the next meeting, which will be held in late June. However, markets literally force the Fed to do this, suggesting a 100 percent likelihood of such a move. As the analysis conducted by the World Gold Council shows, the US Federal Open Market Committee conducted a rate change whenever more than 65% of traders expected such a move from it (Fig. 1).

                    Figure 1: Changes in the Fed's monetary policy in line with market expectations. Source: World Gold Council

                    Despite good inflation data (core inflation rose to 2.1% in June) and excellent unemployment data, the Fed is unlikely to decide to go against the will of the markets and leave the rate unchanged. In turn, the rate reduction is negative for the US dollar, which will lose 0.25% of potential, which is very likely to lead to a decrease in the dollar against a basket of major reserve currencies. At the same time, the US dollar has a 90 percent negative correlation with the US dollar. Earlier, in 2010 - 2015, gold significantly correlated with the yen, but later began to correlate with the euro and the dollar, in turn, the correlation with the yen had decreased.

                    Speaking about the factors that highly affect the price of gold, it is necessary to note the demand of exchange-traded funds - ETF - and the positioning of Money Manager speculators in the futures market. They are the main buyers of gold, and it is the influx of money to the derivatives market that determines the medium and short-term price dynamics. By volume, the COMEX-CME conglomerate is the largest exchange for trading gold and its derivatives, followed by London and Shanghai.

                    From June 1, Open Interest, which characterizes the influx of new money into the market, grew by more than a quarter and for the first time in history exceeded the level of 1 million contracts. However, in July, the process slowed down somewhat and has stabilized at this point. Some traders preferred to take profits, which resulted in a slight decrease in OI to 1.01 million. Speculators, after the explosive growth of May-June, also slightly reduced their long positions, which currently amount to 241 thousand contracts. At the same time, short positions of speculators remain at the lowest values of 24.3 thousand contracts (Fig. 2), which does not indicate their desire to sell gold against its trend. Therefore, wishing to open a short position in gold should not be smarter than the market. Traders need to be with the market, and if you call yourself a speculator, then you must act together with the Money Manager, and not against them.

                    Fig.2: Position of traders in the COT report. Source Commodity Futures Commission - CFTC

                    Based on the above factors, as well as technical analysis, it can be assumed that the range of 1380-1435, formed by the price of gold in the previous three weeks, is more likely a continuation figure than a reversal figure. In this case, in the event of growth, gold has every change to reach the level of $1500 and continue further upward movement.

                    However, if the Fed does not lower the rate, which is now highly unlikely, or Jerome Powell's comments on future monetary policy prospects will lead to an increase in the US dollar, there is some small chance that gold could fall to $1,375-$1,350. In this case, traders should remember that "Murphy's Law" says that if trouble can happen, it will happen, it will be realized on the markets with an enviable constancy. In this regard, no need to make exceptions to the rules of money management and open positions that you can not afford to lose.

                    Analysis are provided by InstaForex

                    Comment


                    • EUR/USD: potential decline to 1.1170 and a "powder keg" for dollar bulls

                      Bears of the EUR/USD pair managed to overcome the support level of 1.1230, which corresponded to the Kumo cloud boundaries on the daily chart, and then headed towards the 11th figure - or more precisely, to the next support level of 1.1170 (the bottom line of the Bollinger Bands indicator on D1). The overall market situation is unequivocally negative for the euro and fairly neutral for the dollar. However, today the US currency received support from retail sales in the US, while the single currency received another blow from the German statistics.

                      Thus, the euro was pressured by figures from the ZEW Institute. In particular, the sentiment index in the business environment of Germany dropped immediately to the level of -24.5 points - this is the most negative result since last November. Analysts expected a negative trend, but, according to their forecasts, the indicator should have dropped to -22.7 points. In Europe as a whole, this indicator also remained at semi-annual lows, having stood at -20.3 points. At the same level, the indicator was released last month. After the surge of optimism in April, when for the first time in 2 years, both in Germany and in the EU as a whole, they were above zero, this dynamic looks depressing, and this fact had a corresponding impact on the single currency. Judging by the rhetoric of members of the ECB, the central bank is ready to use its whole arsenal of available actions in the fall. In particular, we are talking about the bond purchasing program and reducing the interest rate. Not so long ago, the head of the ECB acknowledged that many of the early indicators warn of a worsening situation in the eurozone, so the risks for forecasts remain downward.

                      By the way, tomorrow's data on the growth of European inflation may put additional pressure on the euro if they are revised downward. We will know the final data for June. According to initial estimates, the overall consumer price index rose to 1.2%, while the core index rose to 1.1%. According to the general opinion of experts, core inflation will be subject to revision - the indicator can be reduced to 1%. In this case, bears of the EUR/USD pair will have another reason to sell the single currency, and the price will certainly be consolidated within the 11th figure.

                      Moreover, the greenback's growth is fueled by fairly good statistics from the United States. Today, dollar bulls have pleased retail sales. Contrary to negative forecasts, indicators of consumer activity have not decreased, but in fact remained at the level of the previous period. The overall figure, as well as the figure excluding car sales, grew in June by 0.4% (with a decline forecast to 0.1%). Excluding auto and fuel sales, the indicator has been growing for the second month in a row, reaching 0.7%. Against the background of the growth of key macroeconomic indicators (strong Nonfarm and positive dynamics of inflation), these figures have provided significant support to the dollar. I note that Jerome Powell, in the course of his speeches and without this release, stated the intensification of consumer activity. He associated the main risks for the Fed with other factors (first of all, we are talking about geopolitical risks and reducing the volume of business investments).

                      Nevertheless, today's release made it possible for dollar bulls to once again show character - in almost all pairs, the greenback strengthened their positions, and the EUR/USD pair was no exception. In general, the dollar is gradually gaining momentum throughout the market, and either Powell or Trump can hinder this process. Here it is necessary to emphasize the fact that the Fed's July interest rate cut is largely taken into account in prices, so any reminder about this on the part of the US central bank's members is quite calmly perceived by the market. Dollar bulls fear only aggressive rates of monetary policy easing - for example, a one-time cut in the rate by 50 basis points or the beginning of a decline cycle. The "precautionary" rate cut of 0.25% was largely played by the market, especially after the Fed head's dovish speech in Congress, during which he actually announced the relevant intentions of the regulator.

                      In my opinion, the greatest danger to the dollar is not the Fed, but Donald Trump, who repeatedly expressed outrage at the overvalued exchange rate of the national currency. According to Bloomberg, the US president has already instructed his advisers to develop a strategy to weaken the dollar. According to insider sources, Larry Kudlow, the chief economic adviser to the president, and Stephen Mnuchin, the minister of finance, opposed any US intervention to weaken the greenback. But according to Trump, an overly expensive dollar is almost the key obstacle to a country's economic growth. In turn, economic growth, according to the head of the White House, should provide him with a second presidential term. Here it is worth noting that the overwhelming majority of opinion polls are giving a definite advantage to former Vice-President Joe Biden. Even the Fox News channel, which clearly sympathizes with Trump, acknowledged this fact. According to their polls, Trump is almost 10% behind Biden.

                      Thus, good news for dollar bulls is that the greenback has acquired "immunity" regarding the Fed's stated intentions to cut the rate by 25 points (and more aggressive measures are unlikely to be applied). In addition, US statistics also provide background support for the dollar. The bad news is that Trump may initiate currency interventions, especially if the US currency continues to rise in price across the entire market. Taking into account such (possible) perspectives, dollar bulls sit on a "powder keg", which can jerk at any moment.

                      From a technical point of view, the EUR/USD pair has the potential to fall to the bottom line of the Bollinger Bands indicator on the daily chart, which corresponds to the mark of 1.1170. If the bears overcome this support level (which is unlikely within the next few days), the pair will head to the bottom of the 11th figure, that is, to the bottom line of the Bollinger Bands indicator on the weekly chart.

                      Analysis are provided by InstaForex

                      Comment


                      • AUD / USD vs USD / CAD vs NZD / USD vs #USDX. Comprehensive analysis of movement options from July 18, 2019. Analysis of APLs & ZUP

                        Minuette (H4)
                        Let us consider the comprehensive options for the development of the AUD / USD vs USD / CAD vs NZD / USD vs #USDX movement from July 18, 2019 in the Minuette operational scale (H4 time frame). ____________________
                        US Dollar Index
                        On July 18, 2019, the development of the movement of the dollar index #USDX will be determined by the direction of the range breakdown :
                        - resistance level of 97.50 (lower boundary of the ISL38.2 equilibrium zone of the Minuette operating scale fork);
                        - support level of 97.20 (1/2 Median Line channel of the Minuette operating scale).

                        The breakdown of the support level of 97.20 (1/2 Median Line Minuette) will cause the downward movement of the dollar index to continue to the targets - the initial SSL line (97.00) of the Minuette operational scale fork - the lower boundary of ISL38.2 (96.90) of the Minuette operational scale - local minimum 96.75 - and as an option - to reach the upper boundary of the 1/2 Median Line channel Minuette (96.20).

                        In case of the breakdown of the lower boundary of ISL38.2 Minuette (resistance level of 97.50), the development of the #USDX movement will continue in the equilibrium zone (97.50 - 97.63 - 97.80) of the Minuette operational scale, and if ISL61.8 Minuette (97.80) will be broken down, then it would be important to continue the upward movement of the dollar index to the final Schiff Line Minuette (98.00), with the prospect of reaching the final FSL Minuette line (98.35).

                        The details of the options for movement #USDX on July 18, 2019 are presented at the animated graphics.

                        Australian dollar vs US dollar
                        The development of the movement of the Australian dollar AUD / USD from July 18, 2019 will be determined by the working out and direction of the breakdown of the 1/2 Median Line channel borders (0.7000 - 0.7015 - 0.7040) of the Minuette operating scale.

                        The breakdown of the upper boundary of the 1/2 Median Line Minuette channel (resistance level of 0.7040) will determine the development of the AUD / USD movement in the equilibrium zone (0.7040 - 0.7060 - 0.7085) of the Minuette operating scale with the prospect of reaching the final Schiff Line Minuette (0.7100).

                        In case of breakdown of the lower boundary of the 1/2 Median Line channel ( support level of 0.7000), the operational scale of the Minuette operational scale fork will become topical for the Australian dollar to reach the 1/2 Median Line channel (0.6985 - 0.6965 - 0.6940) of the Minute operating scale with the possibility of updating the minimum of 0.6912.

                        The details of the options for the movement of AUD / USD from July 18, 2019 can be seen at the animated graphics.

                        New Zealand Dollar vs US Dollar The development of the movement of the New Zealand dollar NZD / USD from July 18, 2019 will be determined by the direction of the range breakdown :
                        - resistance level of 0.6725 (lower boundary of the ISL38.2 equilibrium zone of the Minuette operating scale fork);
                        - support level of 0.6710

                        The breakdown of the resistance level of 0.6725 (ISL38.2 Minuette) will confirm the development of the movement of the New Zealand dollar in the equilibrium zone (0.6725 - 0.6755 - 0.6785) of the Minuette operational scale fork with the possibility of reaching the final FSL line (0.6845) of the Minuette operational scale.

                        On the other hand, in the event of the breakdown of the support level of 0.6710, the movement of the NZD / USD will continue to the 1/2 Median Line channel (0.6710 - 0.6688 - 0.6666) Minuette operational scale fork with the possibility of the continuation of this movement (after the breakdown of the support level of 0.6666) is already in the zone of equilibrium (0.6688 - 0.6640 - 0.6595) Minuette operational scale fork.

                        The details of the options for the movement of NZD / USD from July 18, 2019 are presented at the animated graphics.

                        US Dollar vs Canadian dollar.
                        Range Breakdown Direction :
                        - resistance level of 1.3085 (the lower boundary of the 1/2 Median Line channel of the Minuette operational scale);
                        - support level of 1.3050 (boundary of the red zone of the Minuette operational scale fork); will begin to determine the development of the movement of the Canadian dollar USD / CAD from July 18, 2019.

                        After the support level of 1.3050 breaks down at the boundary of the Minuette operational scale fork, the development of the movement of the Canadian dollar will continue to the goals - local minimum 1.3017 - control line LTL (1.2985) of the Minuette operational scale - warning line LWL38.2 (1.2915) of the Minuette operational scale fork.

                        As a result of the breakdown of the resistance level of 1.3085, the development of the movement of the Canadian dollar will continue in the 1/2 Median Line Minuette channel (1.3085 - 1.3115 - 1.3140), and during the breakdown of the upper boundary (1.3140) of this channel, it will be possible to reach the boundaries of the equilibrium zone of USD / CAD (1.3165 - 1.3215 - 1.3260) Minuette operating scale.

                        The details of the options for the movement of USD / CAD from July 18, 2019 can be seen at the animated graphics.

                        The review was compiled without regard to the news background. The opening of trading sessions of the main financial centers does not serve as a guide to action (placing orders " sell " or " buy ").

                        The formula for calculating the dollar index is
                        USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

                        where power ratios correspond to the weights of currencies in the basket:
                        Euro - 57.6%;
                        Yen - 13.6%;
                        Pound sterling - 11.9%;
                        Canadian dollar - 9.1%;
                        Swedish krona - 4.2%;
                        Swiss franc - 3.6%.

                        The first coefficient in the formula gives the index value to 100 on the starting date - March 1973, when the main currencies began to be freely quoted relative to each other.

                        News are provided by InstaForex

                        Comment


                        • Forecast for USD / JPY pair on July 22, 2019

                          USD / JPY pair
                          The technical picture of our last review (July 18) was fully realized. The price worked out the range 107.35 / 87 indicated with a gray rectangle on the four-hour chart. The signal line of the Marlin oscillator on the same scale has once again touched the generator line of convergence. This creates a double convergence, after which it returned above the signal level 107.87.

                          On the daily chart, the departure of the signal line is under the border with the territory of decline. Also, according to our forecast, it turned out to be false. At the moment, Marlin's daily is already in the growth zone. The price is higher than the indicator line of balance, which indicates a shift in the price balance to the upside over the past 90 days based on the calculations by the indicator. Its immediate goal is the area of the MACD line and the price channel line of 108.70. The price yield above the resistance opens up the prospect of growth to the upper line of the channel at 109.70.

                          *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


                          • Forecast for AUD / USD pair on July 23, 2019

                            AUD / USD pair
                            The Australian dollar is falling for the third day. we decided to update the price channels: the dark blue channel of the daily scale chart and the red channel of weekly. The convergence of the daily timeframe proved to be effective and the Marlin oscillator signal line clearly intends to move to the zone of decline. The immediate goal of the "Australian" is 0.6945, which averaged estimate of support for the price channel line and the MACD indicator line.

                            On the four-hour chart, the Marlin signal line after convergence is already in the zone of decline. The price went below the balance line and MACD this morning. We are waiting for the price in the area of the specified goal at 0.6945.

                            *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

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