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GBP/USD forecast: Can the pair bounce back to 1.40
GBP/USD forecast: Can the pair bounce back to 1.40 The British pound (GBP) to the US dollar (USD) fell sharply when the pandemic broke out, reaching a low of 1.1400 in mid-March 2020. The currency pair recovered and grew steadily during the rest of 2020 and in 2021, reaching a three-year high of 1.4215 last May.But the pair could not keep the profit and has been declining since then.This article discusses the key drivers of the pair and the latest forecasts of analysts for the GBP/USD pair.The recovery of the UK economy, although strong, is not enough to raise the pound sterlingThe pound had an optimistic start to the year: the country's economy grew thanks to a well-thought-out vaccination program against COVID-19 in the UK.Optimism about the UK economy grew even during the first three months of 2021, when restrictions were in effect in the UK.In the period from January to March, the UK economy performed better than economists and the Bank of England expected. UK GDP declined by 1.6% on a quarterly basis, while in February the Bank of England expected a reduction of 4%.The resumption of the economy in the second quarter provided an acceleration of growth. According to the Office for National Statistics, GDP grew by 4.8% in the period from April to June. This is a solid figure that shows that the UK economy is on the mend. Nevertheless, it was slightly below the level of 5%, which the head of the Bank of England, Andrew Bailey, spoke about on August 4 at the last meeting of the Bank of England. As a result of these figures, the pound fell.Thanks to the rapid vaccination program, the UK economic recovery was gaining momentum. But since mid-June, the number of COVID-19 infections has started to rise again, as a more contagious variant of the coronavirus, the Delta strain, has spread rapidly across the country. Despite the fact that there were no new lockdowns in the UK, many enterprises faced staffing problems due to the huge number of people who were told to self-isolate by the national health system application.Concerns about the prospects for the UK economy have recently affected the demand for the pound. But it is worth noting that these fears could be exaggerated, because retail sales grew at the fastest pace in seven years. But the PMI data fell more than expected, from 62.4 in June to 59.6 in July, the lowest value since March.UK inflation continues to riseInflation in the UK is also rising. The combination of rising material costs and fuel prices, as well as a shortage of labor, led to an increase in consumer prices. In June, the consumer price index rose to 2.5%. But in July, this indicator fell more than expected, to 2%. However, the Bank of England still expects inflation to rise to 4% by the end of the year, so some analysts believe that an increase in interest rates may occur sooner rather than later.Ian Stewart, chief economist at Deloitte, said: "If there is not another serious wave of COVID-19 diseases in the winter, and the state of the economy is in line with the forecasts of the Bank of England, then the first rate hike is likely to occur in the spring or early summer of next year."Other analysts believe that the Bank of England may start raising interest rates at the end of 2022. A Reuters poll shows that economists generally expect the central bank to start raising rates in 2023.In general, the UK economy has recovered confidently from the pandemic, and the growth rate remains high, even despite its slight slowdown. But the recovery in the UK was less impressive than in the US, which to some extent explains the weakness of the GBP/USD.The issue of tightening the Fed's monetary policy contributes to the growth of the US dollarThe US also benefited from a strong vaccination program, loosening of isolation bans and strong economic growth in the first half of 2021. Inflation was a particularly hot topic. Consumer prices rose to 5.4% in June, which is higher than in the UK.While the Federal Reserve (Fed) insisted that the increase in inflation was temporary, the US central bank made an unexpected hawkish turn, and this move suggests that two interest rate hikes can be expected as early as 2023, and not in 2024, as previously expected.This is a key moment for the GBP/USD pair, when the pair began a downtrend in mid-June.The market is watching the Fed for clues about the timing of measures to reduce monetary policy.The latest minutes of the Federal Open Market Committee (FOMC) showed that the Fed is increasingly agreeing with the idea of tightening monetary policy, and the bond purchase program may be reduced before the end of the year, which supports the US dollar.Now all attention is focused on the symposium in Jackson Hole, which will be held this week. Federal Reserve Chairman Jerome Powell may give further guidance on the timing of the Fed's next step to reduce bond purchases. But the fact that the Economic Forum was transformed into an online event at the last minute hints at further actions. Due to the increase in the number of cases of COVID, the Fed may exercise caution and wait for additional data to appear in the fall. As a result, the GBP/USD pair has grown in recent trading sessions, returning to 1.3700.GBP/USD: prospectsThe GBP/USD exchange rate started this year at 1.3500, rising to a maximum of 1.4215 at the end of May. Since then, the pair has been trending downward, reaching a five-month low of 1.3560 in July.The pair is currently trading below its 50 and 200-day simple Moving Averages (SMA) on the daily chart. The price fluctuates below the multi-month descending trend line. And this is an already formed bearish trend. The Relative Strength Index (RSI), which measures the oversold or overbought nature of an asset, gives mixed signals. He is still in bear territory.Sellers will need to break through the support at 1.3600, which is the minimum of August, and then 1.3560, the minimum of July. Such a move could open the way to the 200-week moving average of 1.3146.The prospects and trend of the GBP/USD pair largely depend on what will happen later this week at the symposium in Jackson Hole on the topic "Macroeconomic policy in an uneven economy". Federal Reserve Chairman Jerome Powell will deliver a speech on Friday.Some analysts expect that Powell will not give specifics about the time of reducing bond purchases in order to maintain flexibility. This can help reduce the demand for the dollar and raise the pound against the US dollar.Ian Lyngen and Benjamin Jeffrey of BMO Capital Markets said: "Investors are waiting for any information about the timing of the Fed's taping announcement, although we suspect that the chairman will leave enough room for ambiguity to provide flexibility, as concerns about the latest wave of the pandemic grow."Patrick Reed, co-founder of Adamis Principle, a trading training consulting company, believes that the Fed will postpone action until next year. He said:"The pound (GBP/USD) is really at the mercy of the Fed and the new taping plan in the fourth quarter… I really think that the Fed will not act this Friday, because the impact of the "Delta" option is worse than the market thinks – from an economic point of view. But I believe that the tightening of monetary policy will occur in the first quarter of 2022, so the pound (GBP/USD) will fluctuate in the range between 1.3580 and 1.4240, and by the first quarter of 2022 it will fall to 1.31."Meanwhile, Goldman Sachs analysts have increased the probability of taping in November compared to December. The investment bank expects the Fed to reduce purchases by $15 billion at the November and subsequent meetings. Goldmans estimates the probability of an official announcement of taping in November at 45% compared to 25%, while reducing the probability of December to 35% from 55%.While the strengthening of the prospects for tightening monetary policy supports the higher value of the US dollar, the Goldman Sachs forecast for the GBP/USD pair indicates a weaker US dollar in the medium term. Analysts believe that the GBP/USD pair will trade at 1.41 in three months and 1.45 in six months. The key level will be 1.44.In his analysis of GBP/USD, David Madden, market analyst at Equiti Capital, also noted that the Fed's next move will be a key factor determining the dynamics of the currency pair:"The GBP/USD pair has been growing for the past 18 months, but recently it has pulled back a little amid talk that the Fed may reduce its bond-buying scheme at the end of this year.Despite the fact that the UK economic recovery has been impressive, the same is true in the US, and it seems that the Fed is ahead of the Bank of England on the path of tightening monetary policy. This may limit the bullish growth of the pound. By the end of the year, the GBP/USD pair may reach the level of 1.4500."As for the more distant future, the pair's prospects after 2021 remain optimistic. The Wallet Investor website says that the GBP/USD exchange rate will rise in the next 12 months. In its annual forecast for GBP/USD, the service indicates that the pair may close August 2021 at the level of 1.3872. The long-term five-year forecast for GBP/USD predicts that the exchange rate will continue to rise to 1.4850.
Aug 27, 2021 Read
EUR/USD forecast: dependence on the ECB, the Fed and the Delta strain
EUR/USD forecast: dependence on the ECB, the Fed and the Delta strain While the currencies of the US and the European Union are strong and stable, the US dollar is also well known as a safe haven currency.The dollar is moving back to expectations regarding market risk: it grows when risk appetites are low, and falls against the background of growing appetites.Both the US and the eurozone are among the three largest economies in the world, while Europe lags behind the US and China. According to Statista, the EUR/USD pair is included in the category of majors in the Forex market, and it became the most traded currency pair in the world in 2020 by a share of the total number of transactions.The current situation for EUR/USDThe European currency remains weak against its American rival, having fallen by 4.46% since the beginning of the year and is struggling to gain momentum. On January 6, the pair reached a one-year high at 1.23495, followed by a series of lower highs and lower lows, which led EUR/USD to fall to 1.17041 on March 31.The pair partially recovered its losses, and then, within three days after the US Federal Reserve meeting on June 15, fell by 2.18% to the next low of 1.18471. Since then, the EUR/USD rate has continued to decline, currently trading at 1.17383, the lowest level since April.EUR/USD Drivers: US Federal Reserve, ECB, Delta strainThe key factors influencing the dynamics of the EUR/USD pair are the actions of the US Federal Reserve System and the European Central Bank (ECB), as well as how these two central banks form monetary policy.When the global pandemic hit the global economy, both central banks tightened policy, cutting interest rates to record lows and increasing bond-buying programs to unprecedented amounts.However, as US inflation rises, reaching a 13-year high of 5.4% in June and July, an interest rate hike may come sooner than expected. In June of this year, a dot chart of the US Federal Reserve showed that more members are now in favor of an interest rate increase by 2023 than previously expected, which led to a 1.96% increase in the US dollar index just three days after the release of this announcement.In addition to raising interest rates, there is a growing expectation that the Fed will begin to reduce its $120 billion bond-buying program. The recently published minutes of the Fed's July meeting showed that the US central bank may begin to wind down its monetary support as early as this year.But not all participants agree with the tightening of the policy. Some would prefer to slow down asset purchases "early next year" amid concerns about the labor market, which is still not reaching its pre-pandemic levels, and the rapidly spreading "Delta" option, which could " slow down the economic recovery."The curtailment of monetary stimulus may provoke a reluctance to take risks in the markets, as optimism is also strengthened thanks to the support of the Fed. Theoretically, the risk appetite will push the dollar up, because the US currency serves as a haven during market downturns, which, in turn, will push the EUR/USD down.After the publication of the Fed minutes, the dollar index rose to 93.729, the highest level since November last year. Problems related to the Delta strain can also support the dollar, as they strengthen the desire to abandon risk and help the dollar consolidate near the current year's maximum.ECB maintains blue positionOn the other side of the Atlantic, the European Central Bank's rhetoric was more dovish. In July, the bank updated its monetary policy recommendations, saying that an increase in interest rates should not be expected until the 2% inflation target is observed for a long period of time.The previous position was that an interest rate increase would be possible when "the forecast for inflation is reliably at a level close enough to 2%, although below it within the forecast horizon." Earlier this month, the bank also presented a new strategic review, in which the inflation target was changed from "below, but close to 2%" to "symmetrically 2%". This is the first change in strategy in almost two decades.During the press conference following the meeting, Christian Lagarde stressed that the September forecasts may be more indicative of the prospects. As in the case of its American counterpart, the ECB expressed concern about the Delta strain, emphasizing the uncertainty it carries.The reaction of EUR/USD to the ECB meeting was limited, the currency pair fell by 0.17% for the day.EUR/USD forecast: analysts' opinionsAccording to Ben Carter, an analyst of global capital markets at Validus Risk Management, the ECB's dovish rhetoric distinguishes it from the Fed and puts the European currency at a disadvantage compared to its American competitor."Due to numerous conversations that the Fed is starting to reduce purchases before the end of the year, the euro may struggle to gain any positions against the US dollar in the next few months, amid Christine Lagarde's comments that inflation has increased, but remains restrained," Carter said.Nevertheless, some analysts make positive forecasts for the EUR/USD pair and foresee a bullish price movement in the coming months, despite the overall strength of the US dollar, which may limit the upward movement of EUR/USD in the short term.On August 19, Rabobank analysts stressed that there are many factors that cause the desire to abandon risk, which contributes to the further growth of the US dollar. "In the G10 space, a lot of this is due to concerns about the Fed's taping," said Jane Foley of Rabobank."But we argue that there are other factors. The decrease in risk appetite is due to concerns about the Delta strain and, possibly, uncertainty about Afghanistan, " she added.Its forecast for EUR/USD for three to six months remains at the level of 1.1600.In a note to clients dated August 18, JP Morgan's global foreign exchange market research group lowered its forecasts for EUR/USD "due to the clearer prospects for monetary policy divergence by 1 cent in the future." The new target for the pair is 1.15 by mid-2022.EUR/USD: technical analysisAs the price recovers again from the lows around 1.1670, there is a consolidation above the 50-hour simple moving average (SMA). The 200-hour SMA is at 1.1730, which coincides with the consolidation area of the EUR/USD pair in the period from August 12 to 13. Important resistance levels are located around 1.1703 (August 19 high), 1.1730 (200-hour SMA), and 1.1754 (August 11 high).In a downtrend, support levels are set at 1.1665 (minimum on August 19), 1.1620 (minimum on September 25, 2020) and 1.1527 (minimum on September 10, 2020).
Aug 27, 2021 Read
Weekly forecast for EUR/USD: The Fed can no longer remain cautious
Weekly forecast for EUR/USD: The Fed can no longer remain cautious The EUR/USD pair ended the week with a modest increase, remaining below the level of 1.1800, not far from the low of 1.1705. The dominant bearish trend was interrupted on Wednesday after the release of US inflation data. The consumer price index was confirmed at 5.4% YoY, and the base indicator for the same period was lowered to 4.3%, as expected. The still-high numbers suggest that inflation may have peaked, and that the US Federal Reserve is right not to rush to reduce the pace of aid.Two bunnies of the FedThe producer price index in the country in the same month was 7.8% YoY compared to 7.3% earlier, which revived the tightening of speculation and stopped the fall of the dollar. Moreover, the number of weekly applications for unemployment fell to 375,000 in the first week of August after the impressive July report on the number of jobs in the non-agricultural sector. The US Federal Reserve system is trying to kill two birds with one stone: to achieve price stability and maximum sustainable employment.The central bank has tried to lower expectations for a reduction in monetary policy tightening, saying that rising inflation will rather be a temporary phenomenon, depending on moderate progress in the employment sector to maintain an ultra-loose monetary policy. Inflation may have finally peaked. This statement will either be confirmed or refuted by the figures of August. Meanwhile, the employment recovery is accelerating. The Fed will not be able to maintain its wait-and-see position if the August data turns out to be optimistic again.Europe's Bumpy RoadEuropean Central Bank remained silent for several weeks after European politicians promised to maintain a" constantly adaptive " monetary policy, as the pandemic could hinder the economic recovery.The ZEW survey showed that in August, the index of economic sentiment in Germany fell to 40.4 and to 42.7 in the European Union, which is much worse than expected. The consumer price index in Germany was confirmed at 3.8% YoY, and the wholesale price index rose by a modest 1.1% mom in July. The EU published data on industrial production for June, which unexpectedly fell by 0.3% mom. The positive aspect is that the trade balance of the European Union, seasonally adjusted, amounted to 12.4 billion euros.Summer depressionThere is a lull in the Forex market as a whole, as trading activity decreases in the summer. Low volatility is likely to continue in the coming days, while the macroeconomic calendar may present a number of surprises.On Friday, the US published a preliminary estimate of the August consumer sentiment index from the University of Michigan, which unexpectedly fell to 70.2, the lowest level in almost a decade, but this did not help the EUR/USD pair to grow.On Tuesday, the EU will publish data on gross domestic product for the 2nd quarter, and the US will publish data on retail sales for July, which, according to expectations, may decline by 0.2% mom. On Wednesday, the US Federal Reserve will publish the minutes of its last meeting.Technical forecast for the EUR/USD pairThe EUR/USD pair reached the bottom a couple of points above the March low of 1.1703, after which it rebounded slightly. On the weekly chart, the pair maintains a bearish position, and it needs to break below the 1.1700 price zone to confirm a sharper decline. At the specified time interval, the pair continues to develop below its 20-day simple moving average, which has partially lost its bearish strength. The longer moving averages converge around 1.1530, while technical indicators are heading down within negative levels, reflecting the dominance of bears.Technical data on the daily chart also shows that sellers retain control. The bearish 20-day simple moving average provides dynamic resistance at 1.1800, developing significantly below the longer ones that lack directional strength. The Momentum indicator remains below its midline, while the RSI is recovering from oversold values, which are currently around 45.A break below the level of 1.1700 may cause a downward movement to the area of 1.1600 / 40, and a further decline will open the way to 1.1520. Above 1.1800 there are resistance levels of 1.1840 and 1.1920, approaching the latter is likely to arouse interest from sellers.
Aug 16, 2021 Read
The most promising commodities in August: Gold, Dilver and Oil
The most promising commodities in August: Gold, Dilver and Oil What factors will determine the prices of promising exchange-traded goods in AugustIn August, the commodity market primarily depends on the policy of the American regulator. Against the background of the labor market recovery, the Fed representatives announced the possible curtailment of the quantitative easing program. This will inevitably affect the commodity market and cause the strengthening of the US currency, which in turn will lead to a decrease in prices for promising exchange-traded goods in August.ContentOil exchange rate forecastGold exchange rate forecastSilver exchange rate forecastOil exchange rate forecastThe main information guide determining the forecast of oil prices in August was a new report of the International Energy Agency. According to the organization, oil reserves in the OECD countries decreased by 50.3 million to 2.882 billion barrels in June, which indicates the recovery of the global economy and the activation of business activity. Moreover, the reserves were 66 million barrels less than the level recorded before the coronavirus pandemic in 2019. This directly indicates that the market is running out of fuel. And first of all, stocks are falling in countries such as the United States and Japan, and are growing in the European Union, which indicates a slower pace of recovery of the European economy.According to the agency, in 2021, the demand for oil will grow by another 5.3 million barrels to 96.2 million barrels per day, and in 2022 — by 3.2 million to 99.3 million barrels per day. These data already take into account the impact of the delta strain of coronavirus, which will be offset by the growing rates of vaccination in the world. As a result, in the third quarter of this year, the demand for oil will amount to 97.4 million barrels per day. This may force the participants of the OPEC+ deal to change its parameters and increase production faster than expected.Against this background, representatives of the US presidential administration unexpectedly announced negotiations with OPEC countries. According to the American side, it is necessary to increase the production quota, because the existing volumes are not enough to restore the world economy.As US President Joe Biden said, it is necessary to increase production and reduce prices for hydrocarbons. Most of all, the head of the United States is concerned about rising gasoline prices. At the same time, OPEC+ participants agreed to increase production by 400 thousand barrels from August 1, but, according to the White House, this is not enough. If the US position is heard by the participants of the OPEC+ agreement, we can expect a decline in oil prices.Gold exchange rate forecastThe key factor determining the cost of commodities in August is the growing dollar exchange rate, which has already managed to update the four-month high. So, on August 11, the DXY index, which reflects the dollar exchange rate against the six leading currencies, rose to 93.19 points, which is the maximum since April 1. As a result, the euro-dollar exchange rate fell by 0.12% to the March low.One of the reasons for the growth of the US currency, experts call the recovery of the labor market and the associated promises of the Federal Reserve to curtail the quantitative easing program in the near future. Moreover, against the background of accelerating inflation, the regulator may also raise interest rates, which will inevitably lead to an even greater strengthening of the US currency and a drop in prices for traded commodities.According to official data, 943 thousand new jobs appeared in the United States in July, while analysts predicted 870 thousand. As a result, more and more experts are talking about tightening monetary policy as a real prospect. For example, the head of the Federal Reserve Bank of Atlanta, Rafael Bostic, made a statement that if employment continues to grow for several more months, the Federal Reserve will have to curtail the asset purchase program. It is expected that the regulator may make such a statement as early as September of this year, and from the end of the year it will begin to gradually curtail the quantitative easing program in order not to bring down the market at the same time.Another significant factor determining the forecast of gold prices is the growth of inflation. In July, the consumer price index increased by 5.4% year - on-year and by 0.5% compared to June. At the same time, the base index, which does not include food and fuel prices, increased by 4.3% in annual terms, although analysts had expected 4.4%. Thus, we can talk about a slowdown in inflation.Against this background, gold quotes went down. On the New York Mercantile Exchange, gold futures fell by 0.07% to $1,752. 15 per troy ounce on August 11. At the same time, the "yellow" metal would have gone even lower, but it found support at the level of $1677.9. In turn, the resistance level is $1807, which makes the prospect of restoring the gold exchange rate to a symbolic $2000 even more remote.Silver exchange rate forecastAgainst the background of the strengthening of the US dollar, the forecast for silver prices is also declining. Literally in one day on August 11, the metal exchange rate collapsed by 2.11% to $23.82 per ounce. As a result, the quotes reached an eight-month low. Moreover, during the day, the price of silver fell by 11%, which indicates a sharp activation of the "bears". Such a movement of the exchange rate occurred against the background of the absence of significant news that could affect the quotes.However, as analysts say, there have already been attempts to manipulate the exchange rate of precious metals on the market, but they could not contain the "bullish" trend. Moreover, in the long term, the value of silver shows an increase. In particular, two years ago it was at the level of $15 per ounce, and twenty years ago it was $5. Thus, investments in silver are justified in the long run.
Aug 12, 2021 Read
The XRP/USD exchange rate from August 2 to 8. Will Ripple be able to rise to $1
The XRP/USD exchange rate from August 2 to 8. Will Ripple be able to rise to $1 If the bulls hold the price above the breakout level for three days, the XRP/USD rate may start its way to $0.92 , and then to $1.09.In a lawsuit between the US Securities and Exchange Commission (SEC) and Ripple, US judge Sarah Netburn granted Ripple CEO Brad Garlinghouse access to records of his XRP transactions made on Binance Holdings. Ripple's lawyers want to use the records to prove that the sales of XRP by Garlinghouse "were mainly carried out on digital asset trading platforms outside the United States" and "do not fall under the law referred to by the SEC." Our traditional analysis of XRP/USD will show how a new round of confrontation will affect the cryptocurrency exchange rate.Last week, the bulls pushed the XRP/USD exchange rate above the 20-week exponential moving average (EMA), but the long wick on the candle indicates that the bears are selling at higher levels. The pair grew by 7.62% and reached $0.77531 by the end of last week.Buyers did not allow the price to stay below the 20-week EMA, according to the technical analysis of XRP/USD. If the bulls raise the price above $0.83704, the pair may rise to $1.09.Both moving averages are gradually tilting up, and the relative strength index (RSI) has risen into a positive zone. However, the bears can still lower the XRP/USD rate below the 20-week EMA. Such a move can lead to a decrease to the 50-week simple moving average (SMA).The moving averages have completed a bullish intersection, and the RSI is in a positive zone, which suggests an advantage for buyers. After consolidating between the 20-day EMA and $0.78 for several days, the bulls pushed the XRP/USD rate above the upper resistance on August 7.If the bulls hold the price above the breakout level for three days, the XRP/USD rate may start its way to $0.92, and then to $1.09.On the other hand, if the "bears" lower the price below the moving averages, it will mean that a break above $0.78 was a "bullish" trap. Then the XRP/USD rate may fall to $0.58, and then to $0.51.Recommendations for XRP for the current weekPrice analysis shows that the "bulls" have raised the price above the hard upper resistance at $0.78, and the indicators suggest that buyers are in control of the situation. If the bulls keep the price above $0.78, the XRP/USD rate may rise to $0.92, and then to $1.09.However, this assumption will be irrelevant if the price turns down and falls below the 50-day simple moving average.
Aug 10, 2021 Read
Forex Market Review for August 9 -13, 2021
Forex Market Review for August 9 -13, 2021 EURUSDThe euro collapsed on Friday's nonfarm, updating, moreover, the local minimum. It is very possible that the bears will be hindered by oversold conditions, as well as the appearance of divergences. But the advantage of the first move is now on the side of the sellers (see the red arrow).At the same time, it is also impossible to exclude the scenario of an upward reversal – the descending trend line is located too close, which, accordingly, can be relatively easily broken, which would cause a market reaction in the form of triggered bearish stops.But, even in the case of such a scenario (the black arrow on the chart), it is unlikely that the pair will be able to recover higher than the resistance of 1.1846-1.1879 in one week.Thus, the tactics of trading this week should be careful: confirmation of the decline can be used for calm work down, but at the first signs of a reversal, you will need to be ready to change your “plate”.GBPUSDThe British pound did not move down too far after it received a rebound down from the psychological resistance of 1.4000. It would have been possible to interpret this as a weakness of sellers, if not for Friday's fall on the American news.In this context, the descending wave looks like it has not realized its full potential. As soon as the quotes are fixed below the round level of 1.3900, we can expect a failure of another 100-140 points-first to the support in the zone of 1.3781-1.3795, and then to the demand area of 1.3668-1.3730.There is no serious alternative to such a plan yet, unless, of course, something extraordinary happens at a fundamental level.Thus, the optimal tactic here is to continue selling the pound in the expectation of working out to any of the above goals.USDJPYThe technical upward correction was slightly higher than we expected earlier. However, the growth that the pair experienced on Friday at the time of the publication of the NFP statistics by the States did not even break the downward structure.This preserves both the downward nature of the medium-term trend and the positional advantage of sellers, who can again attack the dollar in the direction of the support zone 109.173-109.427.This support zone looks very difficult, so it is still difficult to consider the breakdown below. In addition, with the development of a downward wave, we can get a slightly paradoxical inverse correlation with the euro-dollar, so we dare to bet on an upward rebound.Thus, the first half of the week we are working down to the support of 109.173-109.427. The second half we are buying off the pair in the expectation that the market will return to the psychological limit of 110.000, and higher - to the zone of 110.271-110.480.USDCHFThe upward correction of the pair is approaching a very strong confluence of levels – in the 0.9192-0.9221 zone, medium-term resistance and an inclined pivot will be tested, which has already twice provided a downward reversal of the market.From practice, it is in such zones that colossal limit bouncing volumes are placed, which will provide sellers with another rebound down. Plus, the bulls will probably not be too stubborn, having such a clear barrier in front of them, and will prefer to fix a profit (which, in fact, is equal to opening a reverse position).Candles for Friday and Monday look impressive, so it is psychologically difficult to bet on a downward turn. But, another scenario here can be considered only post-factum, when the bulls both break through the resistance of 0.9221, and gain a foothold above it. And this, most likely, is only a matter of next week (if at all it is real).Thus, in the horizon of the current week, we consider an increase in the area of 0.9200-0.9221, and a subsequent downward reversal. Accordingly, you can try to collect the remnants of the upward movement, and then immediately turn over into shorts, and keep them already "until victory” (or at least to the minimum logical goal in the support zone of 0.9074-0.9081).Based on the fact that there is an option to turn up, the risks should be limited to stop orders above 0.9230, which, in any case, will make the Risk ratio/The profit is acceptable.XAUUSDGold experienced a real cataclysm when, having opened Friday at the level of $ 1800 per ounce, it was already below the 1700.00 mark on Monday evening.By the evening of the first day of the week, the bulls won back about $25-30, which, most likely, was due to the fixation of a very good and fast profit by the sellers. The bearish structure of the market is now confirmed, and the presence of a new local minimum in it quite allows for corrections in the direction of the pivot zone 1759.04-1769.19 (red trajectory).But at any moment there may be a continuation of the fall, and this time, the quote will collapse already in the area of 1650.00 and 1600.00.Therefore, the tactics of working here are only sales, but you may need to be patient in order to get better entry points and not fall under unnecessary drawdowns. The optimal sale zone that is currently being viewed is PPZ 1759.04-1769.19.WTIOil has fully confirmed our scenario of a downward reversal through the "Head-and-Shoulders" pattern, which has been tracked in this branch for more than one week. The bears have very dynamically drawn the "right shoulder” and now the asset has slightly stopped falling in the zone of very strong support 64.289-65.068. In the event of a breakdown of this zone, the market will not have strong levels at a distance of almost $ 4 per barrel, therefore, in the medium and long term, we can expect the price in the zones 60.595-61.540 and the psychologically important round level 60.0000.As part of the correction, the quotes may well roll back to the area of 70.200-70.255, from where we would again expect fierce sales – the fall has just begun, and we have been preparing it for too long for the bulls to manage with the little blood that they have managed at this moment.Thus, as in the case of gold – only sales.
Aug 09, 2021 Read
EUR/USD forecast for the week 2-7 of August: can the reports change the rules of the game?
EUR/USD forecast for the week 2-7 of August: can the reports change the rules of the game? The US Federal Reserve disappointed the markets by not showing any desire to tighten monetary policy.The US economy is expected to add about 1 million jobs in July.The EUR/USD pair has recovered well, but the exchange rate change has not yet been confirmed.On the last trading day of the month, the EUR/USD pair reached new July highs, stopping just below the level of 1.1900. The pair has been growing since the beginning of the week, but gained momentum on Wednesday after the US Federal Reserve brought down the dollar.This is not the time to tighten upThe US central bank, as expected, left its monetary policy unchanged. At the same time, he noted that the economy continues to develop, although "significant further progress" in achieving the Fed's goal of stabilizing prices and maximum employment has not yet been achieved. "We haven't achieved that yet," Chairman Jerome Powell said in response to questions after his speech. Market participants were hoping to get some clues about how and when the US central bank will begin to reduce its bond-buying programs launched to support the economy during the pandemic.The Fed has actually created permanent repo mechanisms so that banks can exchange bonds for cash. Powell announced that they will prepare both domestic and international lending schemes. "These mechanisms in the financial markets will help support the effective implementation of monetary policy and the smooth functioning of the market," the statement said.The US currency fell after Powell's speech, as stocks rose. US indices held near record highs, as the US central bank is in no hurry to reduce financial support.The growth of the American economy has reached a plateauWeaker-than-expected US macroeconomic data compounded the dollar's weakness. The preliminary estimate of the gross domestic product for the second quarter showed that the economy grew at an annualized rate of 6.5%, which is lower than the expected 8.5%. GDP for the 1st quarter was revised downward to 6.3%. Orders for durable goods rose by a modest 0.8% in June, compared with the expected 2.1%, and the base indicator was 0.3%. The number of initial applications for unemployment benefits for the week ended July 23 amounted to 400 thousand, and the indicator for the previous week was revised upwards to 424 thousand. The US economic recovery has reached a plateau. The macroeconomic data confirmed this, the Fed had expected such a state in advance.At the same time, the EU economy is in the process of recovery. Germany has published preliminary data on July inflation: the consumer price index increased by 3.8% year-on-year. Growth in the country was moderate, as GDP in the second quarter was 1.5%, below the expected 2%. In the European Union as a whole, GDP for the same period increased from -0.3% in the first quarter to 2% on a quarterly basis. In addition, the unemployment rate in the EU fell to 7.7% in June from 8% a month earlier. Finally, the indicator of economic sentiment in the EU improved to 119.0 in July, exceeding the expected 118.5.The number of new cases of coronavirus infection in Europe and the United States is growing due to the rapid spread of the Delta strain. Vaccination has slowed down in the US, but the pace remains in the EU. Both there and there, about 50% of the population has been vaccinated with at least two doses. If the situation persists, the economic recovery will be under threat on both sides of the Atlantic.What's next in the economic calendarThe upcoming week will be busy, with an emphasis on US employment data. On Wednesday, the ADP survey on job creation in the private sector will be published in the United States, projected at the level of 600 thousand. On Thursday, figures on weekly applications for unemployment benefits and the number of jobs will be published ahead of the release of the report on the number of jobs in the non-agricultural sector on Friday. At the moment, analysts predict that 926 thousand new jobs were created in July. The monthly employment report can change the rules of the game if the number exceeds the threshold of 1 million.In addition to employment data, the official July ISM indices for manufacturing and services will also be released in America, and Markit will publish the final figures of the business activity index (PMI) for July.In Germany, data on retail sales for June will be released on Monday, for the European Union they will be released on Wednesday. Markit's Business Activity Indices (PMI) for July will be published on Monday and Wednesday. By the end of the week, Germany will publish figures on production orders for June and industrial production for the same period.EUR/USD forecastTechnically, a weekly recovery seems like a normal correction from a broader point of view. The pair continues to develop below the 61.8% pullback from the March-May rally, which is at the level of 1.1920. On the weekly chart, the 20-day simple moving average retains its bearish bias of about 50% of the pullback of the same rally, which is at 1.1985. Technical indicators remain inside negative levels, and momentum modestly recovers while the RSI is flat.On the daily chart, the pair shows a moderate positive picture, as it is growing above the flat 20-day simple moving average, currently providing dynamic support around 1.1820. Longer moving averages remain undirected near the 1.2000 zone, and technical indicators have recovered, although they have lost momentum near their midlines.In the near future, the already mentioned Fibonacci levels at 1.1920 and 1.1985 are the resistance levels. Support levels are at 1.1840, the minimum of the month at 1.1751 and, finally, at 1.1703, the minimum of March.
Aug 01, 2021 Read
Five important events to know about today, July 29, 2021
Five important events to know about today, July 29, 2021 The Fed is still waiting for the Robinhood IPO and other important events that affect the dynamics of assets in the financial markets.The end of support for the US economyUS central bank officials will soon be able to start reducing massive support for the US economy, although Federal Reserve Chairman Jerome Powell said there is still time. "We are not there yet. And we see that we have every reason to come to this, " he said at a press conference after the Federal Open Market Committee left interest rates in a range close to zero and supported the purchase of assets at the level of $ 120 billion per month. The yield on 10-year Treasury bonds initially rose as investors digested the somewhat hawkish tone of the statement, but declined during Jerome Powell's speech.IPO RobinhoodRobinhood Markets has priced its initial public offering at the lower end of the market range to raise $ 2.1 billion, a modest achievement of one of the most anticipated listings of 2021. This indicates that investors were in no hurry to buy Robinhood shares, as was the case with some of the hottest IPOs of the year. Robinhood became popular during the coronavirus pandemic, when people took up online trading to pass the time and earn money. The shares will start trading on the Nasdaq today.AstraZeneca is not to blameAccording to the study, the AstraZeneca Covid-19 vaccine does not increase the risk of a rare blood clotting disorder after the second dose is administered. According to data published in the medical journal The Lancet, the estimated incidence of the disease is about 2 people per million vaccinated. This is comparable to the figures found in the unvaccinated population. At the same time, the growing number of delta variant diseases continues to challenge various countries.TodayToday, the pharmaceutical company AstraZeneca, Credit Suisse and the brewing company AB Inbev report on profits. Also the French giant Carrefour.MSCI Emerging MarketsChina's crackdown on its technology and education sectors has helped push emerging market stocks to a 17-year relative low compared to their counterparts from developed countries. The MSCI Emerging Markets index, which accounts for more than a third of its weight in Chinese companies, fell into negative territory over the year, while the MSCI World index of developed market stocks rose by about 14%. Plus, vaccination rates in developing countries lag behind those in the United States and Europe. This leads to a multi-level recovery of the global economy, with the most developed countries coming to the fore, and emerging market countries falling further behind. The fact that China was outperforming in its economic recovery was an important factor for investing in emerging market stocks. But strict regulatory measures have had a negative impact on the country.  Therefore, the dissipating markets remained dependent on the deployment of vaccination and control over the spread of the coronavirus. Only favorable news will help to revive the interest of investors in this asset class.Here are the main movements in the financial markets todayStocksS&P 500 futures were almost unchanged. The S&P 500 index remained stable.Nasdaq 100 futures lost 0.2%. Nasdaq 100 rose 0.4%The Japanese Topix index rose by 0.4%Australia's S&P/ASX 200 index rose by 0.5%The Kospi index in South Korea was almost unchangedHong Kong's Hang Seng Index rose by 2.9%China's Shanghai Composite Index rose by 1.4%Euro Stoxx 50 futures fell by 0.1%CurrenciesThe Japanese yen rose 0.2% to 109.73 per dollar.The offshore yuan rose 0.2% to 6.4737 per dollar.The Bloomberg spot dollar index fell by 0.2%The euro exchange rate was at the level of 1.1858 USD.BondsThe yield on 10-year Treasury bonds was 1.24%.The yield on Australia's 10-year bonds was about 1.16%.CommoditiesWest Texas Intermediate crude oil rose by 0.6% to 72.80 USD per barrelGold fell by 0.6% to 1817.94 USD per ounce.
Jul 29, 2021 Read
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