Daily Market Analysis by ForexMart

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EUR/USD. May 27, 2021 | Dollar strengthened on positive macro data

The EUR/USD pair dropped below the level of 1.2200 and the bulls are unlikely to be able to return the euro to the area of ​​local highs in the near future. The current quote of the instrument is 1.2180.

Important macroeconomic statistics were not published yesterday, however, the dollar strengthened against the background of good yields on US government bonds, as well as due to general market neutrality. At the same time, the euro was pressured by data from the GfK company, according to which the leading consumer confidence index for June rose to -7 points from -8.6 points in May, worse than expected.

Today the focus of traders' attention is shifted to the USA, where the GDP data in the second estimate was published. The US economy expanded by 6.4% qoq, worse than expected. The initial level is also fixed at 6.4%. Data on the volume of orders for durable goods in April showed an increase of 1.0%, which turned out to be better than analysts' forecasts, who had expected an increase of 0.8% m/m.

Also today you should pay attention to the number of initial applications for unemployment benefits in the United States. The number of Americans who filed new applications for unemployment benefits last week fell more than expected – to 406 thousand. Analysts had expected 425 thousand applications. Taking into account these statistics, we can conclude that the US dollar will continue to strengthen and the pair quotes will return to the 1.2150 area.

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EUR/USD. May 28, 2021 | The dollar strengthens below 1.22

The main currency pair continues to trade below the 1.2200 level. The current quote for the pair is 1.2180.

The dollar was supported yesterday by macroeconomic statistics on the US labor market. According to the Ministry of Labor, the number of claims for unemployment benefits for the week was 406 thousand, reflecting a sharp decrease compared to last week at the level of 444 thousand. Analysts predicted the figure at the level of 425 thousand.

The second estimate of US GDP for the first quarter did not reflect changes compared to the initial estimate, confirming the economic growth of 6.4% qoq. Experts had expected growth to 6.5% q/q. The volume of orders for durable goods in the US in April fell by 1.3% m/m after an increase in March by 0.8% m/m and the forecast of an increase this time by the same 0.8% m/m.

The dynamics of the dollar is now mainly influenced by the position of the FRS. If the regulator continues to continue its stimulating policy, ignoring inflationary risks, the greenback has little chance of strengthening. US Treasury Chief Janet Yellen believes that annual inflation in the country will be high at least until the end of this year, and Yellen estimates the recent inflationary surge as a temporary phenomenon.

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European indices Stoxx Europe 600 and DAX on Friday updated records

The composite index of the largest enterprises in the region Stoxx Europe 600 increased by 0.57%, to a record 448.98 points. The German DAX climbed 0.74% and surpassed the 15,500 mark for the first time.

The French CAC 40 gained 0.75% and hit its highest level in 21 years.

The British FTSE 100 indicator rose 0.04%. Italy's FTSE MIB and Spain's IBEX 35 added 0.45% and 0.42%, respectively.

Global markets are being supported by signs that the US economic recovery from the COVID-19 pandemic is gaining momentum.

The data on the US labor market, released yesterday, showed a more significant than expected reduction in the number of applications for unemployment benefits in the country. The number of new applications last week decreased by 39 thousand, to 406 thousand, the lowest since the beginning of the coronavirus pandemic. Analysts on average expected the number of applications to decrease to 425 thousand.

The consensus forecast of experts provides for the growth of the PCE Core index in April by 2.9%, the highest since 1993.

Market participants are also watching talks in Washington on an infrastructure spending plan to further support the economy.

In the fourth quarter of last year, according to revised data, French GDP fell by 1.5%, not 1.4% as previously reported.

Shares in UK developer Vistry Group PLC jumped 4.3% in Friday trading, ranking among the top gainers among the Stoxx Europe 600 components.

Siemens AG, Europe's largest industrial conglomerate, rose 3.8%.

The leaders of the fall were the shares of the Spanish bank Banco de Sabadell SA, which lost 4.5%.

Antofagasta Plc, one of the world's largest copper producers, lost 2.2%.

[KostiaFM]

The dollar is waiting for specifics from the Fed

Fundamentally, the dollar looks weak. Arguments in favor of its further decline have been listed for several weeks. If last week a deeper sinking of the dollar did not take place, in particular, due to large placements of the US Treasury, then it is quite possible to fall to new lows this week. The next few sessions are exempted from bond placements.

It is worth noting that the marks of 89.00–90.0 points serve as a kind of support for the American currency index, which is quite efficient. Despite the increased pressure, the dollar does not fall below. Yes, the American dollar is weak, but in order to gain more arguments in favor of further weakening, you need to look around and carefully study what is happening. Not everything is so simple here, some statements of the FRS members caused some distortions in the markets. And yet, the US Central Bank in the near future may begin substantively talking about the beginning of the reduction of quantitative easing.

Real estate in the USA is becoming more expensive at alarming rates, which provokes comparison of the current situation with the period of 2006-2007. After the coronavirus crisis, it was not enough to get into a mortgage. At least some kind of reaction is now expected from the Fed.

Expectations of hints of at least some action support the dollar a little, at least they are able to keep it from falling deeper. At the same time, the technical picture in the dollar index on the weekly time frame indicates the possibility of a double bottom formation around 89.00 points.

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Euro and the US dollar continue to fight for control in the currency market

The race for leadership continues between the American and European currencies. The competition between these two currencies keeps the market in good form, heating up an already tense situation.

On the morning of June 2, the EUR/USD pair was sharply trading around the level of 1.2214, gradually rising from the previous close at 1.2211. But compared to June 1, the main currency pair loses noticeably, declining from the level of 1.2230. It can be noted that an important resistance level for the euro has formed near this level.

In order to strengthen the "bearish" sentiment and to break through the support level of 1.2212 and the mirror level of 1.2200, the EUR/USD pair will head to the levels of 1.2163, 1.2128, and 1.2102. In the other scenario, the instrument will remain within the price range of 1.2212-1.2232. It can be noted that the ANZ Research Bank's experts expect the pair to slowly increase to the level of 1,2300 in the second quarter of 2021, and to 1.2400 and to 1.2600, respectively in the third and fourth quarters.

However, the continuation of the growth may become more complicated amid the high probability of curtailing the Fed's stimulating policy. There are ongoing discussions about this in the market, but the implementation of these plans is still uncertain. The current situation keeps the US dollar in suspense, and its dynamics are far from stable. This week, the US dollar is trading near five-month lows, yielding not only to the Euro, but also to commodity currencies.

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AUD/USD: Does the Australian dollar need help to see further paths?

The Australian dollar remains relatively calm, being in the existing price range. However, experts warn traders against being too relaxed, believing that the currency can change direction at any time.

During the current week, the Australian dollar experienced a slight volatility. On Wednesday, June 2, the Australian dollar sank slightly, despite the positive macro statistics received from Australia. According to a report from the Australian Bureau of Statistics (ABS), in the first quarter of 2021, the country's GDP increased by 1.8%, and on an annualized basis – by 1.1%.

The current situation has had a positive impact on the dynamics of the Australian dollar. On the morning of Thursday, June 3, the AUD/USD pair was trading near 0.7724, trying to get higher. According to analysts, since the beginning of this year, the tandem has remained in a wide range – from 0.7600 to 0.7835. Over the past three weeks, it has narrowed to 0.7680 and 0.7815. According to experts, the AUD/USD pair lacks strong drivers for a further breakthrough. In the event of their appearance, the scale of the tandem can tilt either downward or go up.

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BTC reaches $38,100 after five days slump

On June 2, the crypto community froze in anticipation of the formation of the "death cross" figure on the horizontal charts of bitcoin. Despite the high probability of such a scenario, the market supported bitcoin. The indicators of the BTC/USD pair rose by 5% and reached $38,100 for the first time since May 28. Bitcoin has shown signs of life and encouraged the entire market, but it is still too early to talk about the beginning of an upward trend.

Despite the encouraging results and the almost complete exclusion of the possibility of retesting $30,000, bitcoin is in an unstable position. To consolidate the sudden success caused by the activity of the market, the indicators of the cryptocurrency need to overcome and gain a foothold above the $40,000 mark. Given the current dynamics of price changes (+0.5%) and the daily trading volume that has dropped to $33 billion, there is reason to believe that BTC is still at the consolidation stage. The asset continues to accumulate the volumes necessary for a successful assault of the $40,000 mark and is a little nervous around $39,000. At the same time, the sudden increase to $38,000 indicates an upward trend in market support. This may be a signal for the entry of more skeptical players, who will accelerate the accumulation of the necessary volumes to gain a foothold above the psychological mark.

As of 10:00 UTC, bitcoin quotes are in a safe corridor, and the asset is gaining momentum, as can be seen on the horizontal charts. It is likely that with the proper level of market support, the cryptocurrency will be able to reach $40,000 by the evening of June 3. The latest decline in bitcoin indicators occurred in the region of $38,900, but the coin almost immediately won back the fall and continued to grow. BTC quotes had problems reaching the $39,000 mark, where the coin collapsed on June 29. This threshold will be the last significant problem before the retest of the $40,000 mark. Given the growing interest in the first cryptocurrency, we can expect a successful breakout of the round mark in the upcoming test.

Ethereum and the Ripple token are able to provide a reverse service to bitcoin, increasing interest in the cryptocurrency market by accumulating their own reserves. This interaction between assets was made possible due to the significantly increased correlation between altcoins and bitcoin, which reached 60%-80%. At the same time, the positive news was not fully won back by the market, which may become an additional factor in the success of BTC. For example, it became known that Google will lift the ban on advertising cryptocurrency platforms and wallets in the United States. In addition, Messari analysts added a positive message to the market, who believe that the collapse of the crypto market and bitcoin is caused by excessive oversaturation and inadequate reactions of players to economic events, and not by the fundamental problems of the first cryptocurrency. The Chainalysis platform also confirmed that whales continue to actively increase their positions in bitcoin and have purchased from 70,000 to 120,000 bitcoins over the past days of the collapse. The growing confidence of investors, supported by positive announcements, can be a determining factor in the successful retest of bitcoin of the $40,000 mark.

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Euro has the potential to rise but it is not easy to reach

The Euro currency is trying to rise again, taking advantage of the weakening of the US currency. However, experts are worried that these efforts will end unsuccessfully.

Throughout the previous week, the euro was behind the dollar, which reacted sensitively to any nuances of the market. Such changes in the USD dynamics include the May report on US employment. It can be noted that the national currency started to slip after its publication, and the euro tried to take advantage of the situation, but it failed to noticeably rise. According to current macroeconomic data, the number of jobs outside of agriculture increased by 559 thousand last month in American, and the economy recorded an influx of workers. The improvement in the economic situation has been facilitated by health gains resulting from large-scale vaccination against COVID-19, and strong fiscal incentives. However, there is a question recently about their curtailment, which was raised by Fed representatives.

Economists believe that the euro's further dynamics will be influenced not only by the Fed's actions but also by the ECB's monetary policy strategy. They think that with the strengthening of the "hawkish" tone on the part of the regulator, the euro will start losing positions. If the representatives of the Governing Council of the ECB slow down the pace of buying up state bonds under the PEPP program, then the indicated currency will begin to decline.

The continuation of the current trend contributes to the growth of the EUR/USD pair. Its nearest target is the level of 1.2300. On the morning of, June 7, the main currency pair was trading near the 1.2163 mark, trying to reach 1.2200, but failed.

According to experts, the bullish mood in the EUR/USD pair may increase in the current situation, if a strong resistance level near the level of 1.2167 is broken. If so, the pair will open the way to the round level of 1.2200, and to 1.2212 and 1.2258 in the future. The next barrier for the EUR/USD pair will be the level of 1.2300, which can be reached anytime soon.

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Gold price rises, eagerly awaiting Thursday's news

On Tuesday, the value of the main precious metal shows an increase amid expectations by market participants for inflation data in the United States.

Thus, the price of August gold futures on the Comex New York Stock Exchange increased by 0.1% - up to $1900.7 per troy ounce. Meanwhile, the July contract for silver slipped 0.24% to $27.95 an ounce.

Until the end of this week, market participants will evaluate the statistics on inflation in America, which will appear on Thursday. Analysts predict that consumer prices in the United States rose 4.7% on an annualized basis in the past month, following a 4.2% rise in April.

Against the background of the inflationary issue, investors are even more worried about the fate of gold. It is obvious that the tightening of monetary policy by the US Federal system will stimulate the strengthening of the dollar. In turn, a strong dollar has traditionally been an overwhelming factor for the value of gold, making it less attractive to holders of alternative currencies.

As for the results of trading on Monday, gold futures reported growth against the background of the weakening of the US dollar.

Thus, the US national currency fell against most major currencies, while the ICE US dollar index sank 0.2%.

As a result, August gold futures increased by 0.4% - to $1,898.80 per ounce, July silver contracts also increased by 0.4% - to $28.02 per ounce, which was the highest since Wednesday.

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Simplified wave analysis and forecast for GBP/USD and AUD/USD on June 9

GBP/USD

Analysis:
The upward trend in the main pair of the British pound sets the direction of the trend since the spring of last year. A correction is formed in the wave structure. The price is located in the area of the intermediate resistance zone. The incomplete wave from May 10 has the form of a shifting plane. Its ascending section from June 4 has a reversal potential.

Forecast:
Today, the price of the pair expects a general lateral movement vector. After a likely attempt to put pressure on the resistance zone, you should wait for a reversal, and the price moves down to the lower border of the price corridor.

Potential reversal zones
Resistnce:
- 1.4200/1.4230
Support:
- 1.4100/1.4070

Recommendations:
Trading on the British pound market today is possible only in the framework of individual trading sessions with a reduced lot. Purchases of the pair are more promising.

AUD/USD

Analysis:
The chart has been dominated by bullish momentum since last year. Since February 25, the price has been forming a horizontal correction along the lower border of the strong resistance zone. The unfinished part of this wave has been reported since May 10. In its structure, the middle part is nearing completion.

Forecast:
In the first half of the day, you can expect a flat nature of the movement, with an upward vector. By the end of the day, in the area of the calculated resistance, there is a high probability of a reversal and the beginning of the price move down.

Potential reversal zones
Resistance:
- 0.7770/0.7800
Support:
- 0.7700/0.7600

Recommendations:
Trading on the Australian dollar market today can only be successful within the intraday. It is recommended to sell the instrument from the resistance zone.

[KostiaFM]

American stock market closed in the red

Food manufacturer Campbell Soup Co. in the 3rd quarter of 2021 fiscal years, which ended on May 2, reduced net profit and revenue, and also worsened the annual forecast. On this news, the company's share price fell 6.5%.

The world's largest express delivery service United Parcel Service said it expects to increase its annual revenues to $ 98-102 billion by 2023. Last year, UPS revenues were $ 84.6 billion. According to FactSet's forecast, in 2021 it will reach $ 93.68 billion. , in 2023 will reach $ 99.92 billion. Nevertheless, the company's shares fell by 4.2%.

Wendy's Co., the third largest fast food chain in the United States, plunged 12.7% after jumping nearly 30% a day earlier. Stifel analysts downgraded their recommendations to Hold from Buy.

Target Corp. lost 1.3% in a day, despite the fact that the retailer announced an increase in quarterly dividends by almost a third, to 90 cents per share.

Caterpillar, one of the world's leading manufacturers of road construction and mining equipment, also increased its quarterly dividend by 8% to $ 1.11 per share. However, the shares of this company also fell in price by the results of the session by 2.3%.

Regeneron Pharmaceuticals Inc. was the leader of the recovery among the companies whose stocks are included in the calculation of the S&P 500. (+ 3.1%), Fox Corp. (+ 2.9%), Biogen Inc. (+ 2.9%).

The most significant rise in quotations among the securities included in the Dow Jones was shown by Merck & Co. Inc. (+ 2.3%), Johnson & Johnson (+ 1.4%) and Amgen Inc. (+ 1.1%).

At the same time, the strongest decline in value was recorded in the securities of Travelers Cos. (-1.2%), American Express Co. (-1.5%) and JPMorgan Chase & Co. (-1.3%).

The US Federal Reserve has previously said inflationary pressures are temporary as the economy continues to recover from the crisis caused by the COVID-19 pandemic. However, the acceleration in the rate of rise in consumer prices is causing concern for analysts and traders.

As a result, the market continues to trade in a fairly narrow range in anticipation of inflation data, while the indices remain close to record levels.

[KostiaFM]

Simplified wave analysis and forecast for USD/JPY and AUD/USD on June 14

AUD/USD

Analysis:
A bullish trend dominates the Australian dollar major market. A correction has been developing along the lower border of the strong reversal zone since February. The unfinished section counts down from May 10. In the structure of this wave, the middle part is nearing completion in the form of shifting planes.

Forecast:
Today, the pair's price is expected to flat in the price corridor between the nearest counter zones. After an attempt to put pressure on the support, a reversal and an increase in the rate to the resistance area is likely.

Potential reversal zones
Resistance:
- 0.7750/0.7780
Support:
- 0.7690/0.7660

Recommendations:
Today, trading on the pair's market is only possible in separate sessions with a fractional lot. As a result, purchases of the pair are more promising.

USD/JPY

Analysis:
The ascending wave sets the direction of the short-term trend of the main pair of the Japanese yen from January 6. A stretched descending plane has been forming in its structure since the beginning of March. All price movements of the last two months do not go beyond this wave.

Forecast:
On the next day, the full completion of the upward movement vector, the formation of a reversal, and the beginning of the price move down are expected. The calculated support shows the lower limit of the expected daily course of the pair.

Potential reversal zones
Resistance:
- 109.80/110.10
Support:
- 109.30/109.00

Recommendations:
Trading the yen today is possible within the intraday, with a reduced lot. There are no conditions for purchases on the market. It is recommended to track sell signals in the area of the calculated resistance.

[KostiaFM]

Stock Asia is trading without a single dynamic

As a result of the next meeting of the leadership of the American Central Bank, in addition to the traditional statement on the rate and volume of asset redemption, economic forecasts will be published, as well as expectations regarding further dynamics of interest rates.

Experts believe that the Fed will not give signals about plans to gradually reduce the volume of redemption of bonds earlier than in August-September this year.

At the same time, a dot plot - that is, a chart that reflects the individual expectations of the Fed's Board of Governors and the heads of the Federal Reserve Banks regarding interest rates - could show that all 18 central bank leaders expect at least one rate hike in 2023.

According to Marcella Chow, global markets strategist at JPMorgan Asset Management, at some point ignoring inflation concerns will no longer convince investors, so the focus will be on what the Fed says about its expectations for economic growth, inflation and interest rates.

The Japanese Nikkei 225 Index climbed 1.01% by 8:37 GMT + 2.

Among the leaders of the increase in quotations are shares of Eisai Co. (+ 6.2%), NEC Corp. (+ 4.9%) and Taiyo Yuden Co. (+ 3.9%).

Market value of consumer electronics manufacturer Sony Group Corp. growing 1.4%, semiconductor manufacturer Advantest Corp. rises by 1.8%.

The leaders of the decline are J. Front Retailing Co. (-2.9%), Kajima Corp. (-2.6%) and IHI Corp. (-2.4%).

The price of securities investment and technology SoftBank Group Corp. fell 0.2%, Asia's largest apparel retailer Fast Retailing Co. decreased by 0.2%.

The Chinese Shanghai Composite Index dropped 0.75% by 8:42 GMT + 2, while Hong Kong's Hang Seng lost 0.71%.

The most significant losses during trading on the Hong Kong Stock Exchange were incurred by the shares of the restaurant chain Haidilao International Holding (-4.2%), the manufacturer of power tools Techtronic Industries Co. (-3.5%) and biologics manufacturer Wuxi Biologics (Cayman) Inc. (-3.2%).

Consumer electronics manufacturer Xiaomi Corp. down 0.4%, one of the key players in the PRC's Internet services Meituan fell 1.6%.

The leaders of growth were shares of the manufacturer of electric vehicles BYD Co. (+ 4.5%), which produces traditional cars Geely Automobile Holdings (+ 3.4%) and China Mengniu Dairy Co., the largest dairy producer in the country. (+ 2.5%).

Internet giants Tencent Holdings and Alibaba (NYSE: BABA) Group Holding gained 0.6%.

The South Korean Kospi index rose by 0.15% by 8:57 GMT + 2.

Capitalization of one of the world's largest chip manufacturers Samsung Electronics Co. increased by 0.4%, another industry representative SK Hynix Inc. rose 1.2%.

The price of shares of the automaker Hyundai Motor Co. dropped 0.2%, Kia Corp. practically do not change in price.

Australian indicator S & P / ASX 200 added 0.96% by 8:57 GMT + 2.

Representatives of the Reserve Bank of Australia (RBA) came to the conclusion that it is too early to consider the issue of curtailing the bond buyback program, according to the minutes of the June meeting of the Australian Central Bank.

As a result of the June meeting, the RBA kept the base interest rate at a record low level of 0.1% per annum, as most economists believed. At the same time, the leadership of the Central Bank confirmed its commitment to maintaining a super-soft monetary policy at least until 2024, when inflation is expected to return to the 2-3% range.

The market value of the world's largest mining companies BHP Group and Rio Tinto rose 0.6% and 1.5%, respectively.

[KostiaFM]

Oil rises continuously on the back of the news from the USA and Europe

Today, the world oil market demonstrates steady growth following a spectacular rise in the past week and a general three-week increase against the background of an improvement in the global situation.

The main upward factor for the positive dynamics remains the prospects for demand for oil in developed countries, which is permanently increasing due to high rates of vaccination and the lifting of restrictive measures.

Thus, US residents began to actively return to work, gather in companies and visit crowded places. In addition, the average daily air traffic in the United States, for the first time since the beginning of the COVID-19 pandemic, has stepped over the level of 2 million passengers.

According to the forecasts of the International Energy Agency, world oil demand will return to the dock level by the end of next year. This year, according to IEA experts, demand will grow by 5.4 million barrels per day - up to 96.4 million barrels per day, and in 2022 - by 3.1 million barrels per day.

In its Friday report, the agency said that OPEC and its allies must increase oil production to ensure the required level of supply in world markets.

At the same time, analysts cite multiple positive news from North America and Europe that are opening after the pandemic quarantines as the reason for the bright growth of the oil market over the past week.

At the time of writing this material, the oil market is showing the following indicators: the price of August Brent oil futures on the London ICE Futures Exchange was at $73.35 per barrel, exceeding the previous session's closing level by 0.91%.

The cost of July contracts for WTI crude oil on the New York Mercantile Exchange NYMEX increased by 0.78% - $71.46 per barrel.

[KostiaFM]

The Fed's rhetoric caused BTC to "stumble". Is its failure a short-term phenomenon?

The first cryptocurrency did not stay away from the main event of the current week – the meeting of the Federal Open Market Committee (FOMC). However, the decisions taken by the regulator tripped bitcoin, which demonstrated a downward trend.

On the evening of Wednesday, June 16, the main digital asset fell to $38,100, but later regained some losses. On the morning of Thursday, June 17, the first cryptocurrency was trading near $39,200, losing 2.8% over the past day. The driver of the sharp decline in bitcoin was the results of the June meeting of the US Federal Reserve. Recall that the US regulator kept the key rate at the level of 0-0.25% per annum, and also left low interest rates until the moment when the level of employment and inflation will be near the target 2%. At the same time, the Federal Reserve extended the program of asset repurchases in the amount of $120 billion per month.

The publication of the Fed report contributed to a noticeable decline in the stock and cryptocurrency markets. To date, the capitalization of the digital asset market has decreased by 2%. Experts are afraid of further subsidence, although they record minor signs of stabilization. Experts note a long-term medium-term correction for bitcoin, which continues to increase. According to analysts, the crypto market has tested the lower limits of the long-term trend in the BTC (near the support level of $34,972) and continues to recover. On the morning of Thursday, June 17, the BTC/USD pair was trading near $39,197, trying to expand the boundaries of the current range.

The market for virtual cryptocurrencies has repeatedly tried to turn upward, acting within the short-term trend. According to experts, the possibility of breaking the upper limit of this range ($43,402) is quite achievable. However, the implementation of this plan is difficult at the moment, although in the near future it is possible.

[KostiaFM]

EUR/USD. Fed woke up the dollar

Markets reacted to the FOMC meeting as if they were genuinely surprised by the shifting of the federal funds rate hike from 2024 to 2023. Did investors really believe that the Fed would turn a blind eye to rising inflation and remain the most peaceful central bank in the world? If so, they were in for a serious disappointment, resulting in a 1.8% collapse in the EUR/USD over the course of two trading days.

To prevent the recurrence of the 2013 taper tantrum, the Fed promised to inform in advance of all changes in monetary policy. In fact, the Central Bank has let its guard down, and the fact that rates may be raised twice in 2023 has become a real thunderbolt for investors. Short positions on the US dollar began to collapse en masse, which led to the fall of the EUR/USD to the base of the 19th figure. The confidence of the market majority that the main currency pair will soon reach the level of 1.25 is gone, and Nordea predicts a fall in the euro to $1.15 by the end of the year against the background of the outperforming dynamics of US inflation over European inflation.

In my opinion, what happened was what should have happened. The Fed could not look at inflation at the level of the 1990s indefinitely. Its previous passivity could be explained by disappointing statistics on American employment, but in the near future, the situation in the US labor market risks a serious change. Judging by the dynamics of vacancies, the gap between potential and actual employment will be filled quickly. If this does not happen, wages will increase dramatically. Both options are potentially bullish for the US dollar.

How can the euro respond to the US dollar? Because of the Fed, investors forgot that thanks to the accelerated vaccination in the EU, a boom in economic growth is expected in the eurozone in the second half of the year. That Brussels successfully sold the first bonds from the European Rescue Fund, while the demand at the auction was off the scale. That after the ECB meeting, the members of the Governing Council recalled that the emergency asset purchase program will end in March 2022. That next year, the currency bloc will surpass the United States in terms of GDP growth. I do not think that the "bulls" on EUR/USD will just throw a white flag.

The key events of the week to June 25 will be the speeches of Christine Lagarde and Jerome Powell, as well as the releases of data on European business activity, the German business climate, and American orders for durable goods. The market needs the dust from the shocks to settle, and then it will determine the direction of further movement.

Technically, only the return of EUR/USD quotes above 1.198 will revive the scenario of the transformation of the blue "Shark" to 5-0, followed by the continuation of the rally to the targets on the "Wolf Wave". With this option, purchases will become relevant. If it is not possible to catch on to 1.198, there is a scenario with the implementation of the target by 88.6% according to the model of the red "Shark". It is located near 1.175, so we use a sell strategy on pullbacks.

[KostiaFM]

Magnetic Pound: GBP attracts investors. Forecast grid

Recently, the British currency has attracted active interest from most investors. Experts believe that the reasons for this popularity are fatigue from the excessive volatility of the dollar and the relatively stable geopolitical situation in the UK.

Despite the active build-up of long positions in USD, the dollar cannot boast of stability. This is hindered by conflicting US macroeconomic data released last week. According to analysts, the dollar will receive an additional growth impulse if market players increase the number of long positions in USD. Against this background, the GBP looks advantageous, since it is now in the focus of investors' attention.

The growing interest in the British currency is due to the expectation of successful results of mass vaccinations in the UK. According to experts, the current situation with the spread of COVID-19 and its new strain remains tense. According to Prime Minister Boris Johnson, in the near future, the British authorities will determine the scope of the fourth stage to ease restrictions. Last week, Sajid Javid, UK Minister of Health, noted that coronavirus restrictions would be lifted no earlier than July 19.

In this situation, the British currency has lost some of its positions. Last Friday, July 2, the pound gained 0.5%. At the end of the second quarter of 2021, the pound remained in positive territory, having increased by 0.37%.

Throughout the past week, the pound has tried to maintain the positions it has gained. Last Friday, July 2, a strong support level near 1.3760 was formed in the GBP/USD pair. According to experts, bearish sentiments will continue in the tandem in the medium term. However, the bulls are determined and are not going to give up their positions. At the end of last week, they dominated the market, but now the situation may change.

At the start of trading on Monday, July 5, the GBP/USD pair was trading at 1.3821. However, on the approaches to the strong resistance level of 1.3852, the growth of the British currency slowed down. Later, experts recorded the beginning of the consolidation of the GBP/USD pair. At the moment, analysts consider it expedient to buy sterling. In the event of a breakdown of the powerful resistance level 1.3852, you can count on breaking the barriers 1.3925 and 1.3980.

Experts are optimistic about the short-term and medium-term prospects of the pound sterling. Currency strategists at Bank of America Global Research believe that the pound will maintain a positive trend until the end of 2021. The bank expects further cyclical growth of the British pound until the end of 2022. The GBP will be supported by such factors as strong economic growth in the country, the "hawkish" attitude of the Bank of England, as well as excess global liquidity and low currency conditions.

[KostiaFM]

Above $1,800: Gold rises in price for sixth session in a row

On Tuesday morning, the price of gold bars was able to finally break through the psychological mark of $1,800. At the time of writing, the noble asset rose 1.07%, or $19. Its price was $1,802.3.

Silver also showed a confident positive trend. The asset rose by 0.88%, jumping to the level of $26,735.

According to analysts, the main catalyst for the growth of the precious metals market is the weakening dollar. On Tuesday, the US currency continues to lose its superiority against its competitors.

Gold has been growing for the sixth consecutive session, drawing strength from other sources as well. The decline in 10-year US bonds and the difficult epidemiological situation in the world give a good boost to the yellow asset.

The new strain of the delta coronavirus increases the risk of a slowdown in economic activity in a number of Asian countries, which strengthens the position of gold as the main safe haven asset.

In addition, the precious metal received significant support last week from the US labor market. The sudden increase in unemployment prompted investors to think that perhaps the US Federal Reserve will not rush to change the current course of monetary policy, keeping interest rates at the current level.

If this scenario is confirmed, bad days will come for the US currency again, unlike gold, for which such a development of events will be an excellent springboard for growth.

Meanwhile, some analysts associate the current dynamics of the precious metal with a technical correction. The yellow asset is recovering losses after a sharp collapse last month. However, if significant negative factors appear, its price may decline again.

Now, investors are waiting for the release of the minutes of the US Federal Reserve meeting. Tomorrow's comments about inflation and interest rates may turn gold around, as it was last month. Back in June, the regulator predicted the probability of a rate hike in 2 years.

[KostiaFM]

Protective Assets: Gold or Cryptocurrency?

Goldman Sachs experts are confident that in the future Ethereum will be able to take the place of bitcoin as a means of saving. According to the bank, Ether has more potential than bitcoin, due to the extensive ecosystem and more diverse options for the practical application of this cryptocurrency.

At the same time, neither bitcoin nor ether can yet overtake gold, which remains the leader among all defensive assets. Since cryptocurrencies, unlike gold, are too volatile, which is incompatible with the concept of a safe haven asset. However, experts clarify that gold can be viewed as a defense against inflation, and cryptocurrency – against inflationary risks.

Moreover, the very competition between cryptocurrencies also prevents them from squeezing gold in the status of a defensive asset. And this is not the whole list of «disadvantages» of digital assets. For example, analysts at the Bank of Singapore consider volatility, low confidence and lack of regulation to be the main obstacles to the spread of digital assets as a means of saving. However, if these problems are solved, bitcoin and ether may well replace gold.

[KostiaFM]

Forecast for USD/JPY on July 8, 2021

USD/JPY

Yesterday, the yen traded in a 40-point range and closed the day at the opening level below the MACD indicator line. The Marlin oscillator strengthens the urge to leave its own channel downward.

What is noteworthy: the dollar index rose by 0.19% yesterday, stock indices also rose in general (Dow Jones 0.30%), with the exception of second-tier stocks (Russell 2000 -0.70%). The Russell 2000 index is often a leading direction indicator for major indices. And in today's Asian session, the Japanese Nikkei 225 index is already decreasing by -0.57%. It is possible that investors' expectation of a fall in the stock market worries them a lot, this decline has been talked about more and more recently. But be that as it may, the surpassing yesterday's low of 110.41 opens the way to the first target at 109.80. This is the main scenario.

On the four-hour chart, the price is holding back before hitting the 110.41 signal level. The price is below the balance and MACD indicator lines. Marlin is in the downward trend area. We are waiting for the attack in order for the price to go down.

The alternative scenario is difficult. To do this, it needs to go above the MACD line on both charts. On the H4 it is 111.02.

[KostiaFM]

Pound - "Vaccine Champion": Prospects and Hopes for GBP

The British currency remains relatively stable, trying to keep the gained positions and build up new ones. In the medium and long-term planning horizons, experts expect the pound to rise, despite its limited growth potential.

Currently, the British currency has sunk slightly against the background of disappointing macro statistics. The GBP sales started after the publication of reports on UK GDP (0.8% with an expected 2%) and low industrial production (0.8% with a forecast of 1.5%). On the morning of Friday, July 9, the GBP/USD pair was trading near 1.3775, but later lost some of its gains.

According to analysts, sterling is stuck among local lows, near the powerful support level of 1.3754. Experts believe that in the event of a breakdown of the strong resistance level of 1.3794, bullish sentiment will increase in tandem. While maintaining the moderate dynamics of the GBP/USD pair, it will remain within the range of 1.3754-1.3794. This assumption is partially realized, giving the pound hope in the medium term. However, by now the GBP/USD pair has fallen to 1.3763, leaving no attempts to rise.

The British currency's hopes are supported by currency strategists Credit Suisse, who expect the GBP/USD pair to recover to 1.3940, and then to the round level of 1.4000. The bank emphasizes that in the near future, it is possible to form a peak in the area of 1.4000, the breakthrough of which will lead to an enhanced recovery of the pound.

Positive sentiment regarding the prospects for sterling is supported by analysts at Credit Agricole CIB Research. The bank supports the "bearish" trend of the British currency, which will continue in the coming weeks. "The GBP has gone from an investment vehicle for generating 'Covid-19 vaccine alpha' in the FX markets to a hedge against the resurgence of the pandemic in recent weeks. The rapid fall from grace of the hitherto G10 FX 'vaccine champion' warrants a cautious stance on the currency in the near term," Credit Agricole CIB Research emphasizes.

The popularity of the British currency is promoted by positive changes in the country's economy. The UK is on the way to an economic recovery, the signs of which are a shortage of labor and rising wages. It should be noted that the salary increase is the fastest since 2014. The continuation of the existing trend will force the Bank of England to curtail the monetary stimulus program, which will lead to the strengthening of the GBP.

Earlier, at the end of 2020, the UK showed the worst economic result among developed countries, but now much has changed. At the moment, England is among the top 5 most vaccinated countries (67% of the vaccinated population). Success in immunization allowed the British authorities to declare the complete lifting of restrictions in a week and a half, on July 19.

With regard to the target inflation rate of 2%, the Bank of England maintains the same position, the regulator believes that finding the indicator within 2% is quite natural. An increase in this indicator will require the regulator to curtail the monetary stimulus program. If the Bank of England does this before the Federal Reserve, the pound will receive an impetus for further strengthening in the medium term.

[KostiaFM]

Analysts predict an imminent collapse of bitcoin to $10,000

Experts of the cryptocurrency market say that the current position of bitcoin is difficult to call stable, and soon BTC risks falling back to the level of $ 10,000 at all. Today, investors do not have a single reason to buy the first cryptocurrency or keep it in the portfolio.

In their disappointing scenarios, analysts rely on historical data, when during the past falls, the value of BTC sank by 80%.

Experts confidently call the current position of the main digital coin a collapse. Traditionally, this term is used to describe the fall of the cryptocurrency by 70-80%, which corresponds to the price range of $ 10,000-15,000.

Recall that in recent months, the first digital currency has already fallen from a record $ 60,000 to $ 33,500. The main downward factor for bitcoin was pressure from Chinese regulators.

Known for his indifferent attitude to the cryptocurrency market, Elon Musk criticized the blockchains of the main digital coin and Ethereum for the low transaction speed and high costs. At the same time, the founder of Tesla warmly supported Dogecoin and called it one of the most actively used digital currencies in the world.

In general, analysts call the current situation of the cryptocurrency market today "the summer calm before the storm". The current dynamics of the bitcoin price with significantly reduced trading volumes are traditionally considered a dangerous signal. When the market is affected by an insignificant number of open positions – any minor incident can lead to a grandiose sale.

[KostiaFM]

Trading recommendation for EUR/USD on July 13, 2021

Looking at the EUR/USD trading chart, one can see the amplitude price movement within the resistance area of 1.1880/1.1895, as if there is a cumulative effect in the market before a new round of acceleration.

Sell signal
Traders will consider this if the price is kept below the level of 1.1835, which will open the way to the support level of 1.1800.

Buy signal
Traders will consider this if the resistance area of 1.1880/1.1895 is broken, which will lead to further formation of a correction. In this case, there is no need to rush. We consider buying positions above the level of 1.1900, with a prospect of 1.1950-1.2000.

* The resistance level is the so-called price level, from which the quote can slow down or stop the upward movement. The principle of constructing this level is to reduce the price stop points on the history of the chart, where the price reversal in the market has already occurred earlier.

* The accumulation process is a price fluctuation in a closed amplitude, where at the moment of a breakdown of a particular stagnation border, a local acceleration in the direction of breakdown often occurs.

Trading recommendation for GBP/USD on July 13, 2021

As for the trading chart of the GBP/USD, it shows the price movement within the deviation of the level of 1.3900, where market participants still view it as resistance.

Sell signal
They have been considered by traders since yesterday, where sell positions may have already been opened. If no deals have been opened, it is advised to wait for the price to hold below the level of 1.3835. The prospective target is 1.3785-1.3750.

Buy signal
It is considered by traders as a prolongation of the existing correction, but entering the market will be possible after the price holds above the level of 1.3950, with a prospective target of 1.4000.

What is reflected in the trading charts?

A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each individual candle in detail, you will see its characteristics of a relative time period: the opening price, the closing price, the maximum and minimum prices.

Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.

Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.

The up/down arrows are the reference points of the possible price direction in the future.

Things to remember:
Golden Rule: It is necessary to figure out what you are dealing with before starting to trade with real money. Learning to trade is so important for a novice trader since the market will exist tomorrow, next week, next year, and the next decade.

[KostiaFM]

Forecast for EUR/USD on July 14, 2021

The euro fell by 83 points on Tuesday, which created some ambiguity in the technical interpretation of this movement.

The high rate of decline, due to which the Marlin oscillator slowed down with a decline, on the one hand, forms a double convergence on the daily chart, on the other hand, the signal line of the oscillator has approached the lower border of its own channel and is preparing to overcome it.

Here, theoretically, convergence may develop, for which the price needs to reach the March low of 1.1705, but the oscillator may continue to develop in the global descending channel, and then the price may reach the target level of 1.1465 and even 1.1300. But we consider this scenario as the main one. Thus, yesterday's low at 1.1772 is a signal level - price drift below it opens the target at 1.1705. Further movement to 1.1640 is possible.

No peculiarities observed on the four-hour chart, there are no reversal signals, the price is below the balance and MACD lines, and Marlin develops a decline. We are waiting for the price at the nearest target level of 1.1705.

[KostiaFM]

Analysis of transactions in the EUR / USD pair

A signal to buy appeared in the market on Wednesday, but it had to be ignored because it came when the MACD line was at the overbought area. And even if bearish traders set up short positions, EUR / USD did not go down, causing losses to investors.

Trading recommendations for July 15

Despite the disappointing report on industrial production, euro continued to rise on Wednesday, as traders were skeptical about the latest statements of Fed Chairman Jerome Powell. In his speech, Powell hinted that the central bank will continue to adhere to a super-soft policy, which resulted in the weakening of the US dollar.

Today, Italy will publish a report on CPI, but it is unlikely to affect the market very much. But the labor market data from US will be a driver for dollar growth, especially if the figure turns out much better than expected. There will also be another speech from Fed Chairman Jerome Powell, but it may not add a significant effect on the market.

For short positions:
Open a short position when euro reaches 1.1819 (red line on the chart), and then take profit at the level of 1.1773. A decline will occur if Italy releases a weak inflation data, and if US publishes a strong labor market report. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.1838 and 1.1876, but the MACD indicator should be in the overbought area, as such would trigger a market reversal to 1.1819.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

Analysis of transactions in the GBP / USD pair

Several market signals appeared on Wednesday, but only one was successful. In fact, the first one, which was to buy, had to be ignored because it came when the MACD line was way above zero. Fortunately by afternoon, a signal to sell was formed, and it coincided with the MACD line being in the overbought area. Such led to a significant drop in GBP / USD.

Trading recommendations for July 15

Pound rose on Wednesday, thanks to better-than-expected data on UK inflation. And if the employment report today indicates another good performance, GBP / USD will surely continue its growth in the market. But in the afternoon, price may pull back slightly, if US releases a similar strong report on its labor market. There will also be another speech from Fed Chairman Jerome Powell, but it may not significantly affect the market.

For long positions:
Open a long position when pound reaches 1.3847 (green line on the chart), and then take profit at the level of 1.3890 (thicker green line on the chart). Demand will increase if UK releases strong growth in the labor market. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.3825 and 1.3780, but the MACD indicator should be in the oversold area, as such would trigger a market reversal to 1.3847.

For short positions:
Open a short position when pound reaches 1.3825 (red line on the chart), and then take profit at the level of 1.3780. A decline may occur if UK releases weak data on employment. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.3847 and 1.3890, but the MACD indicator should be in the overbought area, as such would trigger a market reversal to 1.3825.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.

[KostiaFM]

Investors abandon weakening USD

According to data from July 13, the inflation rate in the United States reached 5.4%, a reading last seen in the 2008 crisis. However, the Fed stubbornly insists that such a high indicator will not last long. The time will come and they will no longer need to print money in such big volumes. Besides, interest rates will be raised sooner or later. According to most analysts, the first hike of the key rate may take place in December next year. However, it is quite difficult to make long-term forecasts as everything may change, especially since tightening monetary policy is not such an easy task. The same situation occurred in 2008 when the world economy was in the stage of recession, although not as significant as today. Back then, the Fed raised the interest rates only six years later. This is why economies believe that the tightening of the monetary policy will take place in 2023, that is, only three years after the start of easing it.

Although the US economy is recovering the losses incurred during the quarantine restrictions and the market is obviously reviving, the economy is still too weak. It is reflected in both the US currency and on the yield of government bonds. It would be extremely naive to hope that big changes could occur in the coming months. Imported goods in the United States rose by 11.3%, which is why prices for consumer goods are also likely to grow. Interestingly, there are rumors that the real inflation rate in the country is several times higher than the official figures.

The US currency declines not only due to a shaky economy but also because of an excess of money in the financial system. The money-printing press simply devalues it. Traders are not ready to invest in bonds that are not able to cover even half of inflation. Bearish sentiment is also swept across the bond market. As with the US dollar, the government bonds are now unpopular due to the fact that they continue to be issued in an unlimited amount.

In the light of such events, demand for riskier assets is buoyant as traders simply do not have other options for investing. In search of profitable investments, many have now turned to the stock market, so we can expect new peaks from the main indices. According to the most modest estimates, stocks may jump by 12-15% in the coming months. Apparently, the biggest gainers are still the technological and biotechnological sectors, as well as the real estate sector. Venture capital investments have also reached unprecedented amount. Experts are quite curious to see how central banks will stop this wave without collapsing the markets at the same time.

Against the background of rising prices, gold, which has always been an asset that protects traders from inflation, is rapidly recovering. As for oil, it is also steadily rising in value. As the US economy is getting back to normal, demand for commodities increases as well. Yet, the US dollar is gradually sliding down.

[KostiaFM]

Analysis of transactions in the EUR / USD pair

Several market signals appeared on Friday. The first one, which was to sell, came at the time that the MACD line was going down from zero. However, it did not manage to produce a large downward movement, so the deal ended with a loss. All other signals appeared when the indicator was in the overbought or oversold area, so it was necessary to open positions in the opposite direction.

Trading recommendations for July 19

Data released last Friday did not affect the markets very much. In fact, even though the US released a strong retail sales report, euro did not succumb to a bear market.

Today, trading should be quite calm, as there are no important statistics to be released. Upcoming statements from the Bundesbank, as well as housing data from the United States are unlikely to shake EUR / USD. Most likely, the pair will just remain in a horizontal channel.

For long positions:

Open a long position when euro reaches 1.1815 (green line on the chart), and then take profit at the level of 1.1849 (thicker green line on the chart). Demand will increase if the European Central Bank announces that it would reconsider winding down measures to support the economy. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.1799 and 1.1773, but the MACD indicator should be in the oversold area, as such would trigger a market reversal to 1.1815.

For short positions:

Open a short position when euro reaches 1.1799 (red line on the chart), and then take profit at the level of 1.1773. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.1815 and 1.1849, but the MACD indicator should be in the overbought area, as such would trigger a market reversal to 1.1799.

Analysis of transactions in the GBP / USD pair

Several market signals appeared on Friday, but not all of them were as profitable as expected. The first one, which was to sell, managed to push GBP / USD down by 25 pips, but failed to bring the price to the target level of 1.3780. A similar story happened in the afternoon, but it was only on the third attempt that pound managed to hit 1.3780. All in all, the downward movement was around 40 pips. Then, at 1.3842 a signal to buy appeared, but it did not bring much profit.

Trading recommendations for July 19

Upcoming statements from the Bank of England could shake the markets today. In fact, just last week, several members changed their position, saying that the central bank now needs to reconsider scaling back support measures for the economy. If similar statements are announced today, pound will rise very sharply. Then, in the afternoon, there will be a report on the US housing sector, but it is unlikely to affect the market very much.

For long positions:

Open a long position when pound reaches 1.3769 (green line on the chart), and then take profit at the level of 1.3837 (thicker green line on the chart). But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.3694, but the MACD indicator should be in the oversold area, as such would trigger a market reversal to 1.3769.

For short positions:

Open a short position when pound reaches 1.3743 (red line on the chart), and then take profit at the level of 1.3694. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.3837 and 1.3769, but the MACD indicator should be in the overbought area, as such would trigger a market reversal to 1.3743.

[KostiaFM]

Simplified wave analysis and forecast for USD/JPY and USD/CAD on July 20

USD/JPY

Analysis:
Analysis of the chart structure of the main pair of the Japanese yen shows that a hidden downward correction ended in the dominant wave of the bullish trend on July 8. The subsequent ascending wave structure has a reversal potential. The middle part (B) is nearing completion.

Forecast:
Today, the pair's price fluctuations are expected in the range between the opposite zones. In the first half of the day, pressure on the support zone is likely. By the end of the day, you can expect a change in the vector and a price rise to the resistance area.

Potential reversal zones
Resistance:
- 109.70/110.00
Support:
- 109.00/108.70

Recommendations:
Trading on the yen market today is possible only within the framework of individual trading sessions in a fractional lot. Purchases from the support zone are more promising.

USD/CAD

Analysis:
The direction of the short-term trends of the Canadian dollar since the spring of last year is set by the descending wave algorithm. Since March 18, the price has formed a correction in the form of a stretched plane. The quotes have reached the boundaries of a powerful reversal zone of the higher timeframe. However, there are no signals of an early reversal on the chart.

Potential reversal zones
Resistance:
- 1.2820/1.2850
Support:
- 1.2730/1.2700

Recommendations:
In the coming day, the upward course of the price movement is expected to continue. A short-term decline to the settlement support is not excluded at the European session. Then you can count on the formation of a reversal and a change in the short-term trend.

Forecast:
There are no conditions for selling the Canadian dollar on the market today. Short-term sales with a reduced lot are possible from the support zone.

[KostiaFM]

A small pullback should not be misleading, sell-off of risks will continue. Overview of USD, CAD, JPY

The markets slightly recovered after a sharp decline on Monday, but there are no special reasons for a positive return.

News regarding the coronavirus is disappointing. According to the head of the US Centers for Disease Control (CDC), 83% of new cases in the US are associated with the Delta strain, compared with 50% a week earlier, and if the trend towards a worsening of the situation continues, another package of restrictive measures may be required. These fears increase the flight from risk.

The tension was supported by the Bank of Australia. The minutes of the RBA published yesterday noted that the economic results are still far from meeting the Bank's inflation and employment target, and therefore, the arguments in favor of maintaining the procurement program at the level of $ 5 billion per week remain. Moreover, the RBA provoked the situation through the media, suggesting that if the current restrictions in Sydney and the Victoria District last until August, the Bank will have arguments in favor of canceling the July decision to reduce the volume of purchases. This decision is also in favor of an increase in demand for protective assets.

It can be assumed that the demand for protective assets will dominate in the coming days again, and the US dollar will continue to rise against commodity currencies.

USD/CAD

After the Bank of Canada's meeting last week, where it left monetary policy unchanged (a decline in purchases from $ 3 billion to $ 2 billion per week was expected and confirmed), no significant macroeconomic events occurred. The rate hike is expected in the second half of 2022, which is around the same time as the forecast for the Fed rate. There was no harsh reaction to the improvement in the economic situation, which somewhat disappointed the bulls. It seems that BoC will adhere to cautious positions and does not intend to be the first to make poorly calculated steps.

The net long position on CAD fell by 1.2 billion during the reporting week. This is quite a deep adjustment. And although the advantage remains for the Canadian dollar (+2.1 billion), the trend is clearly not in its favor. The estimated price rises.

The Canadian dollar passed the resistance level of 1.2626 almost without stopping, not giving any reason to wait for a decline. Thus, the movement to the next target of 1.3010/20 is justified. The need for a correction may interfere since the spot price has gone significantly higher than the calculated one, but it is logical to use any decline for purchases.

USD/JPY

The nationwide core consumer price index rose by 0.2% y/y in June. This is the second month above zero and the growth slightly exceeded the forecast. For Japan, which has been suffering from deflation for several decades, even such minimal growth is already positive.

However, it is clearly too early to be optimistic. On August 20, data for the base year 2020 will be published. There will be new significant factors, which will reduce the inflation index by 0.2% according to the calculations of Mizuho Bank; hence, a slight downward shift is expected. This means that the Bank of Japan's plans to disperse inflation to 2% remains a dream.

The seemingly positive dynamics in the corporate prices and import prices, which showed +2.3% in June – the maximum since 1981, will not help either. The reason here is almost exclusively in the growth of oil prices, and since the growth of consumer incomes remains consistently low, there is no need to wait for inflation growth.

In other words, there are no signs that the Bank of Japan can follow other central banks to consider measures to exit from the super-soft policy.

Japanese yen's net short position declined by 1.456 billion. The demand increased amid a flight from risk. The estimated price is confidently turning down after a long period of stagnation.

[KostiaFM]

July 22 economic calendar:

Today, the results of the planned meeting of the European Central Bank (ECB) will be released, where market participants are anticipating new information on the prospects for EU's monetary policy.

It is clear that there will be no fundamental changes, so most traders are not waiting for the results of the meeting, but for the press conference of the ECB President Christine Lagarde, where the ECB's plans for the future can be announced, as was recently done by the Federal Reserve System (FRS).

In this case, it is worth carefully monitoring the information from the meeting, as well as from the press conference, since a speculative jump will be set in the market depending on it.

So, if the ECB leaves everything as it is (unchanged), then the US dollar can get support again. But if the head of the ECB repeats the path of the Fed and announces an early increase in the refinancing rate, then the euro will go into a growth phase.

ECB meeting results - 11:45 00 Universal time

ECB President press conference - 12:30 Universal time

During the US trading session, America will release its weekly data on applications for unemployment benefits, where they are predicted to reduce their volume.

Volume of initial applications for benefits may fall from 360 thousand to 350 thousand.
Volume of repeated applications for benefits may fall from 3,241 thousand to 3,100 thousand.

Weekly data on applications for unemployment benefits - 12:30 Universal time.

In simple terms, a decline in the number of applications for benefits can lead to a strengthening of the national currency – USD.

Trading recommendation for EUR/USD on July 22, 2021

Looking at the EUR/USD trading chart, one can see price fluctuations along the level of 1.1800, where the accumulation process of trading forces is already taking place. The existing amplitude may well expand by 25-30 points, which will eventually lead to a new round of acceleration.

To put it simply, traders are waiting for the ECB meeting and press conference, which can be followed by speculative hype in the market.

Sell positions:

Traders consider this if the price is kept below the level of 1.1750, in the direction of 1.1700.

Buy positions:

Traders consider this if the price is kept above the level of 1.1830, in the direction of 1.1900.

Trading recommendation for GBP/USD on July 22, 2021

As for the trading chart of the GBP/USD, it can be seen that the correction is still relevant in the market, but the resistance area of 1.3750/1.3800 is standing in the way of buyers, which can negatively affect the volume of long positions.

To simply put it, the correction course can go to a slowdown and completion.

Sell positions:

They are considered by traders if a price rebound occurs from the resistance area of 1.3750/1.3800, which will eventually lead to the continuation of a decline in the direction of the pivot point of 1.3571.

Buy positions:

Traders are still in the area of the 1.3650 level and profit-taking is currently taking place. The entry into the deal was taken into account in the previous analytical review.

[KostiaFM]

Trading recommendation for EUR/USD on July 23, 2021

Looking at the EUR/USD trading chart, one can see that the quote follows the area of this week's local base, where the volume of short positions was reduced again.

In this situation, it is worth adhering to the borders of the previously specified amplitude of 1.1750/1.1830, where the most significant price changes will occur after the price has been held outside a particular border in the H4 interval.

Sell position:

Traders will consider this if the price is kept below the level of 1.1750, in the direction of 1.1700.

Buy position:

Traders will consider this if the price is kept above the level of 1.1830, in the direction of 1.1900.

Trading recommendation for GBP/USD on July 23, 2021

As for the trading chart of the GBP/USD, it can be seen that the price area of 1.3750/1.3800 still acts as a resistance in the market, leaving a chance for a change in trading interest. The strongest sell signal will come from the market after the price is kept below the level of1.3725; or else, there will be a prolonged stagnation.

Sell position:

Traders will consider this if the price is kept below the level of 1.3725, which will open the way towards the coordinates 1.3700, 1.3640, and 1.3570.

Buy position:

Traders considered this in the middle of the week, which made it possible to earn a profit on the correctional course. At the moment, traders have already taken profit and are considering sell positions, but their opinion may change if the price is kept above the level of 1.3800 in the H4 timeframe.

[KostiaFM]

USD rises ahead of Fed's meeting

The US dollar fell slightly due to durable goods orders data. Shortly after, it was trying to strengthen against a basket of six major rivals. Today, the most anticipated event of the week will take place - the FOMC meeting. Yet, many experts think that Fed Chairman Jerome Powell is unlikely to announce certain changes to the monetary policy. So, his testimony will hardly surprise market participants. Moreover, the Fed will clarify its position in the Jackson Hole meeting which is scheduled for September. However, investors are still awaiting the current meeting with bated breath. The main question is how the market will react to the Fed's meeting.

Currently, China's stock market is in the spotlight. It has collapsed significantly due to the ongoing tightening of regulation on large IT companies. Sharp fluctuations in China's equity market may adversely affect stock markets in other countries.

Hence, demand for safe-haven currencies is rising after the fall in government bond yields. Treasuries are declining despite expectations of the reduction in the bond-buying program. Usually, this would lead to an increase in government bond yields.

The greenback seems to have resumed bullish momentum. It may soar to new highs amid turmoil in the market. Besides, the US currency may strengthen if the Federal Reserve hints about the probable reduction of the bond-buying program.

The yen rose moderately following a sell-off in China's stock market. The rebound of the Japanese stock market from the recent low was much more modest in comparison with other countries.

The US dollar index is growing moderately before the Fed's meeting. Maybe traders have already started factoring in Jerome Powell's hawkish remarks.

The EUR/USD pair, as the main barometer of risk sentiment in the market, opened the trading day with a decline. Yesterday, it remained almost unchanged. The pair may even climb to 1.1900 if the Fed's meeting outcome does not stir panic in the market.

If Powell does not provide new comments about the bond-buying program, the euro will continue to fluctuate between the levels of 1.1700 and 1.1800 with possible rebound to the 19th mark. Investors are certain that the Fed will not reveal anything new until the Jackson Hole meeting in autumn where it will discuss whether to raise the debt ceiling.

Experts believe that the euro will rally in the near future. For instance, economists at Commerzbank assume that the pair may return to the area of 1.1860-1.1930.

Strong resistance levels are located at 1.1884 and 1.2008. These level may halt the pair's growth. After breaking through 1.1750, the next target will be the area of 1.1704–1.1600.

[KostiaFM]

EUR/USD and GBP/USD: Trading recommendations for novice traders for July 30, 2021

Economic calendar for July 30

Today, in terms of the economic calendar, we have preliminary data on inflation in Europe, where it is predicted that consumer prices will rise from 1.9% to 2.0%.

Given the growth of the European currency over the past days, inflation indicators could have already been taken into account in the quotes.

Inflation in the EU - 09:00 UTC

We study and analyze

• The consumer price index is prepared by Eurostat, which determines the change in prices of a selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation. From the point of view of fundamental analysis, the rise in inflation is a positive signal for the national currency, but when consumer prices rise faster than forecasted, it is not considered the best signal.

Trading plan - EURO/DOLLAR for July 30

Analyzing the current Euro/Dollar trading chart, you can see that the resistance level at 1.1900 puts pressure on buyers, which leads to a slowdown and a rebound in the price.

In this situation, traders consider two possible scenarios of price development at once:

The first plot proceeds from the natural basis of the past, associated with the resistance level of 1.1900, which contributes to the increase in the volume of short positions.

In simple terms, traders are looking at a rebound from 1.1900 towards 1.1830.

The second plot assumes that the correction from the pivot point 1.1750 will remain relevant in the market and after a short stagnation along the 1.1900 level, it will still be broken by the price along an upward trajectory. For the trading scenario to coincide on the market, the quotes must hold higher than 1.1915 in a four-hour period, this will open the way in the direction of 1.1950-1.1975.

Trading Plan - Pound/Dollar for July 30

Analyzing the current Pound/Dollar trading chart, you can see that the area of the psychological level of 1.4000 acts as a resistance in the market, which leads to a slowdown and a rebound in the price. The logical basis of the past associated with this level can play into the hands of sellers, which will lead to an increase in the volume of short positions.

In simple terms, the rebound stage may well lead to a downward move towards the 1.3900 level.

An alternative scenario for the development of the market will be considered by traders if the price is kept above 1.4050 in the daily period. In this case, the chances of buyers will increase to return the quotes to the area of the local high of the medium-term upward trend.

[KostiaFM]

Analysis and trading recommendations for EUR/USD and GBP/USD on August 2

Analysis of transactions in the EUR / USD pair

Euro fell on Friday despite good GDP and inflation reports from the Euro area.

Trading recommendations for August 2

EUR / USD will again move depending on the economic reports that the Euro area will release today. Strong data on manufacturing activity will lead to a price increase, while a weaker than expected report could result in another decline in the market. Then, in the afternoon, a similar report will be published from the US. This time, if the data expectations exceeds, dollar will regain its strength, which could lead to a decline in the pair.

For long positions:

Open a long position when euro reaches 1.1882 (green line on the chart), and then take profit at the level of 1.1920. Demand will increase if the Euro area publishes strong economic data. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.1857 and 1.1818, but the MACD indicator line must be in the oversold area in order to bring about a market reversal to 1.1882.

For short positions:

Open a short position when euro reaches 1.1857 (red line on the chart), and then take profit at the level of 1.1818. A decline will occur if the Euro area releases weak economic reports. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.1882 and 1.1920, but the MACD line must be in the overbought area in order to provoke a market reversal to 1.1857.

Analysis of transactions in the GBP / USD pair

Pound did not hit the local high last Friday. To be more specific, it was the multiple failed attempts to break through 1.3975 that led to the closure of many long positions in the market.

Trading recommendations for August 2

Pound will trade today depending on the data on UK manufacturing activity. If the figure turns better than the forecast, then GBP/USD will increase rather sharply. Then, in the afternoon, a similar report will be published from the US. This time, if the data exceeds expectations, dollar will regain its strength, which could lead to a decline in the pair.

For long positions:

Open a long position when pound reaches 1.3910 (green line on the chart), and then take profit at the level of 1.3956 (thicker green line on the chart). GBP/USD will climb up if UK publishes good PMI data. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.3885 and 1.3846, but the MACD line should be in the oversold area in order to set off a market reversal to 1.3910.

For short positions:

Open a short position when pound reaches 1.3885 (red line on the chart), and then take profit at the level of 1.3846. A decline will occur if UK releases weak economic reports. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.3910 and 1.3956, but the MACD line should be in the overbought area in order to trigger a market reversal to 1.3885.

[KostiaFM]

Another trillion dollars for the American economy

Yesterday, the leading US stock indexes fell slightly, but in general they continue to be near their absolute highs and can update them any time. All three leading indexes, the S&P 500, Dow Jones, and NASDAQ Composite, maintain upward trends. We have already mentioned earlier why this is happening. First, the Fed continues to buy bonds and mortgage-backed securities from the open market, saturating it with liquidity. And all the cash immediately flows into the most profitable stocks that can provide profit to their investors in the future. Moreover, the profit is not even a dividend, but a profit due to a constant increase in value. The dividends of almost all American companies are already below the current inflation. Therefore, it is extremely difficult to make a profit from dividend payments in the near future. However, since investors do not have much choice, and stocks are the most common investment tool, it is the stock market that capital continues to flow.

At the same time, the US Senate agreed on a new package of assistance to the US economy. Previously, it appeared under the name "infrastructure package". It can be recalled that Joe Biden offered two stimulus packages for the American economy, each of about $2 trillion. As you can see, the final version of the first package is half as small. However, we have not yet seen the second package, which is the "social" one. The infrastructure package will be aimed at investing in roads, bridges, ports, the internet, and other facilities over the next 5-8 years. It is noteworthy that the source of the formation of this package is planned to be tax revenues, but not the attraction of loans. In other words, the US government will not climb into even greater debts to finance this $1 trillion package. Of course, we cannot judge where this money will come from. In America, they really like to live on credit, and the size of the public debt in the United States already exceeds the volume of GDP. Simply put, the States owe more money than their economy is worth. In fairness, it should be noted that about half of the debts are debts to themselves. Simply put, the American government owes American investors, various American funds, the Fed, and so on. For example, the United States owes China or Japan only $1 trillion, which is not so much. Thus, a default is unlikely to threaten Washington. Moreover, the money is spent on improving infrastructure, which will attract new investors to America even more in the future. The Fed can also print money in almost any volume without fear of hyperinflation, since the dollar remains the world's number one currency. One way or another, the US economy continues to accelerate and will continue to do this for many years to come.

[KostiaFM]

Forecast for USD/JPY on August 4, 2021

USD/JPY

Yesterday, the yen continued strengthening against the dollar and overcame the target level of 109.20. The Marlin Oscillator is declining and the price is expected to move towards the target of 108.35, but for this the yen still needs support from external markets, which is now weakening.

Yesterday, the US stock index S&P 500 gained 0.80%, this morning the Chinese Shanghai Composite added 0.69%, only the Japanese Nikkei 225 lost 0.16%. The dollar index is in a neutral position. Consolidating above 109.20 may lead to growth to the nearest target of 109.80.

On the four-hour chart, the signal line of the Marlin oscillator continues to develop inside the wedge, the exit from which statistically predominates downward, but due to the reversal of the signal line from its lower border, a double convergence of the price with the oscillator has formed, and this is already a sign of an upward breakthrough.

The result is an uncertain situation, although rather an expectant one. The price movement in either direction can be fast and deep, so investors are in no hurry to get ahead of events. Together with the market, we will also wait.

[KostiaFM]

Hot forecast for GBP/USD from August 5, 2021

Today, in terms of the economic calendar, a meeting of the Bank of England is scheduled, during which no changes in the parameters of monetary policy, including the interest rate, are expected.

Investors are most interested in comments during the meeting, which may lead to speculative manipulations in the market.

During the US session, weekly data on applications for unemployment benefits in the United States will be published, where they predict a reduction in their volume, which is considered a positive factor and may lead to a strengthening of dollar positions.

The GBP/USD pair, following the correction pattern from the psychological level of 1.4000, reached the support of 1.3900, where there was a slowdown and as a result, a rebound in the price.

The pivot point of 1.3900 was tested twice for strength by the quote, which indicates interest in sales from market participants.

The volatility of the currency pair at the beginning of the trading week is 61 points, which is considered a low indicator and may indicate the process of accumulation of trading.

Expectations and prospects

The downward development of the price according to the correction scenario is still relevant in the market. But in order to confirm the sellers' intentions, the quote needs to stay below the 1.3870 mark. In this case, it will open in the direction of 1.3825-1.3780.

The upward development will be relevant in the case of holding the price above the level of 1.4000 on the daily period. In this scenario, the correction course will end, and the upward cycle from the local minimum on July 20 will be prolonged to new levels.

A comprehensive indicator analysis signals a sale relative to the short-term and intraday periods, due to the price movement within the 1.3900 level.

[KostiaFM]

EUR/USD and GBP/USD: Trading plan for novice traders for August 6, 2021

Economic calendar for August 6

Today, in terms of the economic calendar, a report by the United States Department of Labor will be published, which in the world of finance is considered one of the most important economic events.

Expectations for the report:

The unemployment rate in July may decrease from 5.9% to 5.7%

Outside agriculture, 870,000 new jobs can be created against 850,000 in the previous reporting period.

As you can see from the details of statistical expectations, experts predict a further recovery process, and this may lead to an increase in the US dollar if the forecast coincides.

The time of publication of the report is 12:30 UTC.

Trading plan - EURO/DOLLAR (August 6)

Market participants are working to depreciate the euro, which corresponds to the process of recovery of the downward movement in relation to the correction. Trading expectations consider the value of 1.1752 as a possible outlook for the downward trend. In this scenario, we will receive a full price recovery relative to the corrective move, as well as a signal to prolong the downward cycle from the beginning of June.

Trading Plan - POUND/DOLLAR (August 6)

The price movement along a sideways trajectory is still relevant in the market, but traders are already ready for changes since working within the established boundaries does not have high profits.

Traders will consider an upward movement if the price holds above the level of 1.4000, opening the way in the direction of the values 1.4100-1.4150.

A downward movement will be relevant if the price is kept below the level of 1.3885, opening the way in the direction of 1.3825-1.3800.

[KostiaFM]

Analysis and trading recommendations for EUR/USD and GBP/USD on August 9

Analysis of transactions in the EUR / USD pair

A signal to sell appeared in the market on Friday, which provoked a 30-pip decline in EUR / USD. Apparently, the signal came when the MACD line was going down from zero, so traders were able to open short positions in the market.

The improved situation in the US labor market contributed to such a sharp downward movement, especially since good employment figures are evidence of strong economic recovery. Meanwhile, other data released last Friday, such as reports on industrial production in Germany and foreign trade balance in France, were not remarkable at all.

Today, the market will move depending on the reports scheduled to be published. In the morning, there will be data on the foreign trade balance in Germany and investor confidence from the Euro area, which are expected to post a decline. If this happens, demand for euro will continue to decrease. Then, later in the afternoon, the situation may exacerbate as Fed representatives will deliver speeches, which could provoke increased demand for dollar and accordingly, a further decline in EUR / USD.

For long positions:

Open a long position when euro reaches 1.1779 (green line on the chart), and then take profit at the level of 1.1828. Demand will increase if the Euro area publishes good data on investor confidence. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.1741 and 1.1705, but the MACD indicator line must be in the oversold area in order to bring about a market reversal to 1.1741 and 1.1705.

For short positions:

Open a short position when euro reaches 1.1741 (red line on the chart), and then take profit at the level of 1.1705. A decline will occur if the Federal Reserve hints at a future policy change. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.1779 and 1.1828, but the MACD line must be in the overbought area in order to provoke a market reversal to 1.1741.

Analysis of transactions in the GBP / USD pair

There were several market signals on Friday, but only some were successful. In fact, the first one, which was to sell, had to be ignored because it came when the MACD line was far away from zero, which significantly limited the downward potential of GBP / USD. Fortunately by afternoon, the indicator had moved down from zero, so the pair was able to decline by about 50 pips. And today, price has reached the target level, which is 1.3855.

Surprisingly, long-term prospects for bond purchases did not help pound, which cannot be said about the data on the US labor market, which exceeded all expectations. Meanwhile today, there are no macro statistics scheduled to be published, so pound will most likely undergo an upward correction. But later in the afternoon, the situation may change as Fed representatives will deliver speeches, which could provoke increased demand for dollar and accordingly, a decline in GBP / USD.

For long positions:

Open a long position when pound reaches 1.3881 (green line on the chart), and then take profit at the level of 1.3919 (thicker green line on the chart). GBP / USD may climb today since there are no macro statistics scheduled to be published. But before buying, make sure that the MACD line is above zero, or is starting to rise from it.

It is also possible to buy at 1.3854 and 1.3820, but the MACD line should be in the oversold area in order to set off a market reversal to 1.3881.

For short positions:

Open a short position when pound reaches 1.3854 (red line on the chart), and then take profit at the level of 1.3820. A decline could occur in the afternoon, during the speech of Fed representatives. But before selling, make sure that the MACD line is below zero, or is starting to move down from it.

It is also possible to sell at 1.3881 and 1.3919, but the MACD line should be in the overbought area in order to trigger a market reversal to 1.3854.

[KostiaFM]

Fractal analysis of major currency pairs on August 10, 2021

Outlook on August 10:

Analytical overview of popular currency pairs on the H1:

The key levels for the EUR/USD pair are 1.1791, 1.1773, 1.1761, 1.1741, 1.1723, 1.1705, and 1.1694. The price has been moving in a downward trend since July 30. Now, we expect a short-term decline in the 1.1741 - 1.1723 range. If the last value is broken, it will allow us to move to a potential target of 1.1694. After that, the price may consolidate in the range of 1.1705 - 1.1694, from which a pullback into a correction can be expected.

A short-term growth, in turn, is likely in the range of 1.1761 - 1.1773. If the latter is broken, a deep correction will occur. The target is set at 1.1791, which is also the key support level.

The main trend is the downward trend from July 30.

Key levels of structure development:

Upward resistance: 1.1761 Target: 1.1772

Upward resistance: 1.1775 Target: 1.1790

Downward resistance: 1.1736 Target: 1.1724

Downward resistance: 1.1721 Target: 1.1705

The key levels for the GBP/USD pair are 1.3934, 1.3897, 1.3870, 1.3831, 1.3813, 1.3781, 1.3749, 1.3728 and 1.3683. The further development of the downward trend from July 29 is expected after the price breaks through the noise range of 1.3831 - 1.3813. The target is set at 1.3781 and the price may consolidate around it. If the indicated target is broken, it will lead to a strong decline to the next target of 1.3749. After that, the price may consolidate in the range of 1.3749 - 1.3728. The ultimate potential downward target is 1.3683. After reaching it, an upward pullback can be expected.

Short-term growth is expected in the range of 1.3870 - 1.3897. If the last value is broken, a deep correction will occur. The target is set at 1.3934, which is also the key support level.

The main trend is the downward trend from July 29.

Key levels of structure development:

Upward resistance: 1.3870 Target: 1.3895

Upward resistance: 1.3899 Target: 1.3934

Downward resistance: 1.3813 Target: 1.3781

Downward resistance: 1.3779 Target: 1.3750