KostiaForexMart Posted August 12, 2022 Share Posted August 12, 2022 The music did not play for long, the yen danced for a short time The dollar is getting up from its knees after a crushing fall on Wednesday. The yen is currently feeling the greatest pressure from the greenback, which showed the strongest growth on the US inflation data the day before. The market freaked out By the end of the week, investors continue to digest the July statistics on US inflation. Recall that the data turned out to be cooler than forecasts, which caused a large-scale sell-off of the dollar. Last month, annual inflation in the US fell from the previous value of 9.1% to 8.5%, although economists had expected the CPI to fall to 8.7%. A significant easing of inflationary pressures has increased fears that the Federal Reserve may reduce the degree of its aggressiveness with respect to interest rates already at the September meeting. The reaction of the market was lightning-fast and very emotional: the yield of US government bonds fell sharply, followed by a plunge in the dollar. The DXY index sank 1.5% to a low of 104.646 on Wednesday. The dollar's weakness provided support to all major currencies, but the yen gained the most in this situation. The yen soared by more than 1.6% against its US counterpart, to a mark of 135. The dollar is gaining momentum After a loud fall on Wednesday, the yield of 10-year US government bonds turned towards growth yesterday. It rose by 3.41% during the day and reached a new high of 2.902%. The sharp increase in the indicator again widened the gap between the yields of US treasury bonds and their Japanese counterparts. The yen, which is very sensitive to this difference, could not resist the pressure and moved to decline. The USD/JPY pair managed to recover by 0.12% to 133.19 on Thursday. It was also supported by the general strengthening of the dollar. The greenback grew by 0.1% against its main competitors. Its index remained almost unchanged and stayed at 105.2 during the day. Yesterday's comments by Federal Reserve members contributed to the reversal of the yield of US government bonds and the dollar. Despite the slowdown in inflation in July, the tone of officials still remains hawkish. Neil Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the latest CPI data did not change his expectations about the Fed's future course. In addition, he stressed that the central bank is still very far from declaring victory over inflation. The head of the San Francisco Federal Reserve, Mary Daly, was in solidarity with her colleague. She also does not rule out the continuation of the Fed's hawkish policy, unless, of course, the next portions of macro data will favor such a sharp increase. Recall that the key Fed's goal is to bring interest rates from the current level of 2.25–2.5% to 4% by the end of the year. Some analysts believe that the central bank will try to solve this problem as soon as possible, and predict another rate increase of 75 bps at a meeting in September. Why does the yen have no chance? This year the dollar index rose by 10%. The greenback received such a solid increase thanks to the aggressive policy of the Fed. Since March, the US central bank has raised interest rates by 225 bps. This makes it the undisputed leader: none of the major central banks can compete with the Fed in the pace of tightening. But the biggest divergence in monetary policy right now is between the US and Japan. Despite the global increase in rates, the Bank of Japan is still bending its line and continues to keep the rate at a low level. The priority for the Japanese central bank is not to fight inflation, but to restore the economy, which has been hit hard by the COVID-19 pandemic. Unlike the US and EU, which have already managed to get out of the crisis caused by the coronavirus, the Japanese economy is just beginning to show signs of recovery. According to preliminary estimates, in the second quarter, Japan's annual GDP could show growth of 2.7%, which is in line with pre-pandemic indicators. Statistics on the gross domestic product will be published on Monday. But even if the data turns out to be positive, it most likely will not affect the policies of BOJ Governor Haruhiko Kuroda in any way. Many experts are inclined to believe that the head of the BOJ will not give up his commitment to a super-soft monetary rate. The main argument in its favor now will be the low wages remaining in the country. At this stage, salaries in Japan are far behind the rate of inflation, which undermines the purchasing power of citizens. Another big reason to keep rates low is the coronavirus statistics. Japan is at the epicenter of a new COVID-19 outbreak, posing a major threat to the world's third largest economy. According to economists at the Japan Research Institute, the BOJ's position can be changed to hawkish only after Kuroda leaves his post. Given that he is due to retire no earlier than April 2023, one can estimate how long the downward trend promises to be for the yen. Analysts at the Finnish bank Nordea predict that the USD/JPY pair will continue to strengthen on the tight policy of the Fed and reach the level of 140 in the foreseeable future. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 15, 2022 Share Posted August 15, 2022 GBP/USD: How deep could GBP fall? The pound encountered support after the release of better-than-expected data. The fact that the British economy is not in its best state ahead of the winter season is clear. There are great risks of a recession in the country as monetary tightening along with high energy prices are posing a threat to the economy. Meanwhile, Pantheon Macroeconomics sees Q4 GDP rising by 0.3% from the previous period. "A winter recession can't be ruled out, given that the rise in Ofgem's energy price cap in October will boost CPI inflation—and hence reduce real incomes—by nearly four percentage points. But with fiscal support likely to be scaled up considerably by the next PM and high income households still possessing substantial savings, we think that GDP will flatline through the winter, rather than fall," economists at Pantheon Macroeconomics said. In the second quarter, the British economy contracted by 0.1%, below the expected 0.2%. Overall, the economy expanded by 2.9% year-on-year, above the market forecast of 2.8%. The pound saw an increase in volatility, but traders made no attempts to trade in any direction. In light of a rise in the dollar, however, a sell-off occurred. At the beginning of the trading week, the pair is trying to consolidate. Demand for the pound is decreasing and the currency is edging down amid gloomy forecasts made by the Bank of England. On Monday, bearish pressure on the pound increased, and the price fell below 1.2100. So, GBP/USD was unable to rise on better-than-expected macro data. At the same time, the dollar does not show steady growth either. Traders are now uncertain about the Federal Reserve's further monetary stance. The hawkish comments of some policymakers hint that the regulator will remain aggressive. Yet, there are still questions. The situation will get clearer when the FOMC Minutes are released this week. Should the Federal Reserve stay aggressive, the greenback's rally will extend. Therefore, the dollar is unlikely to be bearish at the beginning of the trading week although its growth potential will be limited. So, GBP/USD may recover eventually. Weekly outlook for GBP This week, the focus will be on the retail sales report scheduled for Wednesday as well as US weekly jobless claims and the FOMC Minutes. "Next week's FOMC minutes will contain some discussion of the FOMC's apparent desire to slow the pace of hikes soon. But we do not expect it to be a lasting relief," Goldman Sachs said. Analysts now see a 50 basis-point hike as the unlikely outcome at the September meeting. US macro data will surely be of great importance to the GBP/USD quotes. Still, macro results in the United Kingdom could affect the Bank of England's interest rate forecast. On Tuesday, traders will see the release of data on the UK labor market report, which will influence the Bank of England's monetary policy stance. Meanwhile, the inflation report published on Wednesday will be of primary importance as it will affect both the BoE's monetary policy and the pound's short-term potential. At this point, it is unclear how the market could react to a possible increase or decrease in rate hikes. Therefore, in light of a busy trading week, the pound is likely to trade in a trend in the coming days after consolidation.On Monday, bullish demand for the pound is falling. In the short-term, the pair is expected to be bearish, with targets at 1.2050 and 1.2000 (psychological level). Resistance is seen at 1.2200, 1.2265, and 1.2315. Support stands at 1.2080, 1.2030, and 1.1965. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 16, 2022 Share Posted August 16, 2022 Tips for beginner traders in EUR/USD and GBP/USD on August 16, 2022 Details of the economic calendar for August 15 Monday was traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the United Kingdom, and the United States were not released. In this regard, traders focused on the information flow, and practiced technical analysis. Analysis of trading charts from August 15 The EURUSD currency pair, during an intense downward movement from the resistance level of 1.0350, reached the lower limit of the previously passed flat of 1.0150/1.0270. As a result, there was a local reduction in the volume of short positions in the market, which led to a slowdown. The GBPUSD currency pair accelerated its decline after breaking through a number of variable levels. As a result, the quote came close to the important psychological level of 1.2000, where it formed a small stagnation. Economic calendar for August 16 At the opening of the European session, the UK labor market data was released, where unemployment remained at the same level of 3.8%. At the same time, employment in the country increased by 160,000 against 296,000 in the previous reporting period. Forecasts assumed that employment would grow by 256,000. At the same time, the change in the number of applications for unemployment benefits in July decreased by 10,500, which is good, but forecasts assumed -32,000. Statistics for the UK stand out only by the unemployment rate, since everything is ambiguous on other indicators. The pound sterling was standing still at that time. During the American trading session, data on the construction sector in the United States will be published. The number of issued building permits and the volume of new housing starts is assumed to decrease. Subsequently, data on the volume of industrial production will be published, which is assumed to decline from 4.2% to 4.0% YoY and grow by 0.3% MoM. Time targeting: U.S. Building Permits Issued – 12:30 UTC (prev. 1.696M; prog. 1.65M) US Housing Starts – 12:30 UTC (prev. 1.55 M; prog. 1.54 M) US Industrial Production – 13:15 UTC Trading plan for EUR/USD on August 16 Presumably, the 1.0150 area will put pressure on sellers, which may lead to a gradual slowdown in the downward cycle, resulting in a technical pullback in the market. Traders will consider a prolonged downward cycle if the price stays below 1.0100. In this case, the quote will rush towards the parity level. Trading plan for GBP/USD on August 16 In this situation, the area of the control level puts pressure on sellers, negatively affecting the volume of short positions. In view of the local signal about the oversold pound sterling, we can assume the formation of a pullback. Traders will consider the next downward move if the price holds below 1.1950. Under this scenario, a resumption of the medium-term downward trend is possible. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 17, 2022 Share Posted August 17, 2022 Tips for beginner traders in EUR/USD and GBP/USD on August 17, 2022 Details of the economic calendar for August 16 The UK's Office for National Statistics (ONS) report on the labor market yesterday showed unemployment rate stabilized at around 3.8%. Employment in the country increased by 160,000 against 296,000 in the previous reporting period. Forecasts predicted that employment would grow by 256,000. At the same time, the change in the number of applications for unemployment benefits in July decreased by 10,500, which is good, but they predicted -32,000. Statistics for the UK stand out only by the unemployment rate, since everything is ambiguous on other indicators. The pound sterling stood still at the time of publication. During the American trading session, data on the construction sector in the United States were published, which recorded a widespread decline in performance. Details: U.S. Building Permits Issued – Prev. 1.696M; Fact. 1.674M. U.S. Housing Starts – Prev. 1.599M; Fact. 1.446M. Subsequently, data on the volume of industrial production were published, which recorded a slowdown from 4.02% to 3.9% YoY, and increased by 0.6% MoM. Conclusion: Data on the US came out negatively; the dollar was under pressure from sellers. Analysis of trading charts from August 16 The EURUSD currency pair overcame the support level of 1.0150 locally during an intense downward movement, but the sellers failed to stay below the reference value of 1.0100. As a result, there was a pullback in the market above the support level. The GBPUSD currency pair rebounded from the psychological level of 1.2000 with surgical precision. As a result, there was an increase in the volume of long positions, strengthening the pound sterling by about 100 points. Economic calendar for August 17 At the opening of the European session, data on UK inflation was published, which recorded an increase from 9.4% to 10.1%. Such a high level of inflation is likely to lead to an even stronger increase in the interest rates of the Bank of England. In Europe, the second estimate of GDP for the second quarter will be published, where no reaction is expected since it should coincide with the first estimate, which is already included in the current quotes. During the American trading session, traders expect retail sales data in the United States, the growth rate of which is likely to slow down from 8.4% to 8.1%. Even with a possible slowdown, retail sales are still at a high level. However, the very fact of a slowdown amid fears of a recession will be a catalyst for fear among investors. Thus, the US dollar may be under pressure. Near the closing of the European session, and when Western traders will be in the active phase, the FOMC minutes will be published. Time targeting: EU GDP – 09:00 UTC US Retail Sales – 12:30 UTC FOMC protocol – 18:00 UTC Trading plan for EUR/USD on August 17 Presumably, the area of the level of 1.0150 is still putting pressure on sellers. For this reason, one of the possible scenarios for the price development is a rebound towards 1.0240. As for the prolongation of the downward cycle, this scenario will be relevant only after holding the price below 1.0100 for at least a four-hour period. In this case, the quote will rush towards the parity level. The pullback stage may well slow down the move around 1.2120/1.2150. In this case, there will be a gradual increase in the volume of short positions, returning the quote to the psychological level of 1.2000. Prolonging the current pullback will be considered if the price holds above the value of 1.2160 in a four-hour period. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 18, 2022 Share Posted August 18, 2022 Dollar - period. USD again trumps on all fronts The FOMC minutes, published on Wednesday, became another springboard for the dollar. Today, the US currency, inspired by the hawkish mood of the Federal Reserve officials, is growing in all directions. Temporary weakness Yesterday investors focused on the minutes of the FOMC meeting. Immediately after its release, the dollar was defeated, but a little later the market interpreted the report in favor of the greenback. Short-term pressure on the USD came from Fed officials' concerns about a recession. During the meeting, it was noted more than once that sectors of the economy that are sensitive to higher interest rates have already begun to show signs of slowing down. Some Fed members fear that as part of their commitment to bring inflation under control, the central bank may tighten policy more than is necessary to restore price stability. In this case, the American economy is unlikely to survive. The rhetoric of the FOMC meeting participants initially seemed dovish to the market. After the release of the minutes, the probability of a rate hike by 75 bps fell to 40% in September, while earlier traders estimated it at 52%. Against this background, the yield of US government bonds began to decline, which provoked a fall in the dollar index. The greenback's low from yesterday was the 106.39 mark. The euro won the most from the short-term rebound of the greenback. After the release of the July minutes, the EUR/USD pair rose by almost 50 points and reached the level of 1.0202. This helped the euro to close the day with a slight increase (+0.13%), while other major currencies, on the contrary, sank in tandem with the USD. Invincible Hulk Despite short-term weakness, the dollar index finished Wednesday's session with growth. The revaluation of the FOMC minutes by the market helped it recover. When the first emotions subsided, the main thing came to the fore: the Fed still intends to fight inflation, which implies further aggression towards interest rates. At the July meeting, absolutely all of its participants agreed to raise rates by 75 bps. Moreover, many of them supported the view that the Fed will continue to move at the same pace if necessary. Of course, by "necessary" we mean the persistence of inflationary pressures. At this stage, Fed members do not see convincing signs of a decrease in price growth, so they do not exclude that even more efforts will be needed to resolve the situation. As for the economy, politicians said they would closely monitor its adaptation to the new monetary rate and take all necessary measures to prevent a recession. In the ranks of the Fed, they do not deny a possible slowdown in economic growth, but at the same time officials manage to remain optimistic. Many of them believe that thanks to a strong labor market, US GDP could grow in the third quarter. The data on retail sales in America, which were published on Wednesday, also helped reduce fears of a recession. The US Department of Commerce said that in July the indicator rose by 10.3% year on year, which is higher than the forecast estimate (8.3%) and more than the previous month's value (8.5%). A positive retail sales report coupled with hawkish FOMC minutes provided strong support for the dollar. Yesterday, the US currency managed to strengthen against its competitors by almost 0.1%. The most important outsider was the Australian dollar. It plunged 1.23% against the greenback. The aussie's appeal has also been eroded by heightened concerns about Chinese demand for commodities, including iron ore. The greenback soared 0.98% against the New Zealand dollar, negating the earlier growth of the NZD. Recall that on Wednesday the Reserve Bank of New Zealand increased interest rates by 50 bps to 3%, and signaled the continuation of the aggressive rate in the coming months. This triggered the rise of the kiwi. The US dollar jumped 0.55% against the Japanese yen to 134.97. Such significant dynamics is a completely logical reaction of the USD/JPY pair to another increase in the gap between the yields of US and Japanese government bonds. The greenback edged up 0.34% against the pound. The pound's weakening on Wednesday was also facilitated by the release of July statistics on inflation in the UK. The report showed that consumer prices in the peninsula hit 10.1% last month, the highest in 40 years. Double-digit inflation has heightened investor fears that the Bank of England will have to be even more aggressive on rates. This raises the already high risk of a recession in Britain. Brilliant outlook for USD "Now the overall picture for the dollar looks very positive. It is in a strong upward trend across the board," notes analyst Matt Simpson. On Thursday morning, under the pressure of the greenback, the euro, the only currency from the group of 10, which showed growth yesterday in tandem with the USD, could not resist. EUR/USD fell to 1.0150 amid growing recession risks. Recall that yesterday Eurostat presented the second estimate of the eurozone GDP for the second quarter. The indicator was revised downward. Also, the euro is under strong pressure from the energy crisis flaring up in the eurozone, which is aggravated by abnormal heat. Record high temperatures and a lack of rainfall caused the Rhine to dry up in Germany. Since the water level in the river has fallen below the critical level of 40 cm, the transport of coal, food and other goods has been significantly reduced. Also, the appetite for the euro is now declining amid anti-risk sentiment among investors. The safe dollar is in high demand due to another escalation in geopolitical tensions between the US and China. Washington just announced official trade talks with Taiwan earlier this fall. As you can see, the EUR/USD pair has fallen into a "perfect storm". According to analysts' forecasts, the dollar will continue to strengthen against the euro in the foreseeable future. Its growth is also expected in other directions. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 19, 2022 Share Posted August 19, 2022 Tips for beginner traders in EUR/USD and GBP/USD on August 19, 2022 Details of the economic calendar for August 18 The annual inflation rate in the euro area accelerated to 8.9% in July from 8.6% a month earlier, eventually updating the historical record. The market ignored the data since it completely coincided with the preliminary estimate. Nevertheless, rising inflation in the EU points to further steps by the ECB to raise interest rates. During the American trading session, weekly data on jobless claims in the United States were published, where, despite the divergence of forecasts, we still saw an increase in their volume. Statistics details: Continuing claims for benefits increased from 1.430 million to 1.437 million. Initial claims for benefits decreased from 252,000 to 250,000. Analysis of trading charts from August 18 The EURUSD currency pair, after a short stagnation within the 1.0150 level, managed to regroup trading forces. As a result, traders managed to properly increase the volume of dollar positions. This step led to a breakdown of the reference value of 1.0100. On the trading chart of the daily period, there is an attempt to prolong the medium-term downward trend. The recovery of the dollar relative to the recent correction is 72%. The GBPUSD currency pair noticeably accelerated the decline, which led to the breakdown of the psychological level of 1.2000. Typical speculative interest has accelerated the sale of the pound by more than 140 points, placing the quote below 1.1900. On the trading chart of the daily period, there is also an attempt to resume the medium-term downward trend. The recovery of dollar positions relative to the recent correction is 72%. Thus, based on the daily charts, it can be seen that EURUSD and GBPUSD are moving after, actively restoring the downward trend. Economic calendar for August 19 At the opening of the European session, UK retail sales data were published, its rate of decline slowed down from -6.2% to -3.0%. And let's talk about the decline in sales. The very fact of slowing down this process is important. Important statistics in Europe and the US are not expected. Trading plan for EUR/USD on August 19 Despite the local signal of oversold euro in the short term, the market remains in a downward interest. Thus, the subsequent price retention below the 1.0100 mark may push the quote towards parity. Traders will consider an alternative scenario if the price returns above 1.0100 in a four-hour period. Trading plan for GBP/USD on August 19 The current price change suggests a recovery of the downward trend relative to the recent correction. Keeping the price below the 1.1880 mark may well prolong the set inertial move in the direction of the local low of the medium-term trend at 1.1750. It is worth considering that the signal about the oversold of the pound sterling is already taking place in the short-term and intraday periods. Thus, a technical pullback in the market cannot be ruled out. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 22, 2022 Share Posted August 22, 2022 Asian markets close mixed on Monday Asian stock markets were mixed on Monday. The Shanghai Composite and the Shenzhen Composite gained 0.57% and 0.64% respectively, while the Hang Seng Index went up by 0.12%. The Nikkei 225 decreased by 0.55%, the S&P/ASX 200 fell by 0.96%, and the KOSPI lost 1.15%. Investors are awaiting new information from Fed chairman Jerome Powell regarding the further monetary policy course of the US central bank. Powell is set to give a speech this week. Furthermore, market players took note of the Chinese central bank decreasing two of its key interest rates. The People's Bank of China cut its one-year loan prime rate to 3.65% from 3.7%. The five-year rate was cut to 4.3% from 4.45%. The move was not unexpected – earlier, the PBoC decreased its medium-term lending facility loan rate by 10 basis points to 2.75%. The Chinese central bank's rate cuts are aimed at boosting the country's economic growth, which has slowed down due to rising energy prices, weak property market, and COVID-19 lockdowns. On the Hang Seng Index, the biggest movers were Agile Group Holdings, Ltd. (+6%), CIFI Holdings (Group), Co. (+7%), Country Garden Holdings, Co., Ltd. (+3%), and China Resources Land, Ltd. (+2%) Shares of Sinopec Engineering (Group), Co. gained 4% after the company reported that its net profit increased by 0.6% in the first half of 2022. In Japan, the worst-performing stocks on the Nikkei 225 were Hino Motors, Ltd. (-3.5%), CyberAgent, Inc. (-3.1%), and Nippon Sheet Glass Co., Ltd. (-2,9%). The share price of Ai Holdings, Corp. advanced by 5%, thanks to the company's net profit jumping by 32% in the previous fiscal year. In South Korea, Samsung Electronics, Co. and Hyundai Motor, Co. lost 1.6% and 0.5% respectively. In Australia, BHP shed 0.2%, while Rio Tinto declined by 0.53%. Shares of NIB, Ltd. gained 6.6% thanks to the company's operating profit exceeding market expectations. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 23, 2022 Share Posted August 23, 2022 Technical analysis recommendations on EUR/USD and GBP/USD for August 23, 2022 EUR/USD Higher timeframes Last week's sentiment retained its strength and predominance, which contributed to the continuation of the decline. Bears managed to close the last day below the indicated reference points of psychological support (1.0000) and the minimum extremum (0.9952). If bulls recover their positions, the passed levels of 1.0000 and 0.9952 can exert attraction and resistance. Reliable consolidation below 1.0000 and 0.9952 will restore the downward trend of the higher timeframes. The reference points for a further decline in the current situation can be the psychological level (0.9000) and the minimum extremum of 2000 (0.8225). H4 – H1 Bears currently have the advantage on the lower timeframes. They are now testing the first support for the classic pivot points (0.9896). Further reference points for the decline within the day are two other supports of the classic pivot points—0.9851 (S2) and 0.9775 (S3). With the correction developing, bulls will need to focus on passing the key levels, which are now the resistance levels 0.9972 (central pivot point of the day) and 1.0088 (weekly long-term trend). Intermediate resistance can be noted at 1.0017 (R1). GBP/USD Higher timeframes Yesterday, bears updated the minimum extremum and tested its support (1.1759). Soon, the result of interaction with the level will form. As the downward trend movement continues, the next reference point will be the minimum extremum of 2020, fixed at 1.1411. H4 – H1 The pair continues to decline, there is a downward trend, and the main advantage in the lower timeframes belongs to the bears. The reference points for the decline within the day are the support of the classic pivot points (1.1725 – 1.1685 – 1.1630). A corrective rise, consolidation above the key levels of 1.1780 (central pivot point of the day) – 1.1936 (weekly long-term trend) and a reversal of the moving average will help change the current balance of power. Intermediate resistance on this path can be provided by the resistance of the classical pivot points (1.1820 – 1.1875 – 1.1915). Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 24, 2022 Share Posted August 24, 2022 USD/JPY: sadness, melancholy, sorrow... After a multi-day rally on Tuesday, the USD/JPY pair reversed sharply to the downside and bounced down hard. This morning, the bulls are struggling to regain the advantage, but the bears are gaining. Who brought down the dollar? Yesterday, nothing foreshadowed a catastrophe of this magnitude. Ahead of the release of the next batch of US economic data, the dollar index reached a multi-year high of 109.27. In the first half of the day, the greenback felt the strong support of the Federal Reserve's hawks, which helped it strengthen against the yen to a 5-week peak of 137.70. However, US statistics turned out to be worse than forecasts and traders were disappointed, as a result of which the USD/JPY pair abruptly changed direction and shot down to the level of 135.80. Literally overnight, the dollar plunged against the Japanese currency by 100 points, or 0.7%. The key pressure on it was increased concerns about the slowdown in the American economy. The risk of recession has increased due to the pessimistic data provided by S&P Global. The agency reported that in August, the composite purchasing managers' index fell from the July value of 47.7 to the level of 45, which is the lowest since February 2021. The PMI in the services sector showed an even more significant drop this month. The indicator dropped from 47.3 to 44.1, while economists, on the contrary, expected an increase to 49.2.Fresh statistics on the US real estate market, which was published on Tuesday, also added fuel to the fire. New home sales in the US fell by more than 12% in July, to the lowest level in six years (from 585,000 to 511,000). In addition, the dynamics of the index of manufacturing activity from the Richmond Fed, which was also published yesterday, turned out to be negative. The index fell to -8.0 in August from the previous reading of 0.0. Taken together, all of these data pointed to signs of a slowdown in US economic growth. Now the markets are once again fearing that the Fed may loosen its hawkish grip on inflation with the looming recession. The resumption of speculation about a less aggressive rate hike has awakened the dollar bears. They increased their pressure on the USD, even though in the coming days Fed Chairman Jerome Powell may trample on the root of all doubts about the US central bank's decisiveness. Caution: High volatility! Most analysts predict that in the short term, the USD/JPY pair will continue to storm strongly. The high volatility of the asset will be associated with the continuing uncertainty about the Fed's future course. Now traders expect that Powell's speech on Friday at the 3-day Fed symposium in Jackson Hole will bring clarity to this issue. Many experts are betting that Powell will remain true to the current monetary rate despite the increasing risks of recession. This opinion is supported by recent hawkish comments by members of the Fed. So, yesterday, the president of the Federal Reserve Bank of Minneapolis Neil Kashkari said that the central bank will have to act more aggressively for a longer time if inflation turns out to be much more stable than expected. According to analysts, any hint by the head of the Fed to further tightening at a given pace can inspire the dollar to new highs. And most of all, in this case, the yen will suffer again. Recall that this year, the JPY plunged more than other currencies from the group of 10 against the dollar due to the divergence in the monetary policy of the Fed and the Bank of Japan. According to forecasts, after Jackson Hole, bulls can push the USD/JPY pair to the psychologically important 140 mark. However, let's not force things, especially since today we are expecting a new batch of important economic data from the United States. Statistics on basic orders for durable goods will be published on Wednesday. According to economists, the indicator will be 0.2% against the previous value of 0.4%. If the forecast is justified and the volume of orders falls, this will indicate a decrease in the activity of manufacturers, which will be another blow to the gut for the dollar. In the near future, the USD/JPY pair risks being far down again. The technical picture also gives hope to intraday bears: a pullback of the RSI (14) and bearish MACD signals. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 26, 2022 Share Posted August 26, 2022 Powell vs dollar: will he support or let it float freely? At the start of the symposium in Jackson Hole, the intrigue about the succeeding dynamics of the dollar increases. Market participants are tensely waiting for what Federal Reserve Chairman Jerome Powell will say and how his speech will affect the current monetary policy and the prospects of the greenback. At previous symposiums, Powell paid attention to very important issues. In 2020, he announced monetary stimulus for the American economy affected by the COVID-19 pandemic. Last year, the key moment was the statement about the temporary nature of inflation and the curtailment of incentives. Powell's mistake. His stance on inflation has cost the world and American economies dearly, although this situation is fixable. In 2022, the theme of the event is a reassessment of the current constraints in the economy, namely a large-scale price increase and ways to combat off-scale inflation. Experts are considering two scenarios of Powell's speeches: 1) Basic The head of the Fed will once again pay attention to extremely high inflation, stressing that the monetary authorities will fight it. The US central bank will do everything possible to maintain economic growth in the United States. 2) Negative Powell will confirm that the Fed is following the chosen course and is ready to aggressively raise rates to combat inflation. Against this background, the US economy will experience strong pressure. In addition, there may be an increase in yields and a correction in the markets. However, there are no prerequisites for the implementation of the second scenario. According to experts, Powell's actions will determine the further dynamics of the greenback. Market participants expect that Powell's speech will clarify the immediate prospects of monetary policy. According to analysts, Powell "will try to manage market expectations" while maintaining the hawkish position of the Fed. On Thursday, August 25, at the symposium that began in Jackson Hole, representatives of the Fed confirmed their intention to raise rates and keep them at a high level until inflation weakens. At the same time, investors remain optimistic about the US currency and cautious with a negative bias towards the European one. The dollar showed confidence this week, gaining momentum after the release of positive macroeconomic data. As a result, in the second quarter of 2022, the US GDP growth rate was revised upward (from -0.9% to -0.6%). At the same time, the number of applications for unemployment benefits decreased more than expected. After the statistics were released, profitability in the US peaked, but then retreated slightly from high levels. Experts have recorded a steady growth of the greenback over the current year (by 13.5% against a basket of key currencies). The US currency has risen to its highest level in 20 years, while the euro has fallen by about 12% to below parity, which has not been the case for two decades. At the moment, there are many USD bulls on the market betting on its rise. Traders and investors are confident that the dollar has the strength to continue growing thanks to the hawkish attitude of the Fed and inspiring economic indicators in the United States. Against this background, the European currency is noticeably losing to its American competitor. The energy crisis in Europe and the European Central Bank's unstable stance on raising rates add fuel to the fire. At the same time, most representatives of the central bank support an interest rate hike by 50 bps. However, many investors are deterred by the deteriorating economic prospects of the eurozone and constantly rising inflation. Against this background, the inflationary situation in the United States looks much more stable than on the other side of the ocean. According to analysts, double-digit inflation in the eurozone is due to the long-term Russian-Ukrainian conflict, which provoked the energy crisis. Economists fear that the euro bloc countries will fall into the so-called "downward spiral of wage and price growth", from which it is difficult to get out. Against this background, long positions on the euro sharply plunged, which was under pressure. The failures of the European currency play into the hands of the American one, experts emphasize. According to JPMorgan analysts, the greenback was supported not only by "encouraging economic data" on inflation and employment in the United States, but also by the "growing vulnerability" of the European economy. Recall that in July, the consumer price index in the United States rose by 8.5% in annual terms. At the same time, the unexpected increase in the number of jobs reduced market fears about the onset of a recession. The US currency has received strong support thanks to the Fed's aggressive rate hike. According to investment analysts at U.S. Bank Wealth Management, this trend will continue in the near future. Against this background, the EUR/USD pair maintains a bearish trend, and the euro still looks vulnerable. Experts note the growing downside risks in relation to the euro. In the short term, the EUR/USD pair is able to test the parity level again. The euro is still showing weakening, having failed to hold the 1.0000 mark. According to experts, the recovery above the level of 1.0030 will support the single currency. However, now it is rapidly sinking. The EUR/USD pair was near 0.9963 on the morning of Friday, August 26. Currently, experts consider the 0.9950 mark to be the support line, the breakdown of which will pull the pair to the low level of 0.9900. Earlier, currency strategists at Capital Economics announced a prolonged period of the euro's weakness amid deteriorating economic conditions in the eurozone. Against this background, the dollar has every chance of rising, as markets expect the Fed to raise rates again in September. The implementation of such a scenario will increase pressure on the euro. However, any signals from the head of the central bank that the Fed recognizes the stabilization of the inflation rate will allow the markets to interpret what has been said in favor of easing the monetary policy. Misinterpretation of Powell's statements can shake the dollar's position and help the short-term recovery of the EUR/USD pair, experts believe. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 29, 2022 Share Posted August 29, 2022 JPY is not a tenant. Powell and Kuroda signed the yen's death sentence The Japanese currency is flying down at the start of the new week. The reason for the next peak of the JPY is still the same – the divergence in the monetary policy of the Federal Reserve and the Bank of Japan, which intensified after Jackson Hole. The main event of last week was the annual Fed symposium in Jackson Hole, and its climax was the speech of the chairman of the US central bank. As expected, Fed Chairman Jerome Powell stressed his firm intention to fight inflation by further raising interest rates. – The restoration of price stability will take some time and will require the "decisive" use of the central bank's tools, – the official said during his speech at the forum. The market interpreted this comment as hawkish, which provoked a sharp jump in the yield of US government bonds and, as a result, a large-scale rally of the dollar. The DXY index updated its 20-year high on Monday morning, jumping to the level of 109.4. The Japanese currency suffered the most from the strong greenback. In just a couple of hours, the Japanese fell by almost 0.6% and reached a 5-week low of 138.60. The current weakness of the JPY is also dictated by the dovish tone of the head of the BOJ. Like his American counterpart, BOJ Governor Haruhiko Kuroda did not present any surprise at the Jackson Hole symposium. Earlier, Kuroda repeatedly stated that the normalization of monetary policy could cause serious damage to the Japanese economy, which has not yet recovered after the COVID-19 pandemic. Last Saturday, Kuroda again made it clear that he remains faithful to the ultra-soft course and will continue to adhere to it until "wages and prices will not grow in a stable and sustainable manner." According to experts, this comment by the head of the BOJ was the last nail in the coffin of the Japanese currency. In the near future, the yen will not only continue to fall, but also, most likely, will reach another record low against the dollar. At the time of release, the USD/JPY pair rose above the 139 level and was aimed at the psychologically important 140 mark. Most currency strategists believe that in the short term, the asset will be able to cross the key barrier that proved impregnable last month. The probability of such a scenario developing is now very high. In the light of recent speeches by Powell. The markets expect that the wide difference in interest rates between Japan and the United States will remain longer than predicted. This significantly strengthens the bulls' positions on the USD/JPY pair. According to experts, the upward trend of the asset will continue until at least one of the central banks signals a change in its current monetary rate. We also draw your attention to the fact that this week the US dollar may receive another strong growth momentum. On Friday, traders expect the release of the US employment report for August. We also draw your attention to the fact that this week the US dollar may receive another strong growth momentum. On Friday, traders expect the release of the US employment report for August. If the data from the labor market turns out to be strong, it will push the greenback to new heights and send the yen even deeper to the bottom. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 30, 2022 Share Posted August 30, 2022 Tips for beginner traders in EUR/USD and GBP/USD on August 30, 2022 Details of the economic calendar for August 29 The new trading week usually starts with an empty macroeconomic calendar. Important statistics were not published in Europe and the United States, while the UK observed a holiday. Investors and traders were able to digest everything said by the head of the Fed last Friday, and a pullback in the US dollar appeared on the market. Information from the Fed was by no means a catalyst for price surges in the euro and the pound, but it was an integral part of the entire information and news background. What was the leverage for buying the euro? Initially, the euro was inspired by the news that gas prices in the EU fell by almost 20% after Germany's statement about full storage facilities. After that, information began to appear in the media that the ECB could start raising interest rates more sharply. This news has become a catalyst for the growth of the euro. Analysis of trading charts from August 29 The EURUSD currency pair opened the new trading week with a roll towards the parity level (1.0000). The activity was so strong that there was an inertial move of about 90 points. The GBPUSD currency pair reached 1.1650 during an intensive downward movement, against which there was a reduction in the volume of short positions as a result of a technical pullback. In this case, the incentive to buy the pound sterling was the positive correlation with the euro, which has significantly strengthened in value over the past day. Economic calendar for August 30 Today, data on the UK lending market will be published, which is expected to decline. This is a negative factor for the UK economy, which may lead to the weakening of the pound sterling. During the American session, data on housing prices in the United States will be published, where a decrease is expected based on the forecast. Data on JOLTS job openings for July is also expected. Time targeting: UK lending market – 08:30 UTC US House Price Index – 08:30 UTC US JOLTS Job Openings – 14:00 UTC Trading plan for EUR/USD on August 30 Despite the existing price changes, the quote is still within the weekly amplitude of 0.9900/1.0050. In order for a shift in trading forces to occur, which will lead to a full-fledged move, the quote must be kept outside of a certain control value for at least a four-hour period. We concretize the above: The upward move in the currency pair is taken into account after holding the price above the value of 1.0050 in a four-hour period. The downward trend should be considered after holding the price below 0.9900 in a four-hour period. Excerpt on indicator analysis Comprehensive indicator analysis indicates multidirectional interest in the short term due to price stagnation within the parity level. Indicators in the intraday period are focused on the recent upward momentum from the value of 0.9900. In the medium term, the indicators are still focused on the downward trend. Trading plan for GBP/USD on August 30 In this situation, the pullback returned the quote to the area of the previously passed level 1.1750, where the upward cycle slowed down. In order for a subsequent increase in the volume of long positions, which will lead to a pullback prolongation, the quote needs to stay above 1.1780 for at least a four-hour period. Otherwise, we are waiting for the completion of the pullback stage, followed by a price rebound from 1.1750. This scenario does not rule out updating the local low of the downward trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted August 31, 2022 Share Posted August 31, 2022 Hot forecast for EUR/USD on 31/08/2022 Today, the reason for the weakening of the US dollar will be preliminary data on inflation in Europe, which should accelerate from 8.9% to 9.1%. And this means that the European Central Bank will actively raise interest rates, which will cause the single currency to strengthen. And it will already pull other currencies with it. Given the high significance of inflation, the published data on employment in the United States, which, by the way, should increase by 180,000, will have little effect. The EURUSD currency pair was conditionally standing in one place yesterday. The movement took place between the parity level and the variable value of 1.0050. In fact, there was a process of accumulating trading forces on the market, where traders took a break, which in the end can become a lever for speculative jumps. The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which, from the point of view of indicator analysis, indicates the prevailing upward interest in the market. Take note that the quote has been moving in the 0.9900/1.0050 horizontal channel for the second week already. Thus, the signal from the RSI H4 indicator may be unstable. MA moving lines on Alligator H4 have many intersections, which corresponds to the flat stage. Alligator D1 is directed downwards, there is no intersection between the MA lines. This signal from the indicator corresponds to the direction of the main trend. Expectations and prospects Despite the existing stagnation, the quote is still moving within the sideways range of 0.9900/1.0050. For this reason, the main decisions will be made by traders after one of the values of the current range is surpassed. An upward movement in the currency pair is taken into account after keeping the price above the value of 1.0050 in a four-hour period. A downward trend should be considered after keeping the price below 0.9900 in a four-hour period. Complex indicator analysis in the short-term and intraday periods have a variable signal due to the current flat. Indicators in the medium term are focused on a downward trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 2, 2022 Share Posted September 2, 2022 Hot forecast for EUR/USD on 02/09/2022 Yesterday, the single currency showed a rather impressive decline, falling below parity again. And it started during the European trading session, under the influence of the actual European macroeconomic statistics. In particular, the final data on the index of business activity in the manufacturing sector turned out to be worse than the preliminary estimate, and fell from 49.8 points to 49.6 points. While the preliminary estimate showed a decrease to 49.7 points. In addition, the data on unemployment also turned out to be not the best, although formally, it fell from 6.7% to 6.6%. But in fact, it remained unchanged, as the previous data were revised upwards. Unemployment rate (Europe): But in the United States, the final data on the index of business activity in the manufacturing sector turned out to be better than the preliminary estimate, which showed a decrease from 52.2 points to 51.3 points. In fact, it dropped to 51.5 points. However, the strengthening of the dollar is still somewhat surprising, as the data on applications for unemployment benefits do not inspire optimism. Of course, the number of initial requests decreased by 5,000. But the number of repeated requests increased by 26,000. And this is quite a lot. Number of retries for unemployment benefits (United States): It is possible that the dollar's growth is purely speculative in anticipation of today's release of the report of the United States Department of Labor. And while the unemployment rate is projected to remain unchanged, data on employment change clearly indicate a high potential for its growth. In addition, 310,000 new jobs should be created outside of agriculture, against 528,000 in the previous month. Such a strong decline in the rate of job creation clearly hints that the US labor market is losing momentum, and the situation is starting to worsen, which will be the reason for a sharp weakening of the dollar. Number of new non-agricultural jobs (United States): The EURUSD currency pair showed local speculative interest in short positions yesterday. As a result, the quote fell below the parity level, having almost reached the lower boundary of the sideways range of 0.9900/1.0050. The technical instrument RSI H4 crossed the middle line 50 from top to bottom during the downward momentum. As a result, the indicator settled in the lower area of 30/50, which indicates the downward mood of market participants. It should be noted that the signals from RSI H4 are of a variable nature due to the fact that the quote, as before, is moving within the sideways formation. MA moving lines on Alligator H4 have many intersections, which corresponds to the flat stage. Alligator D1 is directed to the downside, there is no intersection between the MA lines. This signal from the indicator corresponds to the direction of the main trend. In this case, the strengthening of the downward signal will occur at the moment when the MA (D1) lines are kept below the parity level. Expectations and prospects The convergence of the price with the lower limit of the flat 0.9900 led to an increase in the volume of long positions, as a result, a rebound appeared on the market. Despite the variable speculative interest, the quote is still in the sideways on the basis of a downward trend. Thus, the work can be built on the basis of two tactics: Rebound or breakdown relative to one or another control border. Concretize the above The bounce tactic is seen by traders as a temporary strategy. The breakout tactic is considered the main strategy because it can indicate the subsequent price move. Complex indicator analysis in the short-term and intraday periods have a variable signal due to the current flat. At this time, the indicators indicate a long position due to the price rebound from the lower border of the flat. Indicators in the medium term are focused on a downward trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 5, 2022 Share Posted September 5, 2022 Tips for beginner traders in EUR/USD and GBP/USD on September 5, 2022 Details of the economic calendar for September 2 European Union Producer Price Index came out with a significant margin, rising from 36.0% to 37.9%. This news stimulated the euro to rise against the dollar. The main event of the past week was the United States Department of Labor report, which slightly surprised market participants. The unemployment rate was forecast to remain unchanged at 3.5%. However, unemployment in the US rose to 3.7%, which was a catalyst for a local sell-off of the dollar, yet this is a possible signal for the Fed to take some easing measures. There is one important remark in this reflection, the regulator is ready to turn a blind eye to many things in order to overcome rising inflation. Meanwhile, jobs created outside of agriculture came out in line with the consensus forecast, 315,000. The reaction of the US dollar took place within the framework of speculation. In the beginning there was a sale and then a buy-off. Analysis of trading charts from September 2 The EURUSD currency pair ended last week with an intense downward move. As a result, there was an inertial movement in the market for the US dollar, which returned the quote to the level of 0.9900. The GBPUSD currency pair resumed its decline after a short stop. This step led to a subsequent update of the low of the medium-term trend, where only a few points remained to pass before the bottom of 2020. Economic calendar for September 5 The new trading week starts with a holiday in the United States. The key player of the financial market will return on Tuesday. Trading volumes may decline at first. As for statistical data, the publication of the final indicators on the index of business activity in the services sector in Europe and the UK is expected. If the data coincide with the preliminary assessment of the reaction in the market, it is not worth waiting. At the same time, Eurozone retail sales data is to be published. Its rate of decline may slow down, which is a positive signal for the euro. Time targeting: USA - Labor Day (holiday) EU Services PMI – 08:00 UTC UK Services PMI – 08:30 UTC EU Retail sales volume – 09:00 UTC Trading plan for EUR/USD on September 5 With the opening of the European session, a local level of 0.9900 appeared. The sale of the euro was associated with a sharp jump in gas prices in Europe. At the opening of trading, prices jumped by 30%, to $2,800 per thousand cubic meters. The reason for the increase in the cost of gas lies in the message of Gazprom on Friday evening that the maintenance of the only working turbine of SP-1 revealed "gross violations" and the gas pipeline will not work without their elimination. In order to confirm the signal about the prolongation of the long-term downward trend for the euro, the quote must be kept below the level of 0.9900 steadily in the daily period. In this case, a path will open in the direction of 0.9850–0.9500. Otherwise, the amplitude 0.9900/1.0150 has every chance for further formation. Trading plan for GBP/USD on September 5 Despite the growing oversold level of the pound sterling, the market remains an inertial course, where speculators ignore the overheating of short positions in vain. The low of 2020 (1.1410) may play as support on the sellers' path. In this situation, traders will consider two possible options for price development: The first scenario comes from a rebound from the 2020 local low area. In this case, an increase in the volume of long positions is possible, which at the beginning will slow down the downward cycle, after which a rebound will occur. The second scenario considers the lack of reaction of traders to technical signals about the oversold pound and the support level. In this case, holding the price below 1.1400 in the daily period will lead to a prolongation of the long-term trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 6, 2022 Share Posted September 6, 2022 Tips for beginner traders in EUR/USD and GBP/USD on September 6, 2022 Details of the economic calendar for September 5 Data on indices of business activity in the services sector in Europe and the UK were published, which came out worse than expected. Details of statistical indicators: Eurozone services PMI fell from 51.2 to 49.8 points against the expectation of 50.2 points. The composite index fell from 49.9 to 48.2 points. The euro was already heavily oversold at the time of the release of the data, so it was difficult to fall further. UK services PMI fell from 52.6 to 50.9 points, with forecast of a decline to 52.5 points. The composite index fell from 52.1 to 49.6 points. The pound sterling, like the euro, was oversold; there was no reaction to the statistics. Data on retail sales in the euro area were also published: its rate of decline slowed down from -3.2% to -0.9% YoY. Despite the fact that the data came out worse than expected (-0.7%), the euro ignored them. The reason for the lack of response to statistical indicators arose due to the commodity market. Yesterday, with the opening of trading, there was a sharp increase in the cost of gas in Europe, which jumped by 30% to $2,800 per thousand cubic meters. The reason for the increase in the cost of gas lies in the message of Gazprom on Friday evening that the maintenance of the only working turbine of SP-1 revealed "gross violations" and the gas pipeline will not work without their elimination. Speculators worked out this information flow in the form of a sell-off of the euro, where, through a positive correlation, it followed the euro and the pound sterling. As soon as the price of gas began to recover relative to the morning jump, the euro began to strengthen, followed by the pound. Analysis of trading charts from September 5 The EURUSD currency pair opened a new trading week with an intensive decline, during which the quote temporarily fell below 0.9900. The speculators failed to stay outside the control value, which resulted in a technical pullback. The GBPUSD currency pair, through a positive correlation with EURUSD, first rushed down, almost reaching the 2020 low, and then moved into the pullback stage. Economic calendar for September 6 The United States is coming off a three-day holiday today, and service sector PMI data will be released. In the UK, data on the index of business activity in the construction sector will be released, where they predict its decline. Not the best signal for the pound sterling, but it is worth considering that it is already oversold in the market. Time targeting: UK Construction PMI (Aug) – 08:30 UTC US Services PMI (Aug) – 13:45 UTC Trading plan for EUR/USD on September 6 Despite the speculative activity, the quote is still within the range of 0.9900/1.0050. Thus, traders are guided by the borders of the flat, working according to the method of breakdown or rebound from the given values. Trading plan for GBP/USD on September 6 With the pound losing more than 800 pips in value in three weeks, a pullback/correction was brewing in the market due to short overheating. In this situation, holding the price above 1.1620 will lead to the subsequent strengthening of the pound towards 1.1750. As for the prolongation of the downward trend, it is necessary to keep the price below the value of 1.1400 in the daily period. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 7, 2022 Share Posted September 7, 2022 Tips for beginner traders in EUR/USD and GBP/USD on September 7, 2022 Details of the economic calendar for September 6 The further aggravation of the energy crisis in Europe puts pressure on the markets, which does not allow the euro to move into the stage of a full correction. German Chancellor Olaf Scholz said yesterday that the energy crisis will last for several more years. This statement caused the euro to accelerate its decline. Meanwhile, UK's construction Purchasing Managers' Index (PMI) was published, which rose to 49.2 instead of the expected decrease from 48.9 to 48.0. However, the market ignored the statistics. During the American trading session, the US services Purchasing Managers' Index (PMI) was published, which fell more than expected from 47.3 to 43.7. Again, there was no reaction to the statistical data. Analysis of trading charts from September 6 The EURUSD currency pair is stubbornly trying to prolong the downward trend, as indicated by a number of attempts by traders to stay below the 0.9900 level in the daily period. There is no clear signal of prolongation for the Tuesday period. The GBPUSD currency pair, after a short pullback, again rushed down towards the local low of 2020 (1.1410). This move indicates the continuing downside mood among traders in the market. It is worth noting that the pound sterling has a positive correlation with the euro. Thus, we observe identical cycles in the market. Economic calendar for September 7 Today, the publication of the third estimate of Eurozone GDP is expected, where there will be no reaction in the market if the data coincides with the previous two estimates. If there is a discrepancy in the statistical data, then a speculative activity may appear depending on the indicators. Time targeting: EU GDP – 09:00 UTC Trading plan for EUR/USD on September 7 Market participants still expect the price to hold below 0.9900 in the daily period. This move will indicate the possibility of further weakening of the euro towards 0.9500. It is worth considering that a variable level of 0.9850 stands in the way of the downward cycle. Thus, a confirming signal about the downward move will be received after its breakdown. The upward scenario considers the absence of holding the price beyond the control values. In this case, another rebound is possible, with the price returning above the parity level. Trading plan for GBP/USD on September 7 In order for a signal to prolong the long-term downward trend to appear, the quote needs to be firmly held below 1.1400 in the daily period. In the opposite case, it is impossible to exclude the scenario of a price rebound from the 2020 low area with a subsequent amplitude of 1.1450/1.1600. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 8, 2022 Share Posted September 8, 2022 Hot forecast for EUR/USD on 08/09/2022 The single currency has come close to parity, and this has nothing to do with the third assessment of the eurozone GDP in the second quarter. Which, by the way, turned out to be somewhat better than the previous one, which showed a slowdown in economic growth from 5.4% to 3.9%. According to the latest data, the growth rate slowed down to only 4.1%. So Europe is a little further away from recession than previously thought. But the euro did not immediately start rising after the release of the data, but only after a couple of hours. This happened amid growing confidence that the European Central Bank will raise the refinancing rate by 75 basis points today. It is quite obvious that this is the main driving force and the central event of the week. More important than this is the upcoming board meeting of the Federal Open Market Committee. The very fact of raising the refinancing rate, although it will lead to further growth of the single currency, is not strong. Yes, and not long. In fact, much more important is what ECB President Christine Lagarde will say during the subsequent press conference. If Lagarde announces a further significant tightening of monetary policy, then the euro's growth will be quite serious and prolonged. Otherwise, everything will return to normal pretty quickly, and the single currency will again fall below parity. Change in GDP (Europe): The EURUSD currency pair tried to overcome the control value of 0.9900 for three consecutive days, but the market participants failed to stay below it in the daily period. As a result, there was a price rebound, which led to a reverse move towards the parity level. Technical instruments RSI H4 jumped above 60 due to the pullback stage. This is the highest indicator since August 12. In the case of further growth in the value of the euro, there may be a premature overheating of long positions. At the same time, RSI D1 is moving in the lower area of the indicator, which corresponds to a downward trend in the medium term. Moving MA lines on Alligator H4 have primary intersections with each other. This signal emerged due to a sharp price momentum during the past day. In this case, it indicates a slowdown in the downward cycle. The Alligator D1 indicator line is directed downward, which corresponds to the direction of the main trend. Expectations and prospects Despite the possible overheating of long positions in short-term time periods, speculators can still send the euro up due to the results of the ECB meeting. In this case, local price movement above 1.0050 is not excluded. In the work, it is worth considering that speculative hype is not the basis for a stable price movement. In the event of a slight change in the mood of speculators, mass consolidation of long positions is possible, which will lead to a reverse price movement. Comprehensive indicator analysis in the short-term and intraday periods indicate an upward signal, due to the rollback stage from the value of 0.9900. In the medium term, technical instruments, as before, are focused on a downward trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 9, 2022 Share Posted September 9, 2022 Analysis and trading tips for EUR/USD on September 9 Analysis of transactions in the EUR / USD pair Euro tested 0.9985 at the time when the MACD was far from zero, which limited the downside potential of the pair. Sometime later, it tested the level again, but this time the market signal that was to buy, which led to a price increase of around 40 pips. In the afternoon, another buy signal was formed at 0.9941, and this also resulted to a rise of more than 40 pips. The ECB's decision to raise rates by 0.75% led to a slight decrease in euro because markets already expected that outcome. But after Christine Lagarde said another increase is possible in October, demand rose, which led to the rise of EUR/USD. US data on jobless claims and speech of Fed Chairman Jerome Powell were ignored by markets. A number of reports are scheduled to be released today, including the change in the volume of industrial production in France. There will also be another speech from ECB President Christine Lagarde, which may add optimism in markets. The EU economic summit and Eurogroup meeting may also have a positive impact on euro, especially if decisions are made to support the population and pay off their energy debts. In the afternoon, there are no important statistics in the US, except for changes in the volume of stocks in wholesale warehouses. There will be presentations from FOMC members Charles Evans, Christopher Waller and Esther George, but all of them are likely to talk about further increases in interest rates. For long positions: Buy euro when the quote reaches 1.0078 (green line on the chart) and take profit at the price of 1.0135. Growth may continue today as the ECB raised interest rates by 0.75%. Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0042, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0078 and 1.0135. For short positions: Sell euro when the quote reaches 1.0042 (red line on the chart) and take profit at the price of 0.9998. Pressure will return if the Fed remains hawkish on its monetary policy. Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0078, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0042 and 0.9998. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 12, 2022 Share Posted September 12, 2022 But we don't care: USD/JPY is rushing like a tank, ignoring all the negative factors After Friday's fall, the dollar-yen pair finds the strength to rush upward. The asset demonstrates a confident upward trend at the beginning of the week, despite the predominance of negative factors. Recall that last Friday the USD/JPY pair underwent intense sales. The quote fell by more than 1%, being under pressure from the growing risk of foreign exchange intervention. The Japanese authorities significantly tightened their warning of their intervention after the yen came close to a new 24-year low of 145 in the middle of the week. Many analysts believe that this key threshold is a red line for the Japanese government. As soon as the yen crosses it, officials will move from words to deeds. Over the weekend, the risk of actual rather than verbal intervention increased significantly. On Sunday, Deputy Cabinet Secretary General Seiji Kihara said the authorities were deeply concerned about the excessive fall in the yen. According to him, in the near future the government should take a number of measures in order to stop the depreciation of the national currency. At the same time, Kihara refused to give any comments on the country's monetary and credit rate. This once again confirms that at this stage, Japanese politicians are not considering the possibility of helping the yen by raising interest rates. The only option now being discussed at the top echelon is foreign exchange intervention. But will it bring the desired result if it is one-sided? – For intervention to be effective, support from the Federal Reserve and other central banks is needed. However, right now, as major central banks fight inflation with policy tightening, global official support for the yen looks unlikely, said National Australia Bank currency strategist Rodrigo Catril. The expert is confident that the yen will stop falling only as a result of a change in the exchange rate of the Bank of Japan. To strengthen the currency, the central bank must abandon its ultra-soft policy and start raising the rate. Otherwise, the yen is waiting for a further collapse. With no signs of BOJ capitulation on the horizon right now, the market has no choice but to ignore yet another warning of FX intervention. Traders are well aware that even in the event of an actual intervention, the recovery of the yen will be very short-lived, so they resume long positions on the USD/JPY pair again. The asset returned to the area above 143 on Monday morning. Even the news that Japan intends to further weaken border controls when entering the country did not prevent its rise. According to the Nikkei newspaper, the Japanese government may lift all current restrictions on foreign nationals entering the country by October. The authorities hope that the rise in inbound tourism will help revive the fragile Japanese economy and thereby support the yen that has fallen heavily this year. Another negative factor that the USD/JPY pair stubbornly turns a blind eye to this morning is tomorrow's release of US inflation statistics for August. According to forecasts, the consumer price index on an annualized basis will decrease to 8.1% from the previous value of 8.5%. It would be quite logical to expect that the weakening of inflationary pressure for the second consecutive month will force the Fed to reduce the degree of aggressiveness in relation to interest rates. Despite a possible decline in inflation, prices still remain well above the 2% target. Based on this, the markets continue to believe that the US central bank will raise rates by 75 bps in September. The probability of such a step is now estimated at 85%. Traders' unwavering confidence in the Fed's determination is a key driver for the dollar, especially against the Japanese yen. Most analysts believe that the USD/JPY asset could again demonstrate an impressive rally in the coming days, as moment X is just around the corner. The US central bank's meeting on monetary policy issues, at which the decision on interest rates will be announced, will be held on September 20-21. As the event approaches, hawkish expectations about the Fed's course should intensify even more. This will push the dollar to new heights, and the yen - to the next anti-records. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 13, 2022 Share Posted September 13, 2022 US stocks closed higher, Dow Jones up 0.71% At the close in the New York Stock Exchange, the Dow Jones rose 0.71%, the S&P 500 index rose 1.06%, the NASDAQ Composite index rose 1.27%. The leading performer among the components of the Dow Jones index today was Apple Inc, which gained 6.06 points or 3.85% to close at 163.43. Quotes of American Express Company rose by 4.01 points (2.53%), closing the session at 162.45. Salesforce Inc rose 3.04 points or 1.87% to close at 165.63. The biggest losers were Amgen Inc, which shed 10.07 points or 4.07% to end the session at 237.62. Home Depot Inc was up 2.23 points (0.74%) to close at 297.54, while Johnson & Johnson was down 0.07 points (0.04%) to end at 165. .64. Leading gainers among the S&P 500 index components in today's trading were DXC Technology Co, which rose 5.98% to hit 28.36, APA Corporation, which gained 5.01% to close at 40.00, and shares of Fortinet Inc, which rose 4.20% to end the session at 55.84. The biggest losers were The Mosaic Company, which shed 6.76% to close at 52.44. Shares of Amgen Inc lost 4.07% to end the session at 237.62. Quotes of CF Industries Holdings Inc decreased in price by 4.05% to 99.48. Leading gainers among the components of the NASDAQ Composite in today's trading were Neurobo Pharmaceuticals Inc, which rose 101.30% to hit 0.56, InMed Pharmaceuticals Inc, which gained 70.42% to close at 18.78, and also shares of Ventyx Biosciences Inc, which rose 64.98% to end the session at 38.11. The biggest losers were Tuesday Morning Corp, which shed 31.19% to close at 0.19. Shares of WeTrade Group Inc lost 30.19% and ended the session at 1.11. Akari Therapeutics PLC was down 27.88% to 0.75. On the New York Stock Exchange, the number of securities that rose in price (2,360) exceeded the number of those that closed in the red (764), while quotes of 160 shares remained virtually unchanged. On the NASDAQ stock exchange, 2431 companies rose in price, 1384 fell, and 259 remained at the level of the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, rose 4.74% to 23.87. Gold futures for December delivery added 0.43%, or 7.45, to $1.00 a troy ounce. In other commodities, WTI crude for October delivery rose 1.36%, or 1.18, to $87.97 a barrel. Brent oil futures for November delivery rose 1.44%, or 1.34, to $94.18 a barrel. Meanwhile, on the Forex market, EUR/USD rose 0.81% to hit 1.01, while USD/JPY edged up 0.21% to hit 142.82. Futures on the USD index fell 0.60% to 108.08. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 14, 2022 Share Posted September 14, 2022 Hot forecast for EUR/USD on 14/09/2022 Inflation in the United States of course slowed down, but not to 8.1%, but to 8.3%. At the same time, in monthly terms, it increased by 0.1%, while it was expected to decline by 0.2%. In addition, the core inflation rate, instead of remaining unchanged, accelerated from 5.9% to 6.3%. Monthly data on the core inflation rate showed an increase of 0.6%, while the forecast was 0.4%. After that, everyone immediately started talking about the fact that in just a week the Federal Reserve would raise the refinancing rate by 100 basis points. And the single currency literally fell below parity in the blink of an eye. Inflation (United States): The situation is aggravated by the fact that until next Wednesday, when the meeting of the Federal Open Market Committee takes place, representatives of the Fed will not make any official statements. They can't even comment on the situation with inflation. Internal rules forbid it. In other words, market participants will be able to focus only on macroeconomic statistics and its interpretation by various media. Data on producer prices will be released today, the growth rate of which seems to be slowing down from 9.8% to 8.9%. If these forecasts are confirmed, then it will be possible to assume that inflation will still gradually slow down, and then a rebound is possible, and the euro's return above parity. But if the producer price index declines even a little less, then the market will panic again, and the dollar will further strengthen its positions. Producer Price Index (United States): The EURUSD currency pair fell over 200 points in the course of speculative operations during the past day. This movement led to the return of quotes below the parity level. Technical instruments RSI H1 during the intensive weakening of the local euro fell below 22. This signal indicated a high level of oversold in short-term time periods. RSI H4 and D1 are moving in the lower area of the 30/50 indicator, which corresponds to a downward trend. The MA moving lines on Alligator H4 changed direction from top to bottom, this was caused by sharp price changes a day earlier. Expectations and prospects The overheating of euro short positions led to a technical rollback, which is considered a common phenomenon in the market in case of inertial movement. A gradual recovery of the euro exchange rate is possible, but only in case prices are stable above the parity level. Under this scenario, growth in the direction of 1.0050-1.0120 is possible. An alternative scenario for the development of the market considers the continuation of the downward cycle, in which the technical signal of oversold will be ignored by traders. In this case, keeping the price below 0.9950 will eventually lead to a new low of the downward trend. Comprehensive indicator analysis in the short-term and intraday periods indicate a downward cycle, due to the inertial price movement. In the medium term, technical instruments have a sell signal, which corresponds to a downward trend. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 15, 2022 Share Posted September 15, 2022 Tips for beginner traders in EUR/USD and GBP/USD on September 15, 2022 Details of the economic calendar for September 14 Annual inflation in the UK fell to 9.9% in August, with forecast of growth to 10.6% from 10.1%. The change is small, but this is a positive factor because the Bank of England at the upcoming meeting may well indicate a slowdown in the rate of inflation, which will affect the revision of the rate of increase in the refinancing rate. Euro area industrial production declined to -2.4% YoY in July from the previous month's growth of 2.2%. Forecasts assumed growth of 1.7%. This is a negative factor, but the euro has already been heavily oversold. For this reason, there was no proper reaction on the market. US producer prices recorded a decline from 9.8% to 8.7%. The market almost did not react to these statistics. Analysis of trading charts from September 14 The EURUSD currency pair, despite the characteristic sign of oversold, continued to tread within the base of the recent downward momentum. As a result, a range of 50/60 points was formed. The GBPUSD currency pair reached 1.1588 at the stage of a pullback from the value of 1.1480, where there was a demand for dollar positions. As a result, the quote rushed back to the recent support level. Economic calendar for September 15 Today the market is expecting data on the United States, where not the best indicators are predicted, which may have a negative impact on dollar positions. US retail sales may fall from 10.3% to 9.0% YoY, while the volume of industrial production may slow down from 3.9% to 3.5% YoY. The negative for the US will not end there, as the weekly data on claims for benefits may reflect an increase. Statistics details: The volume of continuing claims for benefits may increase from 1.473 million to 1.475 million. The volume of initial claims for benefits may increase from 222,000 to 226,000. Time targeting: US Retail Sales – 12:30 UTC US Jobless Claims – 12:30 UTC United States Industrial Production – 13:15 UTC Trading plan for EUR/USD on September 15 In this situation, there is a process of accumulation of trading forces, which, in principle, restrains the quote from a full-scale pullback. The optimal trading tactic is considered to be the method of the impulse coming from the range of 0.9955/1.0010. We concretize the above: The downward move will be relevant after the price holds below 0.9950. This step may lead to an update of the low of the downward trend. An upward movement in the currency pair is considered in case of a stable holding of the price above the value of 1.0030 in a four-hour period. Trading plan for GBP/USD on September 15 In this situation, the signal for a subsequent decline will be the price holding below the 1.1480 mark in a four-hour period. This step is highly likely to lead to touching the 2020 low. In your work, it is worth taking into account the factor of overheating of short positions in the pound sterling, where the recent pullback could not lead to a regrouping of trading forces. In this case, the lack of holding the price below 1.1480 may lead to a movement towards the values of 1.1588–1.1600. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 19, 2022 Share Posted September 19, 2022 USD/JPY: is black swan event possible? USD/JPY traders are awaiting the policy meetings of the Federal Reserve and the Bank of Japan this week. For many market players, the outcome of these meetings is obvious. However, some analysts do not rule out an unexpected turn of events. Market expectations Last week, the US dollar found strong support in US CPI data for August. According to the report, inflation in the US decreased to 8.3% in August from 8.5% in July, falling short of expectations. Inflation in the US remains above the Fed's target level of 2% and continues to be persistent, increasing expectations of more aggressive Fed monetary tightening. The markets are currently pricing in an 81% probability of a 75 basis points hike. Some market players even believe the Federal Reserve could increase interest rates by 100 bps at its next meeting on September 20-21. Both scenarios would fuel the US dollar's upward momentum against other major currencies, particularly against the Japanese yen. Since the beginning of 2022, the yen decreased by 20% against the dollar due to a growing monetary policy gap between the Bank of Japan and the Federal Reserve. While Fed policymakers are actively fighting inflation by rapidly hiking interest rates, their Japanese counterparts keep interest rates at very low levels. Many traders now expect the BOJ to maintain their ultradovish policy course this week. Recent decisions by the Bank of Japan suggest the regulator remains committed to its dovish course. Last week, the BOJ increased bond purchases twice to keep yields at their low level. The BOJ's policy meeting is concurrent with the Fed meeting in the US. If decisions of both central banks match market expectations, it would send USD/JPY skywards once again. Both events could give redoubled support to the instrument in the next few days. Many analysts predict significant upward movement for the pair in the short term. Currency strategists at the Goldman Sachs see the yen fall to 155 against the dollar. An outlook by Rabobank predicts that JPY could slide down to 150, while RBC Capital Markets forecast a decline to 147. HSBC Holdings predicts that the yen could decrease to 145 against the US dollar. What could go differently Many analysts warn that USD/JPY would be highly volatile this week. There are numerous factors listed above that could push the US dollar up. However, a Japanese yen rally should not be ruled out. The most obvious driver for the Japanese yen is a currency intervention. Last week, high-ranking Japanese policymakers have repeatedly raised the topic of a possible currency intervention. If the yen once again approaches the key mark of 145 before or after policy meetings of the Fed and the BOJ, this could trigger an intervention by the Japanese government. A less obvious scenario that could halt the uptrend of USD/JPY would involve the Bank of Japan giving up its current stance. So far, few believe that the Bank of Japan could amend its policy, but their number is steadily increasing. According to reports by Reuters, swap rates betting on a shift in policy have sharply increased over the past several days as the regulator stopped referring to inflation as "temporary". The Bank of Japan stopped labeling inflation as "temporary" in its transcripts and minutes of the policy meetings in July. That month, Japanese core CPI hit 2.4%, the highest level in more than 7 years. Inflation in Japan has exceeded its target level of 2% for a fourth consecutive month. Furthermore, most BOJ policymakers expect core consumer prices to rise to 3% in October, Reuters reported. This inflation surge could be driven by rising food prices. According to a survey by private research firm Teikoku Databank, about 80% of Japanese food companies plan to raise prices next month. This price hike would affect more than 20,000 food items, which are expected to go up by 14% on average. As a result, many BOJ policymakers have revised their inflation outlooks upwards, Reuters reported. It remains to be seen when the Bank of Japan will express its concern over price growth. Some experts believe the first signs of such a shift could happen at the next BOJ policy meeting. If the Bank of Japan begins to lose its sticky deflationary mindset and acknowledges that price growth is an issue that must be resolved, this would be regarded as the first hawkish signal by the market. Such an event would pose a threat to USD/JPY rally. Quote Link to comment Share on other sites More sharing options...
KostiaForexMart Posted September 23, 2022 Share Posted September 23, 2022 Tips for beginner traders in EUR/USD and GBP/USD on September 23, 2022 Details of the economic calendar for September 22 The Bank of England, as expected, raised the rate by 50 basis points to 2.25%. At the same time, the regulator lowered its inflation forecast. According to their expectations, it may reach 11%, and inflation will peak in October. The market reaction was zero, because the rate increase by 50 bps has already been taken into account in the quotes. The pound sterling began to weaken. During the American trading session, weekly data on jobless claims in the United States were published, which recorded a decrease in their total volume. This is positive news for the US labor market. Statistics details: The volume of continuing claims for benefits fell from 1.401 million to 1.379 million. The volume of initial claims for benefits rose from 208,000 to 213,000. What is pushing the market? The first is the results of the September Fed meeting, where the regulator clearly indicated that the main goal is to curb inflation, and it is ready to further tighten monetary policy. The second factor is the Russia-Ukraine situation, where, at the moment, there is a large flow of information that puts speculators into action. Analysis of trading charts from September 22 The EURUSD currency pair, in the stage of a pullback from the low of the downward trend, locally returned to the previously passed level of 0.9900, where the price rebounded with a reverse move. The GBPUSD currency pair, after a short pullback, which was caused by a strong overheating of short positions, again moved to the decline. This movement indicates the prevailing downward sentiment among market participants who are in a stage of inertia. Economic calendar for September 23 Today, a preliminary estimate on business activity indices in Europe, the United Kingdom and the United States is expected to be published. Indices, except for the USA, are expected to decrease. Thus, the dollar may well receive support in the market. Time targeting: EU business activity indices – 08:00 UTC UK business activity indices – 08:30 UTC US business activity indices – 13:45 UTC Trading plan for EUR/USD on September 23 With the opening of European platforms, a new round of depreciation of the euro emerged, which led to the price holding below 0.9800. As a result, the speculative-inertial move continues to form, which allows the rate to decline to the subsequent control value of 0.9650, where the lower border of the flat 0.9650/1.0000 passed earlier in history. It should be noted that the market is already experiencing overheating of euro short positions, which allows for a new technical pullback. Trading plan for GBP/USD on September 23 The pound sterling, following the euro, continued to decline, which resulted to the breakdown of the level of 1.1200. A stable hold of the price below this level allows the subsequent weakening of the British currency towards the psychological mark of 1.1000. Also, do not forget about the overheating of short positions and possible technical pullbacks. Quote Link to comment Share on other sites More sharing options...
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