Daily Market Analysis from ForexMart

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Trading plan for starters of EUR/USD and GBP/USD on March 22, 2022

March 22 economic calendar:
Tuesday is not much different from Monday, the macroeconomic calendar is still empty. Traders will continue to analyze the information flow for hot topics.

Trading plan for EUR/USD on March 22:
Stable retention of the price below the level of 1.1000 may well lead to a subsequent recovery of dollar positions relative to the recent correction. In case of a coincidence of expectations, the euro rate may fall to the values of 1.0900-1.0800.

An alternative scenario for the development of the market will be considered by traders if the quote returns above 1.1050. This step may well disrupt the recovery process.

Trading plan for GBP/USD on March 22:
In this situation, traders are still considering the trading tactics of breaking one or another control value relative to the price stagnation. In this regard, buy positions will be valid after holding the price above 1.3210 in a four-hour period, and sell positions would be active after holding the price below 1.3080 in a four-hour period.

ETH surpasses BTC in terms of growth rate

Ethereum soared above $3,000 on Tuesday. The coin has advanced by 3% over the last 24 hours and has added 16% over the past week. At the moment of writing, the altcoin traded at $3,009.76.

On Tuesday, the cryptocurrency updated the February high, and its market capitalization hit $361 billion.

The surge came after BTC, the world's largest digital asset, reached $43,300 and broke through the high as of March 3. As a reminder, bitcoin has traded sideways in the range between $37,000 and $42,000 for about a month.

However, after approaching the high on Tuesday, BTC started to gradually decrease. At the moment of writing, digital gold traded at $42,500. The asset has increased by 3% over the past 24 hours and has grown by 7.1% over the past seven days.

The spike in the value of ETH came amid expectations of the updates that could change the mining process of the altcoin.

Today, pressure mainly came from buyers in Europe and the United States, analysts at Glassnode said. Meanwhile, market players in the Asian region were more willing to sell the asset.

Other popular tokens showed steady growth, following a rise in BTC and ETH. Thus, Dogecoin grew 4.1% to $0.124. Uniswap and Cardano appreciated by about 5%.

The total capitalization of the crypto market came in at $2,02 trillion, according to CoinGecko, the world's largest cryptocurrency data aggregator.

 

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Hot forecast for EUR/USD on 24/03/2022

The single European currency is losing its position again. Although the scale of yesterday's decline turned out to be quite modest. But today this process has continued. And it is sustainable. The reason lies solely in the plane of energy carriers.

First, US President Joe Biden once again stated that during his visit to Europe he would seek from the EU the imposition of an embargo on oil and gas supplies from Russia. But Europe is extremely dependent on Russian energy supplies, and it is not at all clear what to replace them with. The United States itself can export only insignificant volumes, which will not be enough to replace Russian supplies. And this is not counting the fact that fuel prices in the United States, if lower than in Europe, then quite a bit. Whereas in Russia they are five or even six times lower. So if the United States manages to bend Europe, it will inevitably face both a real shortage of energy resources and an even greater increase in fuel prices. This is akin to the destruction of the European economy as such.

Secondly, Russia decided yesterday to sell gas for rubles. The truth is only for unfriendly countries, to which the whole of Western Europe belongs. Of course, this caused a shock, since for the entire post-war history, the prices of raw materials in the world were denominated exclusively in dollars. Roughly speaking, there was a unified pricing and settlement system. This is extremely convenient, and allows you to bring prices to a certain uniform standard, which reduces the cost. If prices are formed in different currencies, it will lead to chaos. The world is used to a single pricing system. And inevitably, this will lead to an increase in raw material prices. However, there is really no talk of any paradigm shift. It's all about the reservation regarding unfriendly countries. It contains an opportunity to bypass this solution. It's just that the buyers will not be the countries of the European Union, but some others. For example, from North Africa or the Middle East. But the gas itself will still be supplied to Europe. Only at slightly higher prices.

So as a result, the cost of energy carriers for Europe will still grow, which will have an extremely negative impact on the European economy. So it is not surprising that the European currencies are losing ground. And oddly enough, Russia's decision allows the European Union to even go for an embargo, since it will still buy gas through intermediaries, and not directly. But Europe will still have to pay dearly. That is the main factor in the weakening of the single European currency.

The EURUSD currency pair completed the consolidation move in the range of 1.1010/1.1045 by breaking the lower border. This move led to speculative activity, which enabled traders to stay below the psychological 1.1000 level.

The RSI technical instrument in the four-hour period confirmed the completion of the consolidation by the rebound of the indicator from the 50 line.

The Alligator H4 indicator has left the phase of intertwining MA moving lines, indicating a downward trend. Alligator D1 still indicates a downward trend in the medium term. There are no intersections between the moving MA lines.

Expectations and prospects:

In this situation, the primary signal to sell the euro was received in the course of holding the price below the level of 1.1000. Strengthening of the existing signal will occur when the price stays below 1.0960 in a four-hour period. This move may well restart dollar positions in the direction of 1.0900-1.0800. Otherwise, we are in for a turbulence within the boundaries of 1.0960/1.1150.

A complex indicator analysis gives a sell signal in the short-term and intraday periods due to the price rebound from the resistance level. Indicators in the medium term give a sell signal due to a downward trend.

 

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Pound sterling fluctuates as BoE revises plans due to inflation

The pound sterling has made slight gains over the week. However, GBP remains in a downtrend. Growing inflationary and geopolitical risks are putting pressure on the British currency, forcing the Bank of England to change its earlier plans.

Inflation in the UK has reached the highest point in 30 years, cancelling the plans of the British government. In February, consumer prices added 6.2%, and producer price inflation reached 10.1%. The government planned to impose the highest taxes in years next month to help economic recovery and prevent inflation from spiraling out of control.

Originally, the national insurance rate was to be increased by 1.25%, which would contribute £12 billion to state coffers. However, this plan was suspended due to difficult economic situation, UK finance minister Rishi Sunak announced on Wednesday, March 23.

Furthermore, the government reduced payroll taxes, cut the basic rate of income tax, and decreased the fuel duty. These measures are aimed at helping poorer families cope with rising prices. However, these plans are unlikely to affect the actual economic situation. According to projections by the Institute of Fiscal Studies (IFS), the cost of living for the poorest could rise by 10%, while their benefits will increase by just 3.1%. The Bank of England estimates that inflation could rise to 8% in April. However, its actual level exceeds these projections.

This situation is detrimental to the pound sterling in the long term. GBP is currently struggling to hold its current fragile position. Amid a protracted price increase, the British pound decreased on Thursday, March 24. GBP is fluctuating up and down, which are unbalancing the pound sterling's price dynamics. GBP/USD was moving within the 1.3214-1.3215 range early on Friday, trying to escape the downward spiral.

Analysts at Morgan Stanley recommend staying short on GBP, as markets price in too much tightening from the Bank of England this year - up to 5 interest rate increases in 2022.

Many economists are cautious with their outlooks, because the UK economy is in a difficult situation, and its currency is far from stable.

The Bank of England is conducting its current monetary policy in accordance with the challenges at hand, adjusting it depending on the current situation. The UK central bank has increased the key rate 3 times over the past 4 months. The hikes helped GBP advance against EUR, but weakened GBP/USD. Experts do not rule out another increase at the next BoE meeting on April 14.

The economic slowdown in the UK and geopolitical uncertainty demands caution in making key decisions from the Bank of England. As real disposable income falls and energy prices soar, the UK economy is expected to weaken.

Earlier outlooks suggested inflationary pressure would peak in April, with prices reaching 8%. However, stronger negative tendencies in the economy could send prices skyward throughout the year, experts predict. The Bank of England suggests further monetary tightening is appropriate amid skyrocketing real inflation in the UK.

 

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Will the dollar lead the new monetary system?

The U.S. currency started the new week with cautious movements, with an eye on the current geopolitical situation. Tensions in the air have gripped the global financial arena. Some analysts believe that the way out of this situation is the formation of a new monetary system.

In the event of such a scenario, the dollar will be among the minor currencies. The place of the USD in the new financial order does not provide for the unconditional leadership of the latter. A similar long-term forecast for the EUR/USD pair was published by Zoltan Pozsar, an analyst at Credit Suisse. Based on a number of factors, he stated changes in the global monetary order.

In his report "Bretton Woods III", Pozsar sets out his point of view on the formation of a new system of settlements and currency relations: "We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West."

The expert emphasized that at the moment "a crisis of commodities is unfolding... and this crisis is about the rising allure of outside money over inside money." According to Pozsar, the basis of the Bretton Woods II system was internal means of payment. However, this bulk, which was considered unshakable, "crumbled a week ago when the G7 seized Russia's FX reserves," Pozsar said.

Recall that the former global financial system, Bretton Woods, provided for the dominance of the U.S. currency. It reached its greatest prosperity from 1944 to 1976, when the dollar took the leading place in the system of international settlements and storage of global reserves. However, now the USD is losing its dominant position, experts believe.

The world is preparing to update the existing monetary order, being on the threshold of the end of the "Eurodollar era." The era of regional currencies in the East begins, which are backed by goods. Such a scenario will lead Western countries to another round of inflation, experts say.

Many experts do not agree with this point of view and still believe in the stability of the greenback. According to analysts, the end of the "dollar hegemony era" is unlikely in the next few years. To prove this, arguments are given about the predominant number of currency transactions that are made in dollars. At the same time, the lion's share of global bank reserves is in the U.S. currency. Refusal of the greenback is possible only in the event of a large-scale global crisis comparable to the Second World War. Recall that after its completion, the USD acquired the status of a world currency.

The replacement of the dollar by the yuan, which has been much talked about lately, is hardly possible in the foreseeable future. According to experts, the Chinese currency does not have such a strong base and global recognition as the U.S. dollar. Such a level of confidence in the yuan, as in the USD, has not yet been formed. At the same time, China is a cunning and cautious market player, analysts are sure. The Chinese government is able to deal harshly with their trading partners and is very reluctant to go beyond their interests, which are mainly related to the Asia-Pacific region.

The disadvantage of the Chinese currency is its small number in the global financial system. Currently, the share of the greenback in international trade settlements is approaching 50%, and in reserves, it reaches 60%. At the same time, the share of the yuan does not exceed 5%, analysts emphasize.

Currently, the U.S. currency is trying not to miss a single opportunity for growth. According to COT reports, over the past week, major market players have significantly increased their positions to buy contracts for the dollar index (USDX). As a result, the net position on it rose from the lows recorded since September 2021.

The current data on the dollar index (USDX) fixes the growth of "bullish" sentiment on the U.S. currency. On Monday, March 28, the dollar index (the rate against a basket of currencies of six countries - key U.S. trading partners) rose by 0.37% to 989.15 points. This week, economists expect an increase in U.S. GDP by 7% and a reduction in unemployment in the country to 3.7%. Optimism about the U.S. currency is also promoted by the build-up of traders' positions on the rise of the latter.

 

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US stocks closed higher, Dow Jones up 0.27%

At the close in the New York Stock Exchange, the Dow Jones rose 0.27% to hit a monthly high, the S&P 500 index rose 0.71%, the NASDAQ Composite index rose 1.31%.

Shares of Microsoft Corporation were the leaders of the gains among the components of the Dow Jones index in today's trading, which gained 7.02 points (2.31%) to close at 310.70. Salesforce.com Inc rose 4.25 points or 2.01% to close at 215.28. Walmart Inc rose 2.55 points or 1.78% to close at 146.00.

The losers were shares of Chevron Corp, which lost 2.96 points or 1.75% to end the session at 166.35. Dow Inc was up 0.59 points (0.91%) to close at 64.11, while JPMorgan Chase & Co was down 1.05 points (0.74%) to close at 140. .87.

Leading gainers among the S&P 500 index components in today's trading were Tesla Inc, which rose 8.03% to hit 1.00, Carnival Corporation, which gained 5.49% to close at 19.40, and Etsy Inc, which rose 4.70% to end the session at 138.54.

The biggest losers were Discovery Inc Class A, which shed 6.47% to close at 25.58. Shares of Discovery Communications C Inc shed 6.15% to end the session at 25.63. Quotes of Mosaic Co decreased in price by 4.72% to 67.97.

Leading gainers among the components of the NASDAQ Composite in today's trading were Hycroft Mining Holding Corporation, which rose 81.25% to hit 2.32, DatChat Inc, which gained 61.45% to close at 2.68, and also shares of Newegg Commerce Inc, which rose 43.41% to end the session at 7.40.

The biggest losers were Clever Leaves Holdings Inc, which shed 50.26% to close at 1.91. Neuroone Medical Technologies Corp lost 46.85% to end the session at 1.18. Quotes of Amylyx Pharmaceuticals Inc decreased in price by 35.96% to 16.01.

On the New York Stock Exchange, the number of securities that fell in price (1,715) exceeded the number of those that closed in positive territory (1,490), and quotes of 134 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,051 stocks fell, 1,843 rose, and 199 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.67% to 19.63, hitting a new monthly low.

Gold futures for April delivery lost 1.64%, or 32.10, to hit $1.00 a troy ounce. In other commodities, WTI crude for May delivery fell 9.18%, or 10.46, to $103.44 a barrel. Brent futures for June delivery fell 9.01%, or 10.58, to $106.79 a barrel.

Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.07% to 1.10, while USD/JPY rose 1.45% to hit 123.83.

Futures on the USD index rose by 0.27% to 99.08.

 

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Trading plan for starters of EUR/USD and GBP/USD on March 30, 2022

March 30 economic calendar
Today, the ADP report on employment in the United States is expected to be published, which is projected to grow by 450,000 in March. This is a positive signal for the labor market if the data is confirmed.

Almost simultaneously with the ADP report, the final data on the United States GDP for 2021 will be published. The data will likely be left without much attention, which will confirm the preliminary assessment.

Time targeting

ADP report - 12:15 Universal time

U.S. GDP - 12:30 Universal time

Trading plan for EUR/USD on March 30
In this situation, the local maximum at 1.1137 plays the role of resistance, which temporarily put pressure on buyers in the form of a technical pullback. In order for the upward cycle to be extended to new price levels, the quote needs to stay above 1.1180 in a four-hour period. This step will lead to further formation of a corrective move from the pivot point 1.0800. At the same time, the regular basis of the past, associated with the 1.1120/1.1180 area, may well put pressure on long positions. In this case, a slowdown in the upward cycle is possible, followed by a weakening of the euro, following the example of a price rebound on March 17th.

Trading plan for GBP/USD on March 30
In this situation, a characteristic uncertainty could arise due to the convergence of the price with the psychologically important level of 1.3000, where there was a reduction in the volume of short positions in history. The risk of a price rebound from the pivot point in the market remains, so the prolongation of the downward cycle will be considered by traders only after holding the quote below 1.3000 in a four-hour period. Until then, a variable or a local pullback is possible.

 

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US stocks extend losses after confident rise early this week

On Thursday, the main European stock indices continue to drop. However, at the beginning of the trading session, they climbed higher but later resumed the downward movement. Market participants are deeply concerned about the prospects of a slowdown in the global economy. The weakening of inflation fears amid a drawdown in oil prices limits the upward movement in European stock exchanges.

At the time of writing this article, the STOXX Europe 600 lost 0.12%, dropping to 459.63.

The shares of Swedish IT company Sinch AB (-10.7%), Polish logistics company InPost SA (-4%), as well as Telecom Italia SpA (-3.2%) incurred the biggest losses.

The largest gainers were the stocks of Russian gold mining company - Polymetal International (+8.1%) and Orpea SA (+4.8%).

On Thursday, the DAX index is down by 0.04%. The FTSE MIB shed 0.2%, the IBEX 35 decreased by 0.15%, the FTSE 100 slid down by 0.04%, and the CAC 40 dropped by 0.16%.

Despite a constant decrease in recent days, the leading European indices will end March on a positive note. The Stoxx 600 grew by 4%, while the DAX rose by 5%.

H&M shares nosedived by 8.5%. Despite the company's upbeat earnings report in the first quarter of the current financial year, the net profit was lower than analysts' forecasts.

The capitalization of UK investment company Brewin Dolphin Holdings instantly soared by more than 60% on the news that the Royal Bank of Canada agreed to buy it for $ 2.1 billion.

During Wednesday's trading session, the major EU indices closed in the red after a spectacular rise a day earlier. The day before, market participants assessed the prospects of a recovery in the global economy amid the geopolitical woes in Eastern Europe.

As a result, the STOXX Europe 600 index sank by 0.41% to 460.19.

The shares of UK advertising company S4 Capital Plc logged the steepest drop among the companies included in the index. Its stock collapsed by 36%. S4 Capital Plc announced another delay in the publication of the earnings report due to problems with the PricewaterhouseCoopers audit.

The CAC 40 index lost 0.74% on Wednesday, the DAX shed 1.45%, the FTSE MIB decreased by 0.03%, and the IBEX 35 slid down by 0.74%. Only the FTSE 100 index grew by 0.55%.

Yesterday, the stocks of companies doing business in Russia also incurred losses. French conglomerates Societe Generale and BNP Paribas sank by 2.5% and 2.3%, respectively. Renault shares fell by 4%.

The shares of Swiss financial holding UBS Group AG dropped by 1.5%. Even the announcement of the launch of a new share-buyback program of up to $6 billion the day before did not boost the company's shares. The program is scheduled to begin today. It will stay in effect for two years,

The main reason for a sharp decline in the DAX index was the outlook for Germany's economy. Earlier, analysts lowered its GDP outlook for the current year amid the escalation of the conflict between Ukraine and Russia. Thus, the growth of gross domestic product may total only 1.8%. In November 2021, economists predicted an increase in GDP by 4.6% in 2022.

As for macroeconomic figures for Germany, in March, the inflation rate soared to 7.3% in annual terms from 5.1% in February. According to the Federal Statistical Office, the indicator hit an all-time high.

Inflation in Spain surged to 9.8% in March from 7.6% in February, notching the highest level since 1985. At the same time, experts predicted an increase of only 8%.

According to preliminary data, in March, the consumer confidence index in Sweden plunged to 73.5 from February 89, reaching a 30-year low.

Another bearish factor for the DAX index was a dazzling rise in oil prices on Wednesday. Crude oil increased by 3%, while gas prices in Europe jumped by 9%.

The FTSE 100 was up amid a rally in the commodity market. As a result, the oil and gas industries in the eurozone expanded by 3.3% and 2.4%, respectively. The capitalization of French energy giant TotalEnergies, UK Petroleum, and Glencore rose by 2.5%, 3.1%, and 4.2%, respectively.

Geopolitical tensions, which began more than a month ago, have adversely affected stock markets worldwide. In addition, analysts are confident that the Russia-Ukraine conflict will slow down the expansion of the global economy as well as trigger a surge in inflation and shortages of raw materials in some countries.

 

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Hot forecast for GBP/USD on 04/04/2022

Given the content of the report of the United States Department of Labor, it is only surprising that the pound's decline on Friday was more of a symbolic nature. And so, 460,000 new jobs were not created outside of agriculture, but 431,000. But even this is still almost twice as much as is necessary to maintain a stable unemployment rate. Which by the way decreased from 3.8% to 3.6%, with a forecast of 3.7%. And it looks like it will continue to decline. There are practically no doubts about this. And apparently, the pound was supported by the single European currency, the decline of which also turned out to be rather modest. However, this appears to be just a temporary phenomenon. Macroeconomic data is clearly in favor of the US dollar. Europe, on the other hand, cannot boast of such figures. As it is much worse. And the dynamics is rather exclusively negative. Whereas in the United States, macroeconomic statistics are more often encouraging than disappointing. So there is no doubt that the pound will gradually lose its positions against the US dollar.

Unemployment rate (United States):

The GBPUSD currency pair continues to move in the 1.3105/1.3180 range, despite the bears' attempts to overcome its lower limit. Long-term price movement in a closed range leads to the process of accumulation of trading forces, which can lead to acceleration in the market.

The RSI technical instrument is moving along the middle line 50 in a four-hour period, which indicates a stagnation. RSI D1 is moving in the lower area of the 30/50 indicator, signaling the high interest of traders in a downward move.

The Alligator H4 indicator has a lot of crossovers between the moving MA lines, which confirms the signal of stagnation. Alligator D1 signals a downward trend, MA moving lines are directed downwards.

Expectations and prospects:

In this situation, traders are still considering the trading tactics of breaking through one or another flat border. In this regard, long positions will be valid after keeping the price above 1.3185 in a four-hour period, and short positions would be valid after keeping the price below 1.3100 in a four-hour period.

Complex indicator analysis has a variable signal in the short-term and intraday periods due to stagnation. Indicators in the medium term give a sell signal due to a downward trend.

 

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Trading plan for EUR/USD and GBP/USD on April 5, 2022

The pound has been marking time for a whole week, although there is no talk of any lull in the foreign exchange market. The single European currency, for example, has been steadily going down for several days now. At the same time, the UK cannot boast of any remarkable macroeconomic data, so the behavior of the British currency is no longer surprising, but fearful.

The market cannot stand still for so long, and even for no apparent reason. This only speaks of an excessive speculative component, which will inevitably make itself felt. It is most logical to assume that the British pound will move downwards, following the euro. But due to the excessive speculative component, upward movement is also possible. And this scenario seems to be the most realistic. That is, first a sharp jump up, and then a rapid reversal and a rapid upward movement.

But all this needs a reason. Given that the macroeconomic calendar is empty, and in general the pound ignores statistics, everything will depend on the general information background. Therefore, it is worth keeping a close eye on the news feed of the largest media outlets. Any news that in one way or another will affect the UK and its economy can become the very trigger that starts this whole process.

But the euro seems to have finally realized that there is a serious gap between the United States and the European Union in terms of macroeconomic statistics. And not much in favor of the euro area. In general, the single European currency steadily went down during the American session. This shows that European traders still deny the reality, while American traders look at things a little more rationally.

The euro continues to be under serious pressure, and it is not yet clear when it will be able to break out of this state. More specifically, what can help it. Macroeconomic indicators are increasingly suggesting that Europe is bearing the greatest losses due to the sanctions confrontation between the West and Russia.

The EURUSD currency pair has reached a variable pivot in the form of the 1.0940/1.0965 area during an intensive downward movement. This led to a slight slowdown with signs of a possible pullback. The subsequent increase in the volume of short positions is expected after holding the price below the value of 1.0940 in a four-hour period. Until then, the risk of a rebound remains.

The GBPUSD currency pair has been moving in the 1.3100/1.3180 side channel for almost a week now. This indicates uncertainty and possible speculative activity in the future. Trading tactics consider the method of breaking through one or another border with confirmation in a four-hour period.

 

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Hot forecast for GBP/USD on 06/04/2022

The pound stayed for a long time, and has demonstrated incredible stability. But yesterday everything changed, and it finally followed the single European currency. That is, to the downside. At the same time, it completely repeated the typical scenario for the last few days for the euro. The British currency stood still during the European session, and after the opening of the US one, it went down. But yesterday, both major European currencies had enough reasons to fall. Although to be precise, there is only one reason. The notorious energy carriers. Just at the opening of the US trading session, publications appeared in the media on the topic that the new block of European sanctions against Russia would include restrictions on coal supplies. We are not talking about a complete ban on imports. It is planned to reduce the volume of deliveries by about 4 billion euros, which is about a third of all coal supplies from Russia to Europe. Naturally, an extremely simple question immediately arises - how does Europe plan to compensate for the falling volumes. Moreover, Europe is already facing an unprecedented increase in fuel prices and inflation. There is no doubt that this decision, if of course it is made, will cause Europe the most serious damage. Including an even greater increase in inflation. The sanctions themselves should be adopted today or tomorrow. And if this issue is delayed, the pressure on the pound will only increase. Uncertainty scares investors the most. But in any case, at least today, the pound will remain under pressure.

The long-playing 1.3105/1.3180 horizontal channel for the GBPUSD pair was broken through on a downward trajectory. This led to speculation in the market, where the pound fell to the area of 1.3060. In fact, the bears tried to return the quote to the support level of 1.3000, playing a 100% corrective move.

The RSI technical instrument moves in the lower area of the 30/50 indicator in a four-hour period, which signals a high interest of traders in short positions.

The Alligator H4 indicator has a primary sell signal after a long intertwining between the moving MA lines. Alligator D1 is signaling a downward trend, MA moving lines are directed to the downside.

Expectations and prospects:

At the moment, the quote has slightly slowed down the downward movement, where the 1.3050/1.3060 area serves as a variable support. Keeping the price below these values is highly likely to lead to a further decline towards the support level of 1.3000. Until then, a rollback to the lower border of the passed flat is possible.

Comprehensive indicator analysis gives a sell signal in the short, intraday and medium term due to the rapid downward movement.

 

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Tips for beginner traders in EUR/USD and GBP/USD on April 13, 2022

Economic calendar for April 13
Data on the UK inflation were published today, which saw an acceleration in consumer price growth from 6.2% to 7.0% with a forecast of 6.7%. Such high inflation is damaging the economy, which is a negative factor for the pound sterling.

During the American trading session, the producer price index in the United States will be published, which is expected to grow from 10.0% to 10.6%. Rising prices will lead to further inflation, which is already at historical levels.

All this is a negative factor for the US economy.

Time targeting

US producer price index - 12:30 UTC

Trading plan for EUR/USD on April 13
In this situation, holding the price below the level of 1.0800 in a four-hour period will indicate a continuation of the trend. This may lead to a subsequent movement towards the local minimum of 2020.

An alternative scenario for the development of the market considers another slowdown in the downward move within 1.0800. This may lead to a temporary pullback, but not to a change in trading interests.

Trading plan for GBP/USD on April 13
The price stagnation within the deviation of the 1.3000 level will soon end. With a high degree of probability, it will become a lever for speculators in the upcoming acceleration in the market. It is worth considering that the signal of prolongation of the downward trend will be confirmed only after the price is kept below the value of 1.2950 in a four-hour period.

As for the upward development of the price, traders consider this scenario as a local rebound of the price from the support level of 1.3000. The signal for action will come from the market at the moment the price is held above the value of 1.3055. In the future, this move may lead to the 1.3105 mark, after which a price reversal is not excluded.

 

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Hot forecast for EUR/USD on 14/04/2022

The single European currency showed a rather unexpected growth yesterday. Although it was insignificant, nonetheless. Moreover, the producer price index in the United States rose from 10.3% to 11.2%. But just a day earlier, a stronger than expected increase in inflation in the United States led to a rise in the dollar, as it finally convinced everyone that the Federal Reserve would actively raise the refinancing rate. The producer price index is a leading indicator for inflation, so it will continue to grow. Therefore, it is quite possible that by the end of this year the refinancing rate will be raised as much as 3.0%.

Producer Price Index (United States):

But the fact is that simultaneously with the release of these data, new forecasts for inflation in the UK were published. The Bank of England expects inflation to peak just in April, stopping at 7.2%. After that, it will gradually decrease. But investment banks think otherwise, and in their opinion, inflation will accelerate to 9.0%, which is quite different from the forecast of the Bank of England. Given the current inflationary dynamics, the forecast from the banking sector seems more realistic. And in this case, the Bank of England will have to react somehow. Of course, we are talking about a further increase in the refinancing rate. This was the reason for the pound's growth, which has already pulled the euro. This is clearly seen by the fact that the pound grew more actively than the euro.

Data on retail sales in the United States will be published today, the growth rate of which may slow down from 17.6% to 11.0%. However, this news will be ignored in principle, since European Central Bank President Christine Lagarde's press conference will begin at the same time. The main event of the day is the meeting of the Board of the ECB. Interest rates, of course, will remain unchanged, as will all other parameters of the monetary policy pursued by the central bank. Only subsequent comments are of interest. If, as before, nothing is said about plans to raise the refinancing rate, then the dollar will resume its growth. But if Lagarde at least hints at the possibility of an increase in interest rates before the end of this year, then in this case the euro will begin to grow actively.

Retail Sales (United States):

The EURUSD currency pair, after the control convergence with the support level of 1.0800, the volume of short positions has sharply decreased. This led to a local stagnation, and then to a price rebound by about 100 points. A comparative analysis of the two trading instruments EURUSD and GBPUSD showed the possibility of a positive correlation, where due to the sharp strengthening of the British currency, there could be a rush to buy the euro.

The technical instrument RSI H4 crossed the 50 middle line during the strengthening of the euro. This signal indicates a corrective move.

The Alligator H4 indicator has a primary intersection between the moving lines, which also allows for a corrective move. Alligator D1 indicates a downward trend, MA moving lines are directed to the downside.

Expectations and prospects:

In this situation, much will depend on the external background, in particular, the results of the ECB meeting. As for the technical levels, the 1.0940 coordinate variable on the bulls' way, which can play the role of resistance if the hype for long positions subsides. If the price stays above 1.0950, it is highly likely that the correction will continue to form towards the psychological level of 1.1000.

Complex indicator analysis gives a signal to buy in the short-term and intraday periods due to the rapid growth of the euro. Indicators in the medium term have a sell signal due to a downward trend.

 

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Gold went into the shadow of a strong dollar

This week, the demand for safe-haven assets has increased significantly. Gold has benefited from another spike in US inflation. But it seems that bullion is starting to seriously lose to the more reliable dollar.

Yesterday's trading on the New York COMEX was the last one this week. Today, many US markets are closed due to the Good Friday holiday.

Gold finished the shortened working week with an increase. Since Monday, its quotes have increased by 1.5%. The main growth driver for the yellow asset was the statistics on consumer prices in the US for March.

Last month, inflation in America accelerated to 8.5% year on year. This is a new 40-year high. The last time the rate was at such a high level was in January 1982.

The record price increase not only increased the value of the precious metal, but also reinforced the Fed's intention to raise interest rates more sharply at its next meeting.

In March, the US central bank raised rates by 25 bp for the first time in four years. Now that inflationary pressures have increased, it is highly likely that the Fed's next move will be to raise the rate by 50 bps.

This version was confirmed on Thursday by New York Fed President John Williams. He said raising interest rates by half a percentage point in May would be a "smart option" for the US central bank.

The hawkish rhetoric of Fed officials has fueled US Treasury yields across the curve. This acted as fuel for the dollar.

Yesterday the greenback index jumped 0.5% against its main competitors. The currency broke through the psychologically important level of 100 points.

The steep dive of the euro also helped the greenback to strengthen. The EU currency fell sharply on the European Central Bank's dovish position. Yesterday, the ECB's meeting for monetary policy took place. The central bank decided to leave its course unchanged for the time being.

Another driver for the dollar was the release of the consumer sentiment index of the University of Michigan. In April, the indicator rose sharply to 65.7 from the March value of 59.4 points.

The powerful momentum that the greenback received had a negative impact on gold quotes. On Thursday, the asset fell 0.5%, or $9.80. The price dropped to $1,974.90. This is the first drop in the value of the precious metal in six trading sessions.

Recall that in the outgoing week, bullion tested a critical level on the way to $2,000. But, according to analysts, gold will not be able to break out of the current price range in the near future. The main obstacle is the dollar.

Now we are seeing strong bullish dynamics of the US currency. According to forecasts, it will continue in the short term. As long as the greenback index remains above 100, the yellow asset has almost no chance of approaching $2,000.

What can help gold?
In the foreseeable future, the gold market will continue to follow the rhetoric of the world's central banks, many of which are hawkish. The Bank of England's interest rate decision is particularly important now.

Tightening the policy of major central banks may lead to a weakening of the US currency. This is a favorable factor for the precious metal.

In addition to the fall of the dollar, bullion may receive support from geopolitics. Currently, most experts predict a further escalation of the military conflict in Eastern Europe.

This week, Russia threatened to deploy nuclear weapons and hypersonic missiles if Sweden and Finland join NATO. The comment came from the Deputy Chairman of the Security Council of the Russian Federation Dmitry Medvedev.

This happened just a day after US President Joe Biden announced that America would provide Kiev with additional firepower, including heavy artillery, worth $800 million.

If the situation in Ukraine continues to heat up, gold may come close to $2,000. However, traders should be prepared for the opposite situation.

The settlement of the conflict in Eastern Europe or the reduction of inflationary risks may lead to a significant drop in the value of the precious metal – up to $1,900.

 

[KostiaForexMart]

Bitcoin (BTC) will not fall below $24,500

Bitcoin is declining for the second week in a row under the influence of the negative dynamics of the stock market. The main decline in BTC last week occurred on Monday against the backdrop of a noticeable drawdown in US stock indices.

The leaders of the world's largest crypto exchanges, interviewed by CNBC, said that they have recently noticed signs of a "crypto thaw", expressed in a changing attitude towards cryptocurrencies from governments.

The Central Bank of Portugal granted the bank the country's first license to work with crypto assets. Bison Bank has become the first bank in Portugal to offer custody and trading services for cryptocurrencies for large clients.

Tesla CEO Elon Musk said recently that he intends to buy Twitter. Cardano founder Hoskinson suggested that Musk join forces to create a decentralized social network if Twitter refuses the deal.

The 12th DOGE cryptocurrency will become the most used cryptocurrency for online payments, said Robinhood CEO Vlad Tenev. However, to do this, developers must increase the speed of transaction processing.

The Ministry of Finance of the Russian Federation finalized the draft law on mining and circulation of digital assets. The government of the Russian Federation submitted to the State Duma a draft law on the taxation of digital assets by three types of taxes.

The creator of the Stock-to-Flow (S2F) model PlanB believes that bitcoin will no longer fall to $24,500. His optimism regarding the asset remains unchanged. According to PlanB, BTC could reach $100,000 by the end of the year.

 

[KostiaForexMart]

US stock market opens this week with decline

In the session on Monday, US stock indices dropped on the back of a record rise in the yield of the 10-year Treasury note.

As a result, all three major indices – the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite – sank by 0.1%, having settled at 34,411.69, 4,391.69, and 13,332.36 respectively.

The major outsiders among the DJIA companies were the securities of Walt Disney Co. (-2.1%), Honeywell International Inc. (-1.6%), and Home Depot Inc. (-1.4%). The best performers were Goldman Sachs Group Inc. (+2.7%) and Intel Corp. (+2.1%).

Bank of America Corp's shares rose by 3.4% on Monday. In the first quarter of the financial year, the bank's net profit fell by 12%. Despite this, the final earnings report exceeded analysts' expectations as the total revenue increased by 2%.

The Bank of New York Mellon securities dropped in value by 2.3% as the company's report showed a decline in profit for the first quarter. At the same time, earnings per share turned out to be higher than market forecasts.

Shares of the Chinese taxi aggregator Didi Global Inc. plunged by 18.5% yesterday after the company reported a 12.7% drop in revenue in the fourth quarter of 2021.

The share price of Natus Medical Inc., a developer, manufacturer, and supplier of screening devices, surged by 29%. As was reported earlier, Natus Medical is being acquired by investment company ArchiMed for $1.2 billion.

The value of Southwest Gas Holdings Inc. went up by 5.7% following the reports that the company is considering various scenarios for its future development, including a possible sale.

On Monday, the price of US government bonds continued to decline, while the yield of the 10-year Treasury bills increased by 4 basis points and soared to 2.861%. This was the highest closing rate since the end of 2018. So, the bond yield has gained more than half a percentage point since early April.

As a rule, a rise in US Treasury yield puts pressure on risk assets. This rule is especially evident in the case of tech stocks and consumer cyclical companies.

This week, markets will closely watch the steps of the US Federal Reserve who intends to increase the interest rate in the near future. The regulator is trying to cap running inflation and save the US economy from significant damage.

At the same time, investors believe that measures taken by the Fed are not enough to tackle inflation. They hope that at its next meetings in May and June, the US central bank will increase the benchmark rate by 0.5 percentage points. Last month, the Fed raised the rate by 0.25 percentage points to 0.25% -0.5%.

Recently, analysts at one of the world's largest investment banks, Goldman Sachs Group Inc., have warned that there is a 35% chance of a recession in the US in the next two years. Therefore, the US Federal Reserve should tighten its monetary policy to the extent where it will help reduce job openings without sharply rising unemployment.

Goldman Sachs notes that achieving a so-called "soft landing" may be tough because historically the gap between jobs and the labor force has narrowed significantly only during recessions.

In addition, market participants will closely monitor the financial reports of the country's leading corporations. Such popular investor choices as Netflix, Tesla, Johnson & Johnson, Snap, Twitter, and United Airlines will reveal their earnings reports this week.

The financial results of the US corporate giants will show how successfully these companies are coping with the permanently rising inflation.

 

[KostiaForexMart]

USD/JPY: dollar at its 20-year high versus Japanese yen

Pressure on the yen has returned. On Wednesday morning, USD bulls pushed the pair to the psychological level of 130.

The greenback is getting stronger versus the Japanese yen amid the difference in the monetary policies of their central banks as well as strong divergence between Japanese and US bond yields.

Earlier today, the dollar surged to its 20-year high against the yen. Eventually, USD/JPY skyrocketed to 129.43 and then bounced to 128.615.analytics625fb5aacbbf4.jpg

The dollar swelled on hawkish comments by a Fed official, hinting at even more aggressive moves by the US regulator.

The ongoing lockdown in China aimed at curbing the spread of COVID-19 is believed to only make things worse when it comes to global supply chains. Against such a backdrop, inflation will accelerate and the Fed will have to resort to emergency measures to tame it.

In this light, the US Treasury yield has extended the rally. During the Asian session, yields hit the high of 2.981% that was previously recorded in December 2018.

Unlike its American counterpart, the Bank of Japan still sticks to its dovish monetary policy stance. On Wednesday, the regulator offered to buy an unlimited amount of 10-year bonds at 0.25% to defend the yield target.

The Bank of Japan is committed to maintaining yields at around zero percent, which is the main driver for USD/JPY. The pair is now on track for its second monthly rally in a row. USD/JPY grew by 5.8% in March and advanced by more than 5% in April.

Geopolitical uncertainty and the escalation of the Russia-Ukraine conflict are playing on the side of the greenback with demand for the safe haven being on the rise.

Earlier today, USDX increased to 101.01 and then fell to 100.76 versus the basket of 6 major currencies.

The greenback has received additional support from the dovish People's Bank of China. On Wednesday, the Chinese central bank announced it would maintain its benchmark interest rates for corporate and household loans unchanged. In this light, the Chinese yuan dropped against the dollar to its October 2021 low of 6.4115.

 

[KostiaForexMart]

USD/CAD: Loonie is confused by ups and downs and looks to the downside, then to the upside

The Canadian dollar started the week on the rise, and ends it in some confusion. After disappointing macro statistics and another round of inflation, the loonie significantly fell. However, the loonie is trying to "keep face" and is looking for ways out of this situation.

The Canadian dollar strengthened against the US dollar in the middle of the week, reaching 1.2584. However, after four days of growth, the USD/CAD pair showed a downward momentum, retreating from the local high at 1.2644. To date, the pair is struggling to hold its positions, but is determined to catch up. On Thursday, April 21, the USD/CAD pair traded at 1.2480, leaning to the downside and upside from time to time.

The "loonie" was tripped up by the growing inflation recorded in Canada. According to current data, consumer inflation in the country accelerated to 6.7% in March, exceeding forecasts. Recall that this figure was 5.7% in February. Against this background, the Bank of Canada is interested in raising interest rates above current levels. The central bank's immediate goals are to curb inflation without provoking a recession in the economy.

The pressure on the USD/CAD pair is exerted by the growing US currency. According to analysts, the resistance to the dollar is draining the loonies. In the future, the loonie will sink even more in relation to the greenback, however, it will strengthen against the euro.

The Canadian currency was supported by the increase in the key rate by the Bank of Canada (by 50 bp) recorded last week. In addition, the central bank announced the start of quantitative tightening in response to accelerating inflation.

The Canadian economy got a head start thanks to rising prices for commodities and energy. This contributes to the decisive actions of the Bank of Canada, aimed at normalizing monetary policy. The country's economy is on the winning side compared to other states that are importers of energy and hydrocarbons. In such a situation, the CAD receives tripartite support: from a significant influx of money into the country, from the growth of business activity and the potential tightening of the central bank's monetary policy.

According to experts, galloping inflation is a weighty argument for further tightening of monetary policy by the Bank of Canada. The implementation of such a scenario will strengthen the position of the Canadian dollar in the medium term. In such a situation, experts recommend holding short positions on the USD/CAD pair with a target of 1.2450.

 

[KostiaForexMart]

Gold to resume growth in near term

Gold closes this week with losses despite a great start. On Monday, the price shortly exceeded $2,000. Will gold develop an impressive rally again?

Since the beginning of the week, the precious metal has depreciated by 1.4%. Now it is on its way to the first weekly drop in 3 weeks.

The main factors that sent gold down from a 5-day high reached on Monday are the strengthening of the US dollar and the rise in US Treasury yield.

Both USD and Treasury yields advanced this week on expectations of a more aggressive approach from the Fed.

There have been some very tough comments by the Fed officials in recent days, and especially the recent statement made by the Fed Chair.

Speaking at a meeting of the International Monetary Fund, Jerome Powell made it clear that the regulator is set to raise interest rates by 50 basis points in May.

"Inflation is now much higher and the interest rate is more flexible. It is appropriate in my view to be moving a little more quickly," he said.

The hawkish tone of the Fed Chair weighed on the gold quotes. The precious metal closed yesterday's trading down by 0.4%, or $7.40, at $1,948.20. This is the lowest value in 2 weeks.

Silver futures for May also declined by 2.6%, or 65 cents, compared to the previous close. So, the price of silver fell to $24,621.

The precious metals market was also affected by the comments about the ECB policy made by EU officials.

In particular, Bundesbank President Joachim Nagel said that the regulator could raise interest rates as early as the beginning of the third quarter.

Now markets expect a rate hike by 20 basis points by July and by more than 70 basis points by the end of the year. If such a scenario comes true, the benchmark interest rate will be above zero for the first time since 2013. This will serve as a catalyst for the euro.

The tightening of the monetary policy of major central banks is a key negative factor for gold.

In addition, the geopolitical crisis is another driver for the value of gold. The aggravation of tensions between Russia and Ukraine allowed the asset to go slightly higher today.

At the time of writing, gold was up by 0.2% and was trading at $1,952.00.

On Wednesday, Moscow sent a draft peace agreement to Kyiv. However, there is no talk of an early ceasefire.

The US and its allies continue to supply Ukraine with weapons, including heavy artillery, so that its forces can repel Russian advances in the eastern part of the country.

The latest reports from the UK Defense Ministry suggest that Russia will try to conduct a quick and decisive fight in Ukraine before Victory Day.

Russia is seeking to demonstrate significant progress in Ukraine ahead of May 9, an important date for Moscow.

According to forecasts, a serious escalation of the conflict in this period may lead to additional sanctions against the Kremlin.

The next anti-Russian sanctions are likely to raise inflationary expectations, which will be a positive factor for gold.

Gold is expected to develop an uptrend ahead of Victory Day in Russia.

 

[KostiaForexMart]

American stock indices fell by 2.6-2.8%

Pressure on financial markets continues to come from growing expectations of a rapid tightening of monetary policy by the Federal Reserve System (Fed), worsening the mood of investors, already worried about the ongoing acceleration of inflation and the situation with COVID-19 in China. Traders are increasingly afraid that the Fed's cycle of raising the base interest rate could lead to a recession in the US economy.

Fed Chairman Jerome Powell, speaking Thursday at an event during the spring meetings of the International Monetary Fund and the World Bank, said that the Fed may need to move a little faster with a rate hike.

It was Powell's last public appearance before the next meeting of the Federal Open Market Committee (FOMC) on May 3-4. On the previous FOMC raised the rate by 25 basis points (bp) to 0.25-0.5%. At the same time, the last time the Fed raised the rate at two meetings in a row was in 2006, and the rise by 50 bp at once. hasn't been since 2000.

Judging by the rate futures, the market is almost certain that the Fed will increase the cost of borrowing by at least 50 bp. at each of the next two meetings - in May and June. At the same time, traders estimate the probability of raising the base interest rate by 75 bp at once at 94%. in June, according to data from CME Group Inc.

The two-year US Treasuries yielded 2.71% on Friday, the highest since December 2018.

Traders continue to follow the quarterly reports of companies, which are generally quite favorable. In the case of S&P 500 companies that have already reported for the past quarter, total earnings per share turned out to be 8.2% better than experts' forecast, according to Credit Suisse data. The performance of about 75% of companies exceeded market expectations. However, analysts fear that companies' results will worsen in the near future due to higher rates.

The Dow Jones Industrial Average fell by 981.36 points (2.82%) by the close of the market on Friday to 33,811.4 points.

Standard & Poor''s 500 fell 121.88 points (2.77%) to 4271.78 points.

The Nasdaq Composite dropped 335.36 points or 2.55% to 12839.29 points.

At the end of the week Dow Jones lost 3.9%, S&P 500 - 2.7%, Nasdaq Composite - 1.9%.

Shares of American Express Co. lost 2.8% in price on Friday, despite the fact that the quarterly report of the company, which is one of the leaders in the US plastic card market, was better than market forecasts.

The price of securities of the gold mining company Newmont Corp. fell by 3.3%. Newmont's first-quarter net income and revenue came in below market expectations due to the company's rapidly rising costs.

Share price of Verizon Communications Inc. decreased by 5.6%. The US telecom operator's adjusted earnings for the last quarter came in slightly better than the market's forecast, while revenue fell slightly short of expectations.

The price of Gap Inc. papers. collapsed by 18%. The clothing company has announced the resignation of Nancy Green as president and CEO of the Old Navy brand. In addition, Gap said it expects a larger drop in sales in the first fiscal quarter than previously thought.

Kimberly-Clark Corp stock quotes and Schlumberger Ltd., which posted strong first-quarter results, rose 8.1% and 2.5%, respectively.

 

[KostiaForexMart]

Tips for beginner traders in EUR/USD and GBP/USD on April 27, 2022

Economic calendar for April 27

Today is a rather boring day in terms of macroeconomic statistics due to the lack of statistical data significant for the market. The only thing that will be published is the index of pending sales in the United States real estate market, where fluctuations in the negative zone are predicted.

Trading plan for EUR/USD on April 27

The downward trend is considered the main movement in the market, there are prospects for a further decline. In order for a signal to appear for the subsequent growth of the volume of short positions, the quote must be kept below the level of 1.0636 in the daily period. Until then, the risk of a price rebound remains in the market, which will be justified by the oversold status of the euro.


Trading plan for GBP/USD on April 27

Despite the colossal oversold level of the pound, there is still a downward interest in the market. It is caused by the inertia-speculative behavior of traders who ignore the oversold status. Sooner or later, there will be a technical pullback or a full-size correction in the market. This movement will not break the integrity of the downward trend. The values 1.2500, 1.2250, and 1.2000 are considered variable pivot points.