First, a review of last week’s events:
EUR/USD. According to Bank of America Merrill Lynch, the most popular strategy in the market after “buy shares” is “sell the dollar”. Speculative short positions in this currency have risen to a two-year high. The USD index (DXY) has fallen below 90, while it was at 102.82 on March 15, 2020. As for the retreat of the dollar in recent days, it is taking place against the background of the discussion in the US Congress of an additional package of fiscal stimuli. After all, every new dollar poured into the country's economy will lead to a decrease in its purchasing power.
First, a review of last week’s events:
EUR/USD. As expected, the European Central Bank left its interest rate unchanged, at the same level of 0%. The euro had a chance to somewhat weaken its position against the dollar. However, it missed it due to the ECB's decision to ramp up the volume of the Pandemic Emergency Purchase Programme (PEPP) by another €500bn and a subsequent comment from the head of that bank Christine Lagarde. Actually, there was nothing unexpected in this decision, we predicted such an outcome a week ago. In addition, it definitely fell into the middle of the market participants' forecast of €400-600 billion. But it was precisely this predictability that prevented the EUR/USD pair from turning south.
First, a review of last week’s events:
EUR/USD. The dollar continues to fall, the euro continues to rise. The pair has traveled from 1.1600 to 1.2175 since early November. The main reasons for the weakening of the US currency lie in the growing global risk appetite. Against the background of positive news about vaccines against coronavirus, the market has believed in the imminent recovery of the global economy. Moreover, not the US economy, but the economies of other countries, including developing. The situation in the United States itself is not encouraging: the main indicators, including business activity and employment of the population, turned red here last week. Suffice it to say that the number of new jobs created outside the agricultural sector (NFP) collapsed from 610K in October to 245K in November, due to new quarantine measures.
First, a review of last week’s events:
EUR/USD. Making a forecast for the past week, most experts (65%) preferred the European currency. Graphical analysis, 90% of trend indicators and 75% of oscillators on D1 also sided with the bulls. And this forecast turned out to be almost correct. “Almost”, because it was expected that, having broken through the resistance of 1.1900, the EUR/USD pair will reach the zone 1.2000-1.2100. However, it managed to rise only to the height of 1.1960 at the very end of the working week. Perhaps this is due to the weekend in the United States - Thanksgiving on Thursday November 26th and Black Friday on the 27th.
First, a review of last week’s events:
EUR/USD. Last week, we talked again about complete uncertainty in the market, when investors just shrug their shoulders, not knowing what to expect in the near future. And then the forecast was appropriate: 50% of the experts sided with the bulls, 40% supported the bears, and the remaining 10% took a neutral position. And it turned out to be the most correct: the pair moved in a very narrow range of 1.1815-1.1890 for the whole week and completed the five-day period in its central part, at the level of 1.1858.
First, a review of last week’s events:
EUR/USD. Last week, we started talking about complete uncertainty in the market, when investors just shrug their shoulders, not knowing what to expect in the near future. Yes, Joe Biden has won the presidential election. It seems to have won. Since Donald Trump's team has already collected a lot of facts about the violations and falsifications and is going to challenge the election results in court. For the time being, a number of state bodies, including even the Office of the Director of National Intelligence (ODNI), refused to support the change of president. The distribution of seats in the US Senate remains questionable, and the priorities in the country's policy, including fiscal measures and programs to support the economy, depend on this.
First, a review of last week’s events:
EUR/USD. As we expected in the previous forecast, thanks to Joe Biden's victory in the U.S. presidential election, the growth of U.S. stocks and encouraging reports from the front against COVID-19, the euro and other competitors of the dollar can very quickly recover the positions previously lost.
First, a review of last week’s events:
EUR/USD. It seems that the market has decided not to pay much attention to the US presidential election. Investors are much more concerned about what is happening with the second wave of the pandemic COVID-19 in the Old and New Worlds, and what steps will be taken by regulators on both sides of the Atlantic Ocean.
First, a review of last week’s events:
EUR / USD. 40% of analysts predicted the growth of this pair to the 1.1900 zone and were right: the local weekly high was recorded at 1.1880, and the five-day period ended at 1.1860.
Strong macro statistics from the United States, as well as a record increase in the number of COVID-19 infected in the Old World, seemed to reverse the pair's trend south on October 21. But then Europe, together with Germany, showed an increase in business activity. This reduced the chances of a build-up of the European quantitative easing (QE) program and further growth in bond prices, which allowed the pair to return to its weekly highs;
First, a review of last week’s events:
EUR/USD. The market is now ruled by two main factors: the second wave of the COVID-19 pandemic and the upcoming November 3 presidential election in the United States.
A rise of nearly 900,000 in applications for unemployment benefits showed that the labor market and the U.S. economy need more stimulus measures. And although, according to US Treasury Secretary Stephen Mnuchin, an agreement on such measures between Democrats and Republicans before the election is unlikely, negative statistics have tempered greatly the market risk appetite and pushed down stock indices such as the S&P500. This clearly benefited the US currency: by Thursday, the dollar gained 135 points, and the EUR/USD pair reached a local bottom at 1.1685. This was followed by a rebound downward, and the pair completed the five-day period at 1.1715;
First, a review of last week’s events:
EUR/USD. We have repeatedly written about the ECB's fear of strengthening the euro as it poses a threat to the recovery of the Eurozone economy. However, neither the head of the ECB Christine Lagarde nor her colleagues want to start a currency war with the US Federal Reserve. Therefore, try to turn the market around not by actions, but by words.
First, a review of last week’s events:
EUR/USD. The question that we tried to resolve last week was whether this pair will continue its fall or return again to channel 1.1700-1.2010. Experts couldn't give any clear answer then. Their votes were divided as follows: 30% favored the fall of the pair, 30% favored its rise and 40% took a neutral position. As a result, the pair surely did not continue to fall, but it is also difficult to call its movement returning to the channel: having reached the local high at 1.1700 on Thursday, October 01, the pair turned around and completed the five-day period at 1.1715.
First, a review of last week’s events:
EUR/USD. The overwhelming majority of experts (75%), supported by the oscillators indicating that this pair is overbought, expected its correction to the south. The argument was that the pair ended the week near the strong resistance zone of 1.1900 on Friday, September 18. The above scenario came true 100%, and finally breaking through the mid-term support at 1.1700, the EUR/USD pair flew downward last week, finding the local bottom at 1.1610.
First, a review of last week’s events:
EUR/USD. According to Reuters sources, the rate close to 1.2000 currently suits both sides, the US Federal Reserve and the ECB. Looking at the chart, one could clarify: not 1.2000, but 1.1850. After all, it is along this horizon the pair has been moving for seven weeks. But, in fact, the difference of 150 points has no fundamental significance here.
First, a review of last week’s events:
EUR/USD. Following the ECB meeting on September 11, the Euro tried to fly up and even reached 1.1920, but literally an hour later the market decided that all this was not so important, and the quotes of the EUR/USD pair quickly returned to their original positions. As a result, as one third of the experts expected, the pair could not break out of the 1.1700-1.2010 channel, along which it has been moving for seven weeks. Moreover, its trading range narrowed to 1.1750-1.1920, returning to the values of the last decade of August.
So, what actually happened?
First, a review of last week’s events:
EUR/USD. The statement of the head of the US Federal Reserve Jerome Powell at the symposium in Jackson Hole is still the most discussed among investors and experts. The Fed decided to take the most serious step in monetary policy starting in 2012, announcing its plans to aim for an “average inflation rate of 2%.” This means that the regulator will not tighten its monetary policy even if the inflation rate exceeds these very two percent.
First, a review of last week’s events:
EUR/USD. 60% of analysts once again tried to give priority to the dollar last week, hoping that the EUR/USD pair will still break the support of 1.1700. In the opinion of the remaining 40%, it should have stayed within the side channel 1.1700-1.1910, which actually happened. Moreover, its finish took place near the upper border of this corridor.
First, a review of last week’s events:
EUR/USD. We noted in the previous forecast that only a clear breakdown of the channel 1.1700-1.1910 in one direction or another can give a clear idea of the dominant trend in conditions of subsiding activity. It is in this range that the pair has been moving for four weeks. But the breakdown never happened: after all it is August, holidays, and no extra events capable of stirring up markets, have not yet happened. The situation shows that investors are ready to buy back even very small drawdowns and close positions with very moderate profits. As a result, the breakthrough to 1.1965 did not bring success to the bulls, and the pair returned to the sidelines1.1700-1.1910, having finished the week not far from its central line, in the 1.1795 zone;
First, a review of last week’s events:
EUR/USD. Citing data from the Labor Department, optimists say that the U.S. economic recovery is gaining momentum. The pandemic-stricken labour market is beginning to recover and may have already overcome the worst stage of the crisis. Unemployment in July fell to 10.2% (against the April peak of 15%). 1.8 million people returned to work in July, a trend that continues for the third month in a row.
First, a review of last week’s events:
EUR/USD. The dollar has been falling for six straight weeks. The USD index (DXY) fell to the minimum values since May 2018. In total, it has lost about 10% in the last five months. And now, it seems that the fall has stopped: the EUR/USD pair is moving along the side corridor within 1.1700-1.1910 for the second week in a row. Attempts to break through its upper border on August 05-06 ended in failure, and the pair completed the five-day period at 1.1785 on Friday August 07.
First, a review of last week’s events:
EUR/USD. The U.S. economy is not just in recession. It's flying down at a breakneck speed. The decline in US GDP in the second quarter was the largest ever recorded - minus 32.9%. The reasons for this fall are well known - these are quarantine measures caused by the coronavirus pandemic. The authorities hope they can stop the spread of COVID-19 without turning the economy to zero. Some states have managed to tighten quarantines without restricting economic activity and to achieve a smoothing of the incidence curve.
First, a review of last week’s events:
EUR/USD. The USA does not bring good news to the markets. Escalating tensions between Beijing and Washington, rising jobless claims, and the ongoing COVID-19 offensive frighten investors, raising doubts about the imminent recovery of the American economy. The Nasdaq and S&P500 indexes turned red at the end of the week. However, their decline is not yet large enough to return investor interest to the dollar - the USD (DXY) index continues to fall and has already reached 94.4, which is even below the low of March 09, 2020.
First, a review of last week’s events:
EUR/USD. Relations between Beijing and Washington continue to heat up, the onslaught on coronavirus goes with great difficulty. 1.3 million people applied for primary unemployment benefits last week in the United States. For more than 17.3 million it was not the first time that they received them, which is 10 times higher than the pre-crisis norm. But at the same time, the risk appetite of investors does not fade away, the stock markets continue to grow. The S&P500 index has been climbing since March 23 and is already approaching February highs. The Nasdaq 100 has broken all records, jumping over the 10,650 mark.
First, a review of last week’s events:
EUR/USD. The dollar is slowly weakening, the pair moved above Pivot Point 1.1240 last week, but is still within the five-week channel 1.1170-1.1350. As expected by 25% of experts, the bulls made an attempt to reach the level of 1.1400, but their attack choked quickly, and, turning at the height of 1.1370, the pair went down again, ending the five-day period in the 1.1300 zone.
First, a review of last week’s events:
EUR/USD. The latest US employment data is not just optimistic, but over-optimistic: approximately 4.8 million people returned to work in June. The unemployment rate fell from 13.3% to 11.1% - the best increase in employment outside the agricultural sector since records began in 1939.
First, a review of last week’s events:
EUR/USD. COVID-19 continues its second attack on the United States. A new spike in incidence is observed in at least seven states. And in the three most populous states, the number of infected people continues to grow at a record pace, with a spike in deaths due in about two weeks. Authorities in Houston (Texas) announced that intensive care units in hospitals are nearly overcrowded. It is clear that this new outbreak is related to the lifting of the quarantine at the end of May. And no matter how much the White House and the governors would not like to return to strict quarantine again, it is possible that they still have to do this.
First, a review of last week’s events:
EUR/USD. The Financial Times reported in a recent article that analysts began to have problems as Forex stopped responding to fundamental factors as before. Against the backdrop of uncertainty in global financial markets, investor risk moods dominate, which are determined by the actions of regulators on quantitative easing (QE) and support for stock markets, on the one hand, and fear of the second wave of the COVID-19 pandemic, on the other. And this fear is becoming stronger due to a new outbreak of coronavirus in China and an increase in the number of infected in several US states.
First, a review of last week’s events:
EUR/USD. If someone thought that the United States won COVID-19, they were mistaken. The number of people infected with coronavirus is growing in 21 states, with new highs recorded in 14 of them. Anti-racist demonstrations in the country are likely to further aggravate the infection situation. Can this be called the second wave of the pandemic? And won't the third one follow it in the fall?
First, a review of last week’s events:
EUR/USD. Beginning May 25, the euro paired with the dollar rose in price for nine consecutive afternoon sessions, which, according to Dow Jones estimates, was the longest period of continuous growth since April 2011.
The ECB's decisions allowed the European currency to soar to its highest level since March 20, reaching the height of 1.1385. Led by Christine Lagarde, the Central Bank has surpassed all market expectations by increasing the Pandemic Emergency Purchase Program (PEPP) by €600 billion to €1.350 trillion. This program will last at least until June 2021, and the proceeds received from the acquired bonds will participate in the process of reinvestment until the end of 2022. The ECB also kept the benchmark interest rate on loans at zero and the deposit rate at minus 0.5%. Thus, the ECB proved to be the only major regulator to continue the policy of quantitative easing (QE) last week, as well as one of the few central banks to undertake similar moves in June.
First, a review of last week’s events:
EUR/USD. The European currency has been growing all week, even despite the rather weak statistics on the Euro zone economy. The pair was helped to break through the upper limit of the 1.0750-1.1000 corridor and rise to the height of 1.1145 by the news on the recovery measures in the EU, including the EU's plans to conduct direct emission and seriously expand its budget. The Swiss Bank, which buys EUR in exchange for its national currency, also provided support to the euro.
