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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.

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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.

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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.

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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.

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Tips for beginner traders in EUR/USD and GBP/USD on April 28, 2022​​​​​​​

Yesterday was a rather boring day in terms of macroeconomic statistics due to the lack of significant statistical data for the market. The only thing that was published was the index of pending home sales in the United States, which was of little interest to anyone.

Economic calendar for April 28
The first estimate of the US GDP for the first quarter is expected today. The data may reflect a significant slowdown in economic growth, which will lead to a weakening of dollar positions.

At the same time, weekly data on jobless claims will be published, which is predicted to reduce in volume. This is a positive factor for the US labor market.

Statistics details:

The volume of continuing claims for benefits may be reduced from 1.417 million to 1.403 million.

The volume of initial claims for benefits may be reduced from 184,000 to 180,000.

Time targeting

US GDP - 12:30 UTC

US Jobless Claims - 12:30 UTC

Trading plan for EUR/USD on April 28
The level of 1.0500 plays the role of a support in the market, which may lead to a reduction in the volume of short positions. As a result, a technical pullback or a full-size correction is allowed. At the same time, the inertia-speculative behavior of traders allows a breakdown of the control level, where the signal of oversold will be ignored by market participants. In this case, holding the price below 1.0500 in a four-hour period will lead to the subsequent weakening of the euro towards 1.0350.

Trading plan for GBP/USD on April 28
A stable holding of the price below the level of 1.2500 may lead to a subsequent increase in the volume of short positions. The signal about the oversold pound sterling can be ignored by speculators, who are focused on the inertial move.

The technical correction scenario is still being considered by traders, but in order to confirm it, the quote first needs to determine the pivot point.

Note that the values of 1.2500, 1.2250, and 1.2000 are considered as variable pivot points.

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Tips for beginner traders in EUR/USD and GBP/USD on April 29, 2022

Economic calendar for April 29
Today, the publication of the first estimate of Eurozone GDP for the first quarter is expected, where the data are slightly exaggerated. An acceleration in economic growth from 4.6% to 5.0% was predicted, despite the fact that the situation in the world and Europe does not favor GDP growth. Thus, there is an assumption that the data will come out worse than expected, which will negatively affect the euro exchange rate.

At the same time, data on inflation in the EU will be published, where further growth is expected from 7.4% to 7.5%. This is a negative factor for the economy, which will also put pressure on the European currency.

Time targeting

Eurozone GDP - 09:00 UTC

Eurozone Inflation - 09:00 UTC

Trading plan for EUR/USD on April 29
The technical pullback is only a temporary manifestation of the price, the downward mood persists in the market. In order for a new round of the downward cycle to occur, the quote needs to be stable below the 1.0500 level. This will lead to an increase in the volume of short positions and a movement towards the low of 1.0350. Until then, there will be a pullback in the market, which serves as a regrouping of trading forces.

Trading plan for GBP/USD on April 29
There is currently a technical pullback in the market that serves as a regrouping of trading forces. Over time, the overheating of short positions will subside. This will lead to the subsequent weakening of the pound sterling, which is in line with the main trend.

Market participants consider the psychological level of 1.2000 as a reference point for a downward trend.

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EUR/USD: Is a trend reversal possible?​​​​​​​

Major dollar pairs froze in anticipation of the announcement of the results of the Fed's May meeting. The EUR/USD pair was no exception here: the price settled at the bottom of the 5th figure, demonstrating low volatility. Over the past few days, both sellers and buyers have tried their hand. But they were unable to turn the tide in their favor. The EUR/USD bears failed to gain a foothold within the 4th figure in order to theoretically qualify for further decline, while the pair's bulls failed to develop a corrective movement, which bogged down near the 1.0580 target. As a result, the parties took a defensive position, waiting for the Fed's verdict.

By and large, there are only two options for the development of events: either traders will go to the bottom of the fourth figure in order to further test the support level of 1.0350 (this is the area of 20-year lows), or buyers will drag the pair into the range of 1.0660–1. 0730 (Tenkan-sen line and middle line of Bollinger Bands on D1 respectively).

Looking ahead, it should be noted that trading in dollar pairs is extremely risky now, given the fact that the intrigue around the results of the May meeting remains. On the one hand, it is quite clear that the Fed will take a hawkish stance, raising interest rates and declaring further steps in this direction. But on the other hand, there is no consensus among the expert community regarding the pace of monetary tightening.

For example, the option of a 75-point rate increase following the results of the May meeting is not at all excluded (although such a scenario is recognized as unlikely). Or the regulator may allow the rate to increase by this amount at the June meeting, if US inflation continues to show rapid growth.

In general, it doesn't matter whether the Fed raises the rate by 75 points at the May meeting, or announces such a move in the context of the June meeting: the effect will be the same. In this case, we will witness a dollar rally throughout the market, including the EUR/USD pair. This is the most hawkish scenario – it will allow the EUR/USD bears to take another step towards 20-year price lows.

The rest of the scenarios are more moderate, but all involve a 50 basis points hike in May and (probably) 50 bp in June. As for the future prospects, the regulator can leave room for maneuver, "tying" the pace of monetary policy tightening to the dynamics of inflationary growth.

Based on this, the question follows: is a corrective growth of EUR/USD possible even in the event of a 50-point rate increase? Certainly, it is possible. The fact is that the market has wound up on itself quite strongly: over the past few weeks, the hawkish expectations of traders have been growing "by leaps and bounds," thereby increasing the degree of heat. St. Louis Fed President James Bullard added fuel to the fire, who, in fact, proposed raising the rate by 75 points at once at the May meeting. The flywheel of hawkish expectations has been spinning more and more, especially during the last days – as you know, "appetite comes with eating."

That is why the US Federal Reserve may not fully justify these expectations by taking a "moderately aggressive" position. For example, if they raise the rate by 50 points and rather vaguely admit the option of a 50-point increase in the future "depending on the circumstances," that is, depending on the further growth of US inflation. At the same time, the regulator may not mention the option of a 75-point increase at all or even reject it. In this case, buyers of the EUR/USD pair will organize a fairly powerful counterattack, with targets in the range of 1.0660-1.0730.

It would be reasonable to use this corrective growth for opening short positions, with the targets of 1.0550, 1.0500. The fact is that even in the case of its "moderate aggressiveness," the American regulator will still be several steps ahead of the European Central Bank. Consequently, the divergence of the positions of the central bank will not go anywhere.

Let me remind you that the ECB still doubts the advisability of tightening monetary policy in the foreseeable future. In particular, the vice-president of the European regulator, Luis de Guindos, in one of his interviews a few days ago, stated that the ECB Governing Council "did not discuss any predetermined way to raise rates." According to him, much will depend on macroeconomic data in June. At the same time, market expectations are opposite: the first increase is expected at the July meeting, while the ECB should raise rates by 70–90 points by the end of the year.

In addition, the dollar is supported by the external fundamental background. First of all, we are talking about geopolitical tensions in Eastern Europe and around Taiwan, as well as another outbreak of coronavirus in China. The euro, in turn, is under pressure from "its own" factors. These are issues of energy security of the European Union, as well as the risks of stagflation.

All this suggests that it is advisable to use any corrective pullbacks for the EUR/USD pair as a reason to enter sales. The downward targets in the medium term are 1.0550 (if following the results of the meeting, the upward impulse will follow in the area of the 6th figure), 1.0500, 1.0450.

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Tips for beginner traders in EUR/USD and GBP/USD on May 5, 2022

Economic calendar for May 5

Today, the focus is on the meeting of the Bank of England, where they expect the fourth consecutive increase in interest rates by 25 basis points. Annual inflation in the UK reached a 30-year high of 7% in March, so the regulator has no choice but to continue tightening monetary policy.

Will the pound sterling react to the news about the rate hike? Possible, but in a local form, in view of the fact that the event is expected in the market.

During the American trading session, data on jobless claims in the United States will be published, where figures are expected to remain unchanged. Thus, if the forecasts are confirmed, then no one will pay attention to the data on applications.

Time targeting

BoE meeting result - 11:00 UTC

US Jobless claims - 12:30 UTC

Trading plan for EUR/USD on May 5

The slowdown of the upward cycle around the value of 1.0636 led to the formation of a consolidation of versatile Doji-type candles. This threatens with new speculative manipulations in the market. For this reason, two possible scenarios should be considered at once.

The first scenario comes from the tactic of a rebound from the level of 1.0636, where holding the price below 1.0600 can restart the sellers' positions. This will cause the price to return to the support level of 1.0500.

The second scenario considers the formation of a full-length correction, where holding the price above 1.0655 can lead to a move towards 1.0700-1.0800.

Trading plan for GBP/USD on May 5

At the moment, most of the recent impulse has been won back, the quote has returned to the boundaries of the earlier amplitude movement. In order for the downward move to get a new round of activity, the quote needs to stay below 1.2450. In this case, the medium-term downward trend will again be prolonged to new price levels. Otherwise, another turbulence is possible within the values of 1.2460/1.2600, which may be facilitated by the results of the Bank of England meeting.

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Tips for beginner traders in EUR/USD and GBP/USD on May 6, 2022

Economic calendar for May 6
The main macroeconomic event on Friday is considered to be the report of the United States Department of Labor, which predicts by no means bad indicators. The unemployment rate could drop from 3.6% to 3.5%, and 385,000 new jobs could be created outside of agriculture. We have a strong US labor market, which could support the US dollar.

Time targeting

US Department of Labor Report - 12:30 UTC

Trading plan for EUR/USD on May 6
The downward cycle is still relevant among traders. The strongest increase in the volume of short positions will occur when the price holds below the level of 1.0500 in a four-hour period. In this case, the sellers will have a high chance of prolonging the downward trend towards the local bottom of 2016.

Otherwise, the amplitude of 1.0500/1.0600 may continue to form, delaying the stage of building a downward trend.

Trading plan for GBP/USD on May 6
Such an intense downward movement last day led to a local overheating of short positions, which caused a short-term stagnation at 1.2324. At the same time, the downward mood among traders remains. After a short stop or pullback, the downward cycle will resume movement. The level of 1.2250 can become a variable point of support on the sellers' way. The strongest point of support is at the psychologically important level of 1.2000.

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Tips for beginner traders in EUR/USD and GBP/USD on May 11, 2022

Economic calendar for May 11
US inflation data is expected to be published. The consumer price index is expected to decline for the first time since the summer of 2021. This is a positive signal for the US economy, and will also indicate confirmation of the Fed's action in tightening monetary policy.

How will this news play on the market?

In the beginning, it can play on the dollar exchange rate in terms of its local strengthening. After that, the US dollar may come under pressure if the Fed softens the requirements for tightening monetary policy. In simple words, the Fed's subsequent comments with the gradual normalization of inflation may already be more restrained. From the rhetoric, the statement about the interest rate hike by 0.75% will disappear at first. After that, they can lower the bar for a one-time increase from 0.5% to 0.25%. In this case, the above text is just a reflection of possible scenarios for reducing inflation. The prospect is medium-term.

Time targeting

US inflation - 12:30 UTC (prev. 8.5% ---> forecast 8.1%)

Trading plan for EUR/USD on May 11
The stagnation stage will end soon, the existing amplitude in the values of 1.0500/1.0600 will play the role of a lever for speculators. In this case, the optimal trading strategy is considered to be a breakdown of one or another stagnation border.

We concretize the above into trading signals:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.0636 in a four-hour period.

Sell positions should be considered after holding the price below 1.0470 in a four-hour period due to the repeated storming of the 1.0500 border.

Trading plan for GBP/USD on May 11
Price movement within the framework of stagnation is a local manifestation of the market. In this situation, the key values are considered to be: 1.2250 (support level) and the peak of the recent eye at 1.2405. Holding the price outside one or another control value may well indicate a subsequent quote path.

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Analysis and trading tips for EUR/USD on May 12

EUR/USD reaching 1.0555 led to a buy signal in the market, but having the MACD line far from zero limited the upside potential of the pair. Similarly, the downside potential was limited because the indicator was also far from zero when the pair tested the level again and prompted a sell signal. The test of 1.0532 in the afternoon also led to losses because the MACD line was still far from zero. No other signal appeared for the rest of the day.

CPI data from Germany did not help euro yesterday because the figure completely coincided with economists' forecasts. Similarly, the speech of ECB President Christine Lagarde did not change the balance in the market even though her statements hinted that rates may increase in July. US data on CPI for April also showed further increases, returning demand for dollar.

Most likely, EUR/USD will continue declining today as there are no scheduled statistics for the Euro area. The US will also release reports on jobless claims and producer prices, which, if shows sharp increases, will lead to a further rise in dollar demand. The upcoming speech of Fed member Mary Daly will also provide support for USD.

For long positions:

Buy euro when the quote reaches 1.0520 (green line on the chart) and take profit at the price of 1.0570 (thicker green line on the chart). A rally is quite unlikely because demand for dollar returning. Nevertheless, when buying, make sure that the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0489, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0520 and 1.0570.

For short positions:

Sell euro when the quote reaches 1.0489 (red line on the chart) and take profit at the price of 1.0446. Pressure will most likely return after the release of data on the US economy in the afternoon. But note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.0520, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.0489 and 1.0446.

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

Economic calendar for May 13

Today the macroeconomic calendar is practically empty. The only thing you can pay attention to is industrial production in the EU, where a decline is predicted.

Time targeting

The volume of industrial production in the EU - 09:00 UTC

Trading plan for EUR/USD on May 13

In this situation, the convergence of prices with the local bottom of 2016 may well lead to a slowdown in the downward cycle. This will lead to a slowdown or a full-length pullback.

An alternative development scenario considers the continuation of the inertial course in the market, where the signals about the oversold euro will be ignored by traders. In this case, holding the price below 1.0325 in a four-hour period will restart short positions.

Trading plan for GBP/USD on May 13

If the current stagnation serves as a regrouping of trade forces, then a local acceleration may soon occur. In this case, the optimal trading tactic is an outgoing momentum relative to the boundaries of stagnation.

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Tips for beginner traders in EUR/USD and GBP/USD on May 16, 2022

Economic calendar for May 16

Monday is traditionally accompanied by a blank macroeconomic calendar. Nevertheless, stable information and news flow will continue to play on the nerves of speculators, which allows new jumps in the market.

Trading plan for EUR/USD on May 16

In this situation, the pullback was replaced by stagnation, where the values of 1.0350/1.0420 serve as variable boundaries of the amplitude. The optimal trading strategy is considered to be a breakdown of one or another stagnation border.

We concretize the above into trading signals:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.0450 with the prospect of a move to 1.0500.

Sell positions should be considered after keeping the price below the local low of 2016, at 1.0325.

Trading plan for GBP/USD on May 16

Despite the slowdown, the pullback stage is still relevant in the market. In order for the downward cycle to resume, the quote must first return to the pivot point of 1.2150. This price move will indicate an increase in the volume of short positions, which will lead to the breakdown of the variable support and the trend prolongation.

An alternative market development scenario considers the price transition from the pullback stage to a full-scale correction. This movement can be indicated by a long stay of the price above 1.2250 in the daily period.

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Hot forecast for GBP/USD on 18/05/2022

The correction that began on Monday ended quite quickly. It was supposed that at best, Federal Reserve Chairman Jerome Powell's words would stop it, but in fact, it happened long before that. Namely, at the very opening of the US trading session. The fact is that US macroeconomic reports suddenly turned out to be noticeably better than forecasts. And instead of slowing down the main indicators, they accelerated each other.

The growth rate of retail sales increased from 7.3% to 8.2%, although they expected a decrease from 6.9% to 4.2%. That is, not only did the new data turn out to be significantly higher than the forecast, but also the previous ones were revised up. Unlike industrial production, whose previous results were revised from 5.5% to 5.4%. But its growth rate accelerated to 6.4%, instead of slowing down to 2.0%. And judging by these data, the American economy is doing just great. Especially when you consider that the data were published for April.

Retail Sales (United States):

But if macroeconomic statistics have completed the corrective movement, then Powell's words indicate the resumption of the trend for the strengthening of the dollar. Despite the recent slowdown in inflation, Powell did not say a word about the possibility of any revision of plans to raise interest rates. Powell once again stated that the central bank will raise the refinancing rate until inflation falls to target levels. That is, up to 2.0%. Given that it is now above 8.0%, then at least until the end of this year, during each meeting of the Federal Open Market Committee, the refinancing rate will be raised by at least 0.25%. So by the end of the year, it is likely to be above 2.00%. But in general, there is nothing new in this, and Powell only confirmed the previously announced plans, regarding the implementation of which there were some doubts. Powell dispelled them.

But if Powell's words were not enough to immediately start the process of strengthening the dollar, then British inflation coped with this task perfectly, which rose from 7.0% to 9.0%. And this is the biggest value in more than forty years. But the Bank of England has recently assured everyone that in April, and the data were published for this month, inflation will peak, after which it will gradually decline. That's just according to the forecasts of the British central bank, it should have reached the level of 7.2%. But the reality turned out to be noticeably worse. And there is no doubt that such a high level of inflation will have an extremely negative impact on the economy of the United Kingdom. Yes, it already does. As a result, after a small local rebound, the market returned to the long-familiar trend of strengthening the US dollar.

The GBPUSD currency pair formed a correction by more than 300 points, eventually returning the quote to the level of 1.2500. The subsequent price slowdown indicates an overheating of long positions.

The RSI H4 technical instrument entered the overbought zone during the acceleration. This signal confirms the overheating of long positions in the short term.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move in the market. The Alligator D1 indicator still signals a downward trend in the medium term. The moving MA lines are directed down.

Expectations and prospects:

Price stagnation within the level of 1.2500 signals the process of accumulation of trading forces. It will end soon and lead to subsequent price spikes.

If we assume that the correction is coming to an end, then keeping the price below the 1.2420 mark will lead to a full-fledged rebound of the price from the 1.2500 level. This step, in turn, will restart short positions.

An alternative scenario sees the current slump as an opportunity for a realignment of trading forces that would remove the overbought status from the pound. In this case, keeping the price above 1.2520 in a four-hour period allows for the subsequent formation of a corrective move.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. Indicators in the medium term give a sell signal due to the main trend.

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Tips for beginner traders in EUR/USD and GBP/USD on May 19, 2022

Economic calendar for May 19

Today, of interest, there are only claims for unemployment benefits in the United States, where they are predicted to decrease in their volume. This is a positive factor for the US labor market.

Statistics details:

The volume of continuing claims for benefits may be reduced from 1.343 million to 1.320 million.

The volume of initial claims for benefits may be reduced from 203,000 to 200,000.

Time targeting

US Jobless Claims - 12:30 UTC

Trading plan for EUR/USD on May 19

In this situation, only a stable holding of the price below the level of 1.0500 can indicate a signal about the completion of the correction. Otherwise, the scenario of variable turbulence within the boundaries of 1.0500/1.0600 will still be relevant on the market.

Trading plan for GBP/USD on May 19

The subsequent increase in the volume of short positions is expected at the time of holding the price below the value of 1.2300 in a four-hour period. This move may lead to further weakening of the pound in the direction of the local bottom on May 13 at 1.2155.

An alternative scenario will be considered by traders if the price returns to the resistance level. So the correction will have a second chance for a prolongation.

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US stocks closed lower, Dow Jones down 0.75%​​​​​​​

At the close of the New York Stock Exchange, the Dow Jones fell 0.75% to hit a 52-week low, the S&P 500 fell 0.58% and the NASDAQ Composite index shed 0.26%.

UnitedHealth Group Incorporated was the top performer in the Dow Jones Index today, up 7.17 points or 1.52% to close at 478.55. Boeing Co rose 1.62 points (1.29%) to close at 127.14. Home Depot Inc rose 0.90% or 2.58 points to close at 287.76.

The losers were shares of Cisco Systems Inc, which lost 6.64 points or 13.73% to end the session at 41.72. The Travelers Companies Inc was up 2.88% or 5.02 points to close at 169.30 while Walmart Inc was down 2.74% or 3.36 points to close at 119. .07.

Leading gainers among the S&P 500 index components in today's trading were Synopsys Inc, which rose 10.25% to 300.52, MarketAxess Holdings Inc, which gained 7.10% to close at 267.94, and shares of General Holdings Inc, which rose 6.62% to end the session at 223.69.

The biggest losers were Under Armor Inc C, which shed 15.76% to close at 8.18.

Leading gainers among the components of the NASDAQ Composite in today's trading were NeuroMetrix Inc, which rose 76.28% to hit 5.50, VivoPower International PLC, which gained 47.64% to close at 1.58, and shares of Neuroone Medical Technologies Corp, which rose 29.57% to end the session at 0.79.

The biggest losers were Bright Green Corp, which shed 67.35% to close at 15.70. Shares of Visionary Education Technology Holdings Group Inc lost 39.00% and ended the session at 3.05. Quotes of Molecular Data Inc decreased in price by 27.50% to 0.10.

On the New York Stock Exchange, the number of securities that rose in price (1645) exceeded the number of those that closed in the red (1538), while quotes of 108 shares remained virtually unchanged. On the NASDAQ stock exchange, 2069 companies rose in price, 1679 fell, and 235 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.20% to 29.35.

Gold futures for June delivery added 1.29%, or 23.46, to hit $1.00 a troy ounce. In other commodities, WTI July futures rose 1.78%, or 1.90, to $108.94 a barrel. Brent futures for July delivery rose 1.94%, or 2.12, to $111.23 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 1.14% to 1.06, while USD/JPY shed 0.35% to hit 127.78.

Futures on the USD index fell 0.93% to 102.89.

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Tips for beginner traders in EUR/USD and GBP/USD on May 20, 2022

Economic calendar for May 20

UK retail sales dropped by 4.9% YoY in April replacing 1.3% growth in March. Analysts assumed a decline of 7.2%. The discrepancy in the forecasts delayed the rapid weakening of the pound sterling.

Trading plan for EUR/USD on May 20

In this situation, a price rebound from the border of 1.0600 is possible, which will lead to a reverse move towards the level of 1.0500. This movement can form a flat.

An elongated correction scenario will be considered by traders if the price holds above 1.0636 in a four-hour period.

Trading plan for GBP/USD on May 20

The subsequent increase in the volume of short positions is expected at the time of holding the price below the value of 1.2300 in a four-hour period. This move may lead to further weakening of the pound towards the May 13 local bottom at 1.2155.

An alternative scenario will be considered by traders if the price returns to the resistance level. So the correction will have a second chance for a prolongation.

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Aussie and Kiwi skyrocket. Commodity currencies rise and US dollar tumbles

Commodity currencies grow sharply at the beginning of the week. The Australian and New Zealand dollars were supported by a surge in risk appetite.

In anticipation of the end of the lockdown in China's largest financial center, Shanghai, the demand for stocks rose.

Quarantine restrictions have been in effect in the city of 25 million people since the end of March. Most of them are expected to be lifted by June 1.

At the same time, optimism about global economic growth triggered a surge in high-risk commodity currencies. For example, the Australian and New Zealand dollars rose to their highest levels in weeks.

The Aussie jumped by 0.7% this morning to 70.92 cents.

Meanwhile, the New Zealand dollar soared 1.1% to its highest since May 5 at 64.62 cents.

The Australian and New Zealand dollars managed to recoup some of the losses suffered this quarter. Both currencies have had the worst performance among the Group of Ten since April.

The Aussie and Kiwi have been under pressure from the strong US dollar over the past few weeks. Amid aggressive rate hikes in the US, the greenback index rose to a new 20-year high of 105,010 this month.

However, at the beginning of the new working week, the US currency is trading at 2% below the record level amid the return of appetite for risky assets.On Monday morning, its rate fell by 0.1% from Friday's close to 102.790 points.

By the end of last week, the US dollar showed the first decrease in 7 weeks. The weakness of the greenback allowed the Aussie to make its first weekly rise since the end of March.

Since the beginning of the week, the Aussie has received a little boost from the center-left Labor Party's victory in Australia's federal election on Saturday.

The good news for the Australian currency is that this is the first change of government in almost 10 years. The bad news is that the new government is unlikely to change the pace of interest rate hikes in Australia.

A fresh comment from Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent adds to the pessimism about monetary policy.

On Monday morning, the official hinted at a gradual reduction in the Australian Central Bank's balance sheet for this and the coming year:

– This year's asset reduction plan calls for only $4 billion in bond redemptions, and we expect the figure to rise to $13 billion in 2023.

This abundance of funding indicates that the target money rates will remain low for a few years.

As for the monetary policy of the Reserve Bank of New Zealand, the base interest rate may rise as early as this week.

Markets are now expecting the RBNZ to raise the rate on Wednesday by 50 bps to 2%. The regulator's hawkish scenario adds momentum to the NZD/USD pair, which is now at a 3-week peak.

Thanks to the return of risk sentiment to the stock markets the AUD/USD pair is also showing great movements. It is firmly above the 21-day moving average this morning.

Bulls need to close above this level to continue the uptrend in the AUD/USD pair because this level coincides with the resistance line of the downtrend.

If the Aussie dollar continues to be in demand in the near future, it might lead it to test the high of 0.7135 from May 6.

If the AUD/USD does not manage to keep above the 21-day moving average by the end of the day, bears will return to the market and pull the Aussie back to Friday's low of 0.7002.

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Tips for beginner traders in EUR/USD and GBP/USD on May 24, 2022

Economic calendar for May 24
Preliminary data on business activity indices for May in Europe, Britain, and the United States will be published today. A widespread decline in indicators is expected, which may lead to variable fluctuations in the market.

Time targeting

Business activity indices in the EU - 08:00 UTC

Business activity indices in Britain - 08:30 UTC

Business activity indices in the US - 13:45 UTC

Trading plan for EUR/USD on May 24
In this situation, overheating of long positions can lead to a pullback, while the upward interest will still prevail in the market. The next round of growth is expected after the price holds above the 1.0700 mark.

An alternative scenario will be considered by traders in case the price returns below the 1.0600 mark in a four-hour period. In this case, a signal of completion of the corrective move may occur.

Trading plan for GBP/USD on May 24
The previously passed level of 1.2500 currently plays the role of a support in case of a pullback in the market. The subsequent increase in the volume of long positions is expected at the time of holding the price above 1.2600. In this case, buyers will have the possibility of further growth towards the level of 1.2700.

If the pullback drags on, and the quote needs to stay below the level of 1.2500, the first signal of the completion of the corrective move may appear.

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Analysis and trading tips for GBP/USD on May 26

Analysis of transactions in the GBP / USD pair

GBP/USD reaching 1.2545 prompted a buy signal in the market, which led to a 10 pip increase as the MACD line was just starting to move above zero. However, the quote turned down immediately after and retested 1.2545, forming a sell signal. This time, it provoked a 25-pip decrease in the pair and reached 1.2518, where movement became limited as the MACD was already far from zero. In the afternoon, another sell signal appeared at 1.2545, resulting in another 20-pip decrease. Its fourth test then led to a buy signal, which prompted a 50-pip increase as the MACD was moving above zero.

GBP/USD reached new monthly highs after traders did not find anything new in the minutes of the Fed's May meeting. Contrary to what was expected, there were no hints that the central bank will raise rates again at the next meetings.

However, today, it is likely that the pound will turn down as there are no statistics scheduled to be released in the UK. In the afternoon, data on US jobless claims and second estimate of the 1st quarter GDP will support the dollar, while the report on pending home sales may strengthen the emerging trend in the pair provided that its value turns out better than expected.

For long positions:

Buy pound when the quote reaches 1.2575 (green line on the chart) and take profit at the price of 1.2610 (thicker green line on the chart). There is a chance for a rally today because there is no scheduled statistics to be released. However, note that when buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.2553, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2575 and 1.2610.

For short positions:

Sell pound when the quote reaches 1.2553 (red line on the chart) and take profit at the price of 1.2516. Pressure is likely to return if there is no bullish activity in the market before and after the release of the US GDP report for the 1st quarter. However, note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.2575, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2553 and 1.2516.

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Major altcoins suffer losses​​​​​​​

On Thursday, bitcoin dived to $28,900 and eventually closed at $29,117. At the time of writing on Friday, BTC fell to $28,982.

Since Monday, bitcoin has tried to break out of the 7-week long downtrend, but remained near the $30,000 mark. The leading cryptocurrency lost about 60% since it surpassed $69,000 and reached an all-time high in November 2021.

Crypto market lossesOver the past 24 hours, BTC lost about 2%. Howevre, major altcoins suffered more severe losses. STEPN's native token nosedived by 37.9% after its developer halted its services in China due to a demand from local authorities. STEPN is a move-to-earn lifestyle app which uses GPS and allows users to earn rewards in crypto by running, walking, or jogging outside. The company will stop providing GPS services to users in mainland China from July 15.

Solana fell by 7.15% to $45. The altcoin lost more than 17% last week. Among other cryptocurrencies, Ethereum decreased by 6.16% to $1,847, BNB slumped by 5.03% to $311.86, Cardano declined by 4.59% to $0.487, and Dogecoin slid down by 4.83% to $0.0791. The best performing cryptocurrency was Chain, which jumped by 46.6% on Thursday.

According to CoinGecko, the market cap of the cryptocurrency market decreased by 3.22% to $1.22 trillion yesterday. The Bitcoin Dominance Index reached 45.74%.

Lengthy crypto downtren

Since the beginning of 2022, the digital assets market dropped sharply as investors shifted away from risky assets. BTC lost about 37% since January, while Ethereum dived by 48%. The market cap of the cryptomarket declined to $1.3 trillion from $3 trillion in November 2021.

The war in Ukraine and rising geopolitical tensions in Eastern Europe have pushed the crypto market downwards.

Another bearish factor for crypto is the growing dominance of the United States in the digital assets market, reflecting the currency war between the US and China, which began in 2014. The US crypto dominance was reinforced by China's crypto ban in 2021

The Federal Reserve's monetary policy is also pushing the crypto market downwards. According to crypto market analysts, the Fed's interest rate hike has contributed to the downtrend. Investors are concerned that rising inflation would force the regulator to increase interest rates even higher in the future.

Earlier, Fed chairman Jerome Powell stated that the US central bank plans to act decisively to bring inflation back to the target level of 2%, despite short term recession risks.

In May, the Federal Reserve increased the key interest rate by 50 basis points to 0.75-1%. The US regulator hiked the rate by 25 basis points at its March meeting. It was the first back-to-back rate rise by the Fed since 2006 and the first 50 basis points increase since 2000

Light at the end of the tunnel?

Despite bitcoin's woes, JP Morgan strategists estimated BTC's fair value at $38,000, which is 30% higher than its current price of about $29,000. Furthermore, JPMorgan classified digital assets and hedge funds as its "preferred" alternative asset classes.

The bank's strategists also stated that BTC and digital assets have great upside potential after its recent fall.

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Hot forecast for EUR/USD on 30/05/2022​​​​​​​

Although the single European currency demonstrated good activity on Friday, showing a movement of fifty points, first up, then down, in fact, it was a stagnation. Which, in general, is not surprising, given that macroeconomic data was not published. And there were no serious news reports that could somehow affect the market either. The beginning of the new trading week will be much less active. And it's not just a completely empty macroeconomic calendar. After all, it is a holiday in the United States to honor Memorial Day. And in the absence of American traders, activity in the market is coming to naught. Like it or not, American investors control most of the capital circulating in financial markets. So the stagnation will become more pronounced, and the magnitude of the movement will be noticeably smaller than on Friday.

The EURUSD currency pair, despite the scale of the correction, adheres to an upward move. During this time, the euro exchange rate has strengthened by more than 400 points, which is considered a strong price change.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates an upward interest among traders. RSI D1 settled above the 50 line, this is a signal of an elongated correction.

Alligator H4 is signaling an upward trend, MA moving lines are directed upwards. The Alligator D1 indicator has changed direction from a downward cycle to an upward one. The moving MA lines are directed upwards.

Expectations and prospects:

There is a resistance area of 1.0800/1.0850 on the way, which can hold back the bulls. For this reason, the tactic of working on the rebound is considered as the most optimal strategy. In the future, this may lead to the completion of the corrective move.

An alternative scenario considers the prolongation of the correction. This signal will be relevant only if the price stays above 1.1850 in the daily period.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the correction. In the medium term, indicators changed to buy indicators due to a protracted correction.

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Tips for beginner traders in EUR/USD and GBP/USD on May 31, 2022

Economic calendar for May 31

Today, traders are focused on the preliminary assessment of inflation in Europe. It is predicted that the consumer price index will continue to grow from 7.4% to 7.7%, which is a negative factor for the EU economy. Further inflation growth may stimulate the ECB to more aggressive tactics of tightening monetary policy. In simple words, the regulator may still move to an interest rate hike based on the growth of inflation. Thus, based on the logic of the ECB's further steps, this news may lead to an increase in the value of the euro in the medium term.

A short-term reaction to rising inflation could lead to a weakening of the euro.

Time targeting

EU Inflation - 09:00 UTC

Trading plan for EUR/USD on May 31

The area of resistance 1.0800/1.0850 is still putting pressure on buyers, which may lead to the completion of the corrective movement. If expectations are confirmed, the euro rate may return to the value of 1.0636.

An alternative scenario considers the prolongation of the correction. This signal will be relevant only if the price holds above 1.0850 in the daily period.

Trading plan for GBP/USD on May 31

In this situation, special attention is paid to the stage of stagnation within the amplitude of 1.2600/1.2700. This fluctuation may indicate the process of accumulation of trade forces, which will eventually lead to a local acceleration. Based on the assumption, the best trading tactic is the method of breaking through one or another stagnation border with confirmation in a four-hour period.

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Oil holds steady in positive territory for six straight months and extends its rally into summer​​​​​​​

On Wednesday, global oil prices are steadily increasing after a short decline a day earlier. The fall in oil prices on Tuesday was caused by speculations that some producers want to suspend Russia's participation in the OPEC+ production deal, as well as by new sanctions against Russia.

At the moment of writing, August Brent oil futures have gained 0.36% and are now hovering near $116.02 per barrel. A day earlier, Brent lost 1.7% and declined to $115.60 per barrel.

WTI oil futures for July rose by 0.44% to $115.17 per barrel on Wednesday. Yesterday, the futures contracts fell by 0.35% to $114.67 per barrel.

So, on Tuesday, oil depreciated by about 2% after a report that some OPEC members are exploring the idea of suspending Russia's participation in the deal over the conflict in Ukraine. The key factors in this case are the Western sanctions imposed on Russia and the partial embargo on Russian crude imports. This step will notably limit Russia's ability to ramp up oil production. The next OPEC+ meeting will take place on June 2, 2022.

In 2021, Russia, one of the world's top three crude producers, made a deal with OPEC and 9 other non-OPEC members to gradually increase output every month. Yet, amid anti-Russian sanctions, analysts predict an 8% drop in oil production.

Oil quotes were steadily rising until the news about Russia's possible suspension appeared in the media. In the early trade on Tuesday, Brent futures for July jumped above $124 per barrel for the first time since March 9.

Experts suggest that if the cancellation of Russia's membership is confirmed, the price of oil may drop to $100.

Today, markets are focused on supply prospects amid a ban on Russian oil imports to the EU. On May 31, the EU members agreed on the sixth package of sanctions which includes a partial embargo on oil and petroleum products imported by sea.

The sanctions ban local companies from providing insurance to Russian oil tankers. This means that from now on, Russia is isolated from the largest export market.

Restrictions will deal a heavy blow to oil deliveries to Asia which may disrupt Russia's plan to refocus on exports to China and India.

This ban can seriously hit the economy of Russia as the majority of European companies will refuse to transport oil without insurance. The effectiveness of this restriction was previously tested on Iran and proved to be successful.

Many European countries involved in shipping have already expressed concern about the ban on insurance for Russian oil tankers. So, the EU decided to implement it gradually within the next six months.

The official statement about the new restrictive measures against Moscow is expected in the coming days.

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Tips for beginner traders in EUR/USD and GBP/USD on June 2, 2022

Economic calendar for June 2

Today is a holiday in the UK, but this will not cause a decrease in volatility in financial markets. The focus will be on the ADP report on employment in the United States, which is predicted to grow by 295,000 in May. This is a positive signal for the labor market if the data is confirmed.

Almost simultaneously with the report, ADP will publish weekly data on jobless claims in the US, where they predict a reduction in their volume. This is a positive factor for the US labor market.

Statistics details:

The volume of continuing claims for benefits may be reduced from 1.346 million to 1.308 million.

The volume of initial claims for benefits may remain at the level of 210,000.

Time targeting

ADP report - 12:15 UTC

US Jobless Claims - 12:30 UTC

Trading plan for EUR/USD on June 2

In order to confirm the signal to sell the euro, the quote needs to stay below the level of 1.0636 for at least a four-hour period. In this case, traders will have high chances of moving towards the values of 1.0570–1.0500.

Otherwise, the market may experience another stagnation with a local pullback relative to the pivot point.

Trading plan for GBP/USD on June 2

A stable holding of the price below the level of 1.2500 may lead to a subsequent decline towards the value of 1.2350. This move will indicate a gradual process of recovery of dollar positions relative to the recent correction.

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Tips for beginner traders in EUR/USD and GBP/USD on June 3, 2022

Economic calendar for June 3

Retail sales data in the euro area is expected for publication today. Forecasts assumed growth in figures, which may provide local support for the euro before the American trading session.

The main macroeconomic event of the outgoing week is considered to be the report of the United States Department of Labor, which predicts by no means bad indicators. The unemployment rate could drop from 3.6% to 3.5%, and 325,000 new jobs could be created outside of agriculture. We have a strong US labor market, which could support the US dollar.

Time targeting

EU retail sales - 09:00 UTC

US Department of Labor Report - 12:30 UTC

Trading plan for EUR/USD on June 3

Based on the recent price change, we can assume that the market has a local signal that the euro is overbought in the short term. This can lead to a slowdown in the upward cycle followed by a rebound. The price area of 1.0770/1.0800 is considered as resistance on the way of buyers.

The scenario of the prolongation of the corrective move will be considered by traders if the price stays above 1.0850 for at least a four-hour period.

Trading plan for GBP/USD on June 3

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

The first one comes from the preservation of rising interest in the market, where holding the price above 1.2600 can return the quote to the resistance area of 1.2670/1.2720.

The second scenario considers the possibility of completing a corrective move, where holding the price below 1.2530 will lead to another attempt to break through the support level of 1.2500. The largest increase in the volume of short positions will occur after the price holds below 1.2450, which will confirm the signal about the completion of the correction.

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Most of the Asian indices gain 0.67–2.2%​​​​​​​

Most of the Asian indices gained between 0.67 and 2.2%. Thus, the Chinese and Hong Kong indices showed the biggest increases. Shanghai Composite added 1.05%, Shenzhen Composite increased by 2.21%, and Hang Seng Index surged by 1.37%. Japan's Nikkei 225 gained 0.67% while Australia's S&P/ASX 200 lost 0.32%. South Korean stock exchanges are not working today. However, the Korean KOSPI ended last week in a positive area with an increase of 0.44%.

The main reason for investors' optimism was strong statistical data from China. Thus, the index of business activity in the service sector last month rose to 41.4 points from April's mark of 36.2 points. At the same time, the value of this indicator is still below the 50-point mark, indicating a decline in business activity.

The gradual lifting of restrictive measures in the capital and other major cities of China, caused by the new wave of COVID-19, is also encouraging.

Wuxi Biologics (Cayman) Inc. gained 9.7%, Meituan added 8.3%, and Anta Sports Products, Ltd. soared by 5.5%. Quotes of BYD Co., Ltd. rose slightly less by 5.2%, and Alibaba Group Holding, Ltd. climbed by 2%.

In Japan, the country's central bank reports the intention to continue the soft monetary policy. According to the management of the regulator, at this stage, the rise in prices in the country is caused by individual factors, such as an increase in the cost of energy. The authorities believe that stimulus measures will lead to an increase in wages, and inflation will become more stable.

Among the companies included in the Nikkei 225 indicator, the shares of Kawasaki Heavy Industries, Ltd. gained 6.4%, Hitachi Zosen Corp. grew by 5.5%, and Idemitsu Kosan Co, Ltd. soared by 5%. Slightly less growth was shown by Fast Retailing securities, which gained 2.5%.

At the same time, SoftBank Group stock decreased by 0.4%, and Sony dropped by 9%.

The capitalization of the largest Australian companies decreased. BHP lost 0.9%, and Rio Tinto dropped by 0.2%.

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Hot forecast for GBP/USD on 07/06/2022

Even before the opening of the US trading session, the dollar began to steadily strengthen its positions, which is quite strange. After all, the macroeconomic calendar is completely empty. Basically, just like today. In addition, there was also nothing in the news background that could somehow affect the development of events. It turns out that what happened most likely lies in the plane of technical factors. Which in general is not surprising, since amid the absence of obvious fundamental factors, the market is switching to technical ones. Also, such a situation may hint at the lack of market participants' faith in the prospects of Europe as a whole. After all, representatives of the European Central Bank are already directly talking about the imminent increase in the refinancing rate, which should be the first since 2011, and which should contribute to the strengthening of the euro.

However, the general state of the European economy, along with the increasing risks of energy shortages, which are most acute in front of the eurozone, cause more and more concerns. What is the trip of Olaf Scholz to Africa worth, in order to find alternative sources of supply, after the European Union's decision to abandon Russian energy carriers. It is quite obvious that even if Europe can find a replacement for Russian oil and gas, it will cost much more. And this is despite the fact that inflation is not even slowing down, and fuel prices are higher than ever before. In such circumstances, it is difficult to feel a sense of optimism about the European economy.

Since the beginning of June, the GBPUSD currency pair has been stubbornly trying to change the trading interest from an upward cycle to a downward one. This is indicated by the price consistently reaching the support area of 1.2450/1.2500.

The RSI H4 technical instrument is moving to the lower area of the 30/50 indicator, which indicates traders' prevailing interest in short positions. RSI D1 is moving within the deviation of the 50 middle line, which indicates a slowdown in the corrective move.

The moving MA lines on the Alligator H4 are directed downwards. This is a signal to sell the pound. Alligator D1 has interlacing between the MA lines, which indicates a slowdown in the upward cycle.

On the trading chart of the daily period, there is a corrective move from the pivot point of 1.2155, which fits into the clock component of the downward trend. The resistance area of 1.2670/1.2720 is on the correction path as resistance.

Expectations and prospects

We can assume that the long absence of updating the local high indicates the completion of the corrective move. The main signal to sell the pound is when the price stands firm below 1.2450 for at least a four-hour period. In this case, we will see a gradual recovery of dollar positions.

A complex indicator analysis has a sell signal in the short-term and intraday periods due to the price movement within the support area. Indicators in the medium term have a variable signal due to the slowdown in the corrective move.

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Tips for beginner traders in EUR/USD and GBP/USD on June 10, 2022

Details of the economic calendar from June 9

The European Central Bank (ECB) expectedly kept the base interest rate at the same level. The ECB also said that it intends to raise the rate in July. This became the main topic during the meeting as this will be the first time the regulator will raise the rate since 2011. It is expected that the regulator will raise the rate by 0.25%.

The market reaction to this announcement was not so rosy. Perhaps investors were expecting a stronger rate hike.

The main theses of the ECB:

The ECB, as expected, kept the base rate at zero, and the deposit rate at minus 0.5%.

The ECB will end the asset purchase programme (APP) on 1 July.

The ECB intends to raise its base rate by 0.25% in July.

The ECB forecasts eurozone GDP growth of 2.8% in 2022, 2.1% in 2023 and 2.1% in 2024.

The ECB intends to gradually raise the base rate after September.

The ECB forecasts eurozone inflation at 6.8% in 2022, 3.5% in 2023 and 2.1% in 2024.

The ECB plans a second rate hike in September, the pace of its rise will depend on inflation.

At the same time as the press conference, data on jobless claims in the United States was released which recorded an increase in the overall rate.

This is a negative factor for the US labor market, but in connection with the comments of the ECB that coincided at that time, the dollar did not react in any way to the negative on the applications.

Statistics details:

The volume of continuing claims for benefits decreased slightly from 1.309 million to 1.306 million.

The volume of initial claims for benefits increased from 202,000 to 229,000.

Analysis of trading charts from June 9

The EURUSD currency pair has covered more than 120 points during an intense downward momentum. This movement led to the breakdown of the lower border of the side channel 1.0636/1.0800. Based on the behavior of the price, we can state the fact of speculation in this period of time.

The GBPUSD currency pair rushed down through a positive correlation with the European currency. This led to another convergence of the price with the lower border of the side channel 1.2450/1.2500.

Economic calendar for June 10

Today, the focus will be on inflation data in the United States, where it is predicted that the consumer price index will remain at the same level—8.3%. In some ways, this is a positive signal that indicates a slowdown in the rate of inflation. The US dollar is likely to receive a local incentive to strengthen.

Time targeting

Inflation in the USA - 12:30 UTC

Trading plan for EUR/USD on June 10

The technical pullback is still relevant in the market due to the local overheating of short positions in the euro. This movement can temporarily return the quote to the boundaries of the previously passed flat.

The next downward movement is expected in the market after holding the price below 1.0600. This move will lead to a gradual recovery of dollar positions relative to the recent corrective move.

Trading plan for GBP/USD on June 10

The price movement within the flat is still relevant in the market, so another price rebound from its lower border cannot be ruled out. As the main strategy, traders consider the tactics of breaking through one or another frame of the established range.

Trading recommendations are based on the breakdown tactics:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.2600 in a four-hour period with the prospect of a move to 1.2660-1.2720.

Sell positions should be considered after holding the price below 1.2450 in a four-hour period with the prospect of a move to 1.2350-1.230.

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Trading Signal for GOLD (XAU/USD) on June 14-15, 2022: buy above $1,812 (2/8 Murray - oversold)​​​​​​​

XAU/USD came under bearish pressure after falling below the 200 EMA (1,849) and ended the American session reaching a low of 1808.93

In less than 24 hours from the high of 1878.74 to the low of 1808.93, gold fell by approximately $70. This is a sign that risk aversion is increasing and investors will continue to take refuge in the US dollar.

Investors are worried that the Fed may hike the interest rate by 0.75%. As a result, the stock markets declined along with gold and cryptocurrencies.

A technical rebound is expected in the next few hours as gold is in an oversold zone. However, as long as it fails to consolidate above the 200 EMA located at 1,849, it will only be a pullback to resume the downtrend correction.

In the early Asian session, XAU/USD is trading at 1,824 and after having found a strong bounce above 2/8 Murray. The technical bounce is likely to continue in the next few hours and may reach the 21 SMA around 1,838.

In case of a test of the level of 2/8 Murray, gold is likely to return to the zone of 1,812. We should wait for a consolidation above this level to buy with targets at 1,830, and 1,838. It could reach the 200 EMA at 1,849.

In the Asian session, the eagle indicator touched the oversold zone. It means that a technical rebound will occur in the next few hours. it may be an opportunity to buy above 1,812.

On the contrary, if gold resumes its downtrend and trades below 1,812 it could continue its downward movement and could reach the psychological level of 1,800 and the low of May 16 at 1786.70

Our trading plan for the next few hours is to buy gold at current price levels around 1,824 or in case of a bounce at 1,812 to buy with targets at 1,838 and 1,849.

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Storm warning for USD/JPY

USD/JPY went on a rollercoaster ride yesterday after the US Federal Reserve raised rates by 75bp. Don't loosen your belts as more course turbulence is expected in the coming days

The US central bank's decision did not come as a surprise to the markets.

The latest jump in the US consumer price index to 8.6% made it clear that the Fed intends to tighten its grip.

As predicted, at Wednesday's meeting the central bank raised interest rates by 75 bp.

The fact that the Fed went for the biggest increase in the rate since 1994 sent the dollar skyrocketing in almost every direction.

However, a little later on the charts, the opposite situation was already observed. The greenback dipped just as steeply as investors weighed in on the US central bank's rate plans.

Politicians lowered inflation expectations for both the current year and 2023, and also hinted at the next rate hike by either 50 bp or 75 bp.

The Fed's rejection of the possibility of a 100 bp rate hike literally plunged the dollar. The USD/JPY fell to 133.75, after hitting a new 24-year high of 135.50 in previous deals.

This morning, the yen turned around again and took the already familiar downward route. The Japanese currency returned to the lowest level since 1998 at 135.

Meanwhile, currency strategists note that in the short term the dollar-yen pair will remain highly volatile, and warn of even greater exchange rate turbulence.

Ahead and after the 2-day meeting of the Bank of Japan, which will be held on June 16-17, the range of fluctuations of the USD/JPY pair may be at least 7 points.

According to experts, during this period, the yen will trade from 131.05 to 138.08 per dollar. Thus, its weekly volatility will approach the highest level since 2020.

The jumps in the rate will be due to the ambiguous expectations of the market regarding the further policy of the Japanese central bank. As you know, BOJ stands out among its colleagues with its ardent commitment to a soft monetary rate.

BOJ Governor Haruhiko Kuroda continues to insist that it is too early to cut stimulus and raise rates, because inflation in the country remains relatively moderate.

In April, consumer prices in Japan exceeded the BOJ target of 2% for the first time in seven years and reached 2.1% year on year.

Nevertheless, in the future, Kuroda does not expect a significant increase in inflation. And until recently, this confidence has helped him stick to a dovish line, despite the global tightening trend.

However, can the head of the BOJ continue in the same vein amid the ongoing depreciation of the yen?

The decline in the Japanese currency has already significantly worsened the position of the world's third largest economy and overshadowed its prospects.

This morning, the Japanese government announced that in May the country faced the largest increase in the trade deficit in eight years.

Imports rose 48.9% year-on-year last month, outpacing exports by 15.8%, according to Japan's Ministry of Finance data. This resulted in a trade deficit of 2.385 trillion yen ($17.80 billion).

The trade balance with a negative balance testifies to the widespread consumption of foreign goods, the value of which continues to rise steadily.

This exacerbates the already sad situation of Japanese consumers, suffering from rising energy and food prices. Therefore, it is possible that Kuroda may change his mind dramatically and throw out a surprise tomorrow.

Given his behavior in the past, this is quite likely. As a reminder, before settling on the current policy, which is known as yield curve control, in 2016 the official shocked the markets with an unexpected move to negative interest rates.

Some analysts do not rule out the BOJ's surrender in the near future. If Kuroda gives even the slightest hint that he intends to reduce his asset purchases or raise rates, this will further increase the volatility of the market.

In this case, we should expect a big sale of Japanese bonds, a sharp increase in their yield and, as a result, an increase in demand for the yen.

According to experts, a change in the yield curve control policy could lead to a fall in the USD/JPY pair by 3-4% from the current level.

And if Kuroda declares on Friday that he remains true to his position, we will be able to see the continuation of the rally of this currency pair.

Analysts at Credit Suisse expect the greenback to rise to 142 against the yen.

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The steep rise of the franc and the crushing fall of the yen

Yesterday, Switzerland made a knight's move, unexpectedly raising rates by 50 bps. Against this background, expectations of the Bank of Japan's capitulation sharply increased. But the BOJ still decided to stand on its own.

In the outgoing week, two major central banks, whose monetary policy remained super-soft in the face of total tightening, decided to go their separate ways.

On Thursday, the Swiss National Bank made a shocking decision to raise interest rates. And this morning, the BOJ finally dispelled rumors about a possible rise in the indicator.

Franc rejoices: SNB takes a hawkish a path
Yesterday's decision by the Swiss central bank on interest rates produced a bombshell effect on the markets.

Of course, many expected that the SNB could decide to increase the indicator in conditions of increased inflation. But did anyone think that it could literally turn from a quiet dove into an aggressive hawk overnight?

The Swiss bank immediately raised the rate by half a percentage point, to 0.25%. The central bank has tightened its monetary policy for the first time in 15 years, hoping to contain inflation, which threatens to get out of control.

Currently, inflation in the country is 2.4% and, according to SNB forecasts, may reach 2.8% by the end of the year. This is significantly higher than the agency's target range of 2%.

The shocking rise in the rate by 50 bps provoked the sharpest growth of the franc in the last seven years. The Swiss currency has risen by almost 3% against the dollar.

The franc also strengthened significantly against the euro. The single currency dropped to 1.0131, showing the strongest drop since June 2016. Recall that the results of the Brexit referendum were published then.

Now analysts expect a further rise of the Swiss currency against the dollar and the franc reaching parity with the euro, as the SNB said that further tightening may be required to combat inflation.

The yen is stormy: BOJ chooses a dovish route
Interestingly, the rise in rates in Switzerland not only triggered the franc rally, but also gave a short-term boost to the yen.

Yesterday, the Japanese currency rose more than 1% against the dollar and reached a 2-week high. The increased threat of a global recession partially contributed to the strengthening of the protective asset.

Investors fear that a series of rate hikes, which this week has been remembered for, will provoke a slowdown in global economic growth.

Recall that on Wednesday the Fed raised rates by 75 bps, and on Thursday the Bank of England (by 25 bps) and the SNB (by 50 bps) reported an increase in the indicator.

The most unexpected, as we have already noted above, was the decision of the Swiss central bank. After the surprise it presented, speculation increased significantly that the BOJ would go the same way.

However, this did not happen. On Friday morning, the BOJ announced that it continues easing monetary policy and keeps interest rate targets unchanged.

This choice left the BOJ completely alone. While other major central banks are tightening their policies to curb rising inflation, the Japanese central bank decides to focus on supporting the economy affected by the COVID-19 pandemic.

The market's reaction to the BOJ's dovish tactics is absolutely logical. Today, the yen is falling as rapidly as it rose yesterday.

At the time of preparation of the material, the yen plunged by almost 1% against the dollar and was trading again at a 24-year low of 134.

Experts predict that in the near future we will see a further depreciation of the yen, which may cause even more damage to the economy, which is heavily dependent on imports of fuel and raw materials.The fact that uncertainty about the Japanese economy is extremely high is also stated in today's BOJ statement. Therefore, it would not be surprising if the regulator decides to turn off the beaten track at its next meeting...

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AUD skyrockets post-RBA Minutes​​​​​​​

Two weeks ago, the Reserve Bank of Australia unexpectedly lifted interest rates by 50 basis points. AUD/USD soared after the announcement. No wonder, the Minutes of the meeting triggered a similar reaction.

The Aussie dollar went up even before the release of the RBA Minutes. Yesterday, the currency strengthened by 0.3% to 0.69675 versus the US dollar on hawkish expectations.

According to the June report published on Tuesday, the central bank considered a 0.25% or 0.5% rate hike. RBA policymakers voted in favor of the latter one to curb inflation faster.

AUD/USD extended gains following RBA Governor Philip Lowe's hawkish comments.

The RBA chief saw inflation at 7% by the end of the year, well above the long-term target rate. He reaffirmed further monetary tightening due to growing inflationary pressure.

"As we chart our way back to 2% to 3% inflation, Australians should be prepared for more interest rate increases," warned Lowe in a speech. "The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation."

At the same time, the official made it clear that the RBA would not follow the Fed's suit. Last week, the US central bank lifted rates by 0.75% for the first time since 1994.

"At the moment, the decision we will take is either 25 or 50 again at the next meeting," Mr. Lowe said.

By the end of July, the Australian regulator will see the release of Q2 inflation. Therefore, the RBA may well stay hawkish in August.

The bank will also update the economic growth forecast by the August meeting.

Some analysts say these data could affect the pace of rate increases needed to tame inflation.

The interest rate is now seen at around 3.7% by the end of the year. To reach the target, the central bank should go for the most dramatic monetary tightening in its modern history.

Such a scenario would hit consumer spending hard and even lead to a slowdown in economic growth, thus harming the Australian dollar.

In addition, global recession risks are growing as the world's biggest central banks are hiking rakes.

A slowdown in global economic growth could be a serious obstacle to the commodity currency in the long term.

"We forecast AUD/USD will spend most of the next twelve months in a 0.60-0.70 range," the Commonwealth Bank Of Australia said in a note.

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Technical analysis recommendations on EUR/USD and GBP/USD for June 22, 2022​​​​​​​

EUR/USD

Higher timeframes

The area 1.0539 – 1.0582, which united many significant resistances of the higher timeframes, continues to hold back the development of the upward movement. To gain new targets, bulls should eliminate the daily death cross (1.0501 – 1.0522 – 1.0573 – 1.0624), enlist the support of the weekly short-term trend (1.0583) and enter the daily cloud (1.0558). For bears, the targets remain the same, which are the local lows 1.0339 and 1.0349.

H4 – H1

Bulls are still having a hard time developing their advantage on the lower timeframes. For several days now, they have been interacting with key supports, being in their zone of attraction. Consolidation below and reversal of the moving average (1.0500—weekly long-term trend) will change the current balance of power, and then bullish interests may be replaced by opportunities for strengthening bearish sentiment.

GBP/USD

Higher timeframes

Bulls fail to develop a rebound. As a result, the pair continues to consolidate in the zone of attraction of the daily Ichimoku cross (Tenkan 1.2225 – Kijun 1.2300). The most significant resistance of this section is now at the level of 1.2388 (the final level of the daily cross + weekly short-term trend). The reference points for a bearish trend are 1.2000 (psychological level) – 1.1933 (local low). Overcoming these levels may change the current balance of power.

H4 – H1

Bulls had been in possession of the key levels of the lower timeframes for a long time, but failed to develop their advantage. Today, an attempt is being made to change the balance of power, perhaps the opponent, having seized the key levels 1.2232–79 (central pivot point of the level of the day + weekly long-term trend), will be more effective.

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Trading plan for EUR/USD and GBP/USD on June 23, 2022

US President Joe Biden asked Congress to introduce a gas tax holiday for only three months, which is far less than expected. He also requested to try to avoid cuts to the highway fund, adding that the fuel tax will continue to finance the construction and maintenance of roads. This is worrying because the budget deficit is already almost $ 1.6 trillion, and Biden's proposal will certainly push it higher. Congress has not responded, but they accepted the proposal for consideration. Unsurprisingly, dollar demand fell because, given November's congressional and Senate elections, there is little doubt that this measure will be taken.

In terms of euro, there is a high chance that it will decline during the European trading session because preliminary estimates of business activity indices are down. In particular, the manufacturing index is expected to fall from 54.6 points to 54.0 points. The service index is also projected to dip from 56.1 points to 55.8 points, and the composite PMI to decrease from 54.8 to 54.2.

Composite PMI (Europe):

Similarly, preliminary estimates to business activity in the UK also show a decrease. The manufacturing index is expected to fall from 54.6 points to 54.2 points, while the service index is projected to go down from 53.4 points to 52.8 points. The composite index is also likely to decrease from 53.1 points to 52.3 points.

Composite PMI (UK):

But during the US trading session, the market will return to the levels hit at the opening of the trading day. After all, the US is also expected to report declines in all its indices of business activity. The manufacturing index will drop from 57.0 points to 56.0 points, while the services sector will decrease from 53.4 points to 53.0 points. The composite index will fall from 53.6 points to 52.8 points.

Composite PMI (United States):

In short, the market will fluctuate throughout the day, but close with zero result.

EUR/USD rushed up, prolonging the current corrective move. 1.0600 serves as a variable resistance on the way of buyers, relative to which a short-term stagnation-rollback has occurred. For the subsequent upward move, the quote needs to hold above 1.0600 in the four-hour TF.

Despite the strong buying pressure, GBP/USD remains within 1.2170/1.2320. In this situation, traders must first overcome one or another boundary of the established range, and only then talk about the direction. Signals will occur in the four-hour TF.

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Tips for beginner traders in EUR/USD and GBP/USD on June 24, 2022

Details of the economic calendar from June 23
Preliminary data on business activity indices were published in Europe, the UK, and the United States, which had a strong impact on financial markets.

Europe's manufacturing PMI fell significantly stronger than the forecast from 54.6 to 52.0 points. Meanwhile, things are even worse for the services PMI, which fell from 56.1 to 52.8 points.

The European currency at this time was under a strong division of sellers.

As for the UK, things are a little better. The manufacturing index fell from 54.6 to 54.2 points against the forecast of 53.4 points. In the services sector, the indicators remained unchanged, although the index was expected to decline from 53.4 points to 52.8 points.

The pound sterling was under less pressure, but due to a positive correlation with the euro, it still lost value.

During the American trading session, weekly data on jobless claims in the US were first published, where a slight increase in the overall indicator was recorded. This is a negative factor for the labor market.

Statistics details:

The volume of continuing claims for benefits increased from 1.310 million to 1.315 million.

The volume of initial claims for benefits decreased from 231,000 to 229,000.

The main figures for the US were published a little later. The manufacturing index of business activity decreased from 57.0 to 52.4 points, with a forecast of 52.4 points. Meanwhile, the services sector decreased from 53.4 to 51.6 points, with a forecast of 53.5 points.

Negative statistics on the United States had a negative impact on the dollar.

Analysis of trading charts from June 23
The EURUSD currency pair once again reduced the volume of short positions around the support level of 1.0500. This led to a slowdown in the downward cycle and, as a result, a price rebound.

The GBPUSD currency pair has been moving within a wide range of 1.2150/1.2320 for a week now. This price fluctuation indicates a slowdown in the corrective move from the area of the psychological level of 1.2000, while at the same time signaling a characteristic uncertainty among traders.

Economic calendar for June 24
Today, since the opening of the European session, data on retail sales were published, where the rate of decline slowed down from -5.7% to -4.7%. This is a positive factor if it were not for the revision of the previous indicators for the worse from -4.9% to 5.7%. A stronger slowdown in the rate of decline to -4.1% is also predicted.

The bottom line shows bad statistics, which negatively affects the British currency.

Trading plan for EUR/USD on June 24
The price movement within the range of 1.0500/1.0600 attracts a lot of attention of speculators, which corresponds to the process of accumulation of trading forces. As a result, the closed loop will complete the formation, which will lead to acceleration and indicate the subsequent path relative to the range. A signal to action will appear at the moment when the price stays outside one or another border in the daily period.

Trading plan for GBP/USD on June 24
The price movement within the flat is still relevant in the market, so another price rebound from its upper border cannot be ruled out. As the main strategy, traders consider the tactics of breaking through one or another frame of the established range.

Trading recommendations are based on the breakout tactics:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.2325 in a four-hour period with the prospect of a move to 1.2400.

Sell positions should be considered after holding the price below 1.2150 in a four-hour period with the prospect of a move to 1.2000.

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Trading plan for EURUSD on July 04, 2022​​​​​​​

Technical outlook:
EURUSD dropped through the 1.0380 lows on Friday before reversing sharply. The single currency pair is seen to be trading close to 1.0430 at this point in writing and is expected to target close to 1.1100 in the next few weeks. Bulls are required to hold prices above the 1.0350 interim support to keep the proposed structure intact.

EURUSD has been dropping from the 1.2350 high since January 2021, carving lower lows and lower highs. The recent downswing could be seen between 1.2266 and 1.0350 as marked on the daily chart. Ideally, prices should retrace the above recent boundary at least until the 1.1086-1.1100 area, which is the Fibonacci 0.382 retracement level.

EURUSD further produced a lower-degree upswing between 1.0350 and 1.0786 in May 2022. Since then, it has remained subdued oscillating broadly between 1.0380 and 1.0600 and needs to breakout. A push above 1.0600 will be quite encouraging for the bulls to come back in control and push through 1.1100 going forward.

Trading plan:
Potential rally towards 1.1100 against 1.0350

Good luck!

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King dollar tightening its grip across board. EUR to reach parity level soon?

The euro traded quietly on the first day of the week amid the holiday-thinned market. On Tuesday, the euro again came under selling pressure. EUR/USD dropped to 1.0300, the lowest level sinceDecember 2002. In this connection, speculations on its parity level with the US dollar resurfaced among traders. There are a few reasons behind the euro's fall.

The major reason was the fact that the EU reported a deficit in its trade balance. On Monday, Germany unveiled the first deficit for more than 30 years in the trade balance in May in monthly terms. Energy imports sharply increased whereas trade with Russia and China was disrupted. A worse trade balance in Germany drags the whole euro block down.

Currency strategists consider downbeat trade results the most plausible explanation for the euro's decline. Indeed, it means a crucially different macroeconomic environment for the euro block. A double proficit turned into a double deficit.

Therefore, the Eurozone driven by the largest economy of Germany becomes a net importer which creates fundamental pressure on the euro. Apparently, Europe's prospects don't look rosy. Experts at Commerzbank reckon that EUR/USD could slump even below the parity level for a variety of reasons, including gas issues. The crisis in petroleum imports is likely to leave its imprint on theEU economy. In turn, EUR/USD will be able to develop a steady rally provided that the gas crisis is settled.

ECB and euro

Lately, the ECB comes up with hawkish remarks, but it is not enough to support the euro. The regulator is acting sluggishly in normalizing its monetary policy Even if the ECB ventured into the first rate hike and raises the key policy rate to positive values, it is still lagging behind other major central banks. They have already made some moves towards tighter monetary policies. In this context, the euro lacks an advantage over other currencies compared to the period until 2013.

The ECB's obvious hawkish stance has been spotted by analysts and priced in. Later this month,the regulator is expected to raise interest rates by 25 basis points. Market participants are anticipating the same rate hike in September. What will happen next? Further policy decisions will depend on how the central banks manage to tame inflation and how CPIs will slow down in the coming months.

Most experts hardly believe in more aggressive tightening by the ECB. By and large, it doesn'tmatter a lot bearing in mind the US dollar's stunning rally.

US dollar

The US dollar index is trading at the highest level in almost two decades, aiming to settleabove 106.00. The greenback finds support from cautious market sentiment followingthe long weekend in the US. The king dollar has been reigning on Forex for quite a while. Nevertheless, the US dollar cannot extend its rally indefinitely. Sooner or later, the US dollar is set to reach a peak and retrace downward. Nobody has predicted the level when the US dollar index will level off.

Historically, the greenback used to grow amid three fundamental factors: global inflation of more than 5%, a slowdown in the global economic growth, and joint monetary tightening by influential central banks. The last time when these three factors came together was in 1980.

On the back of the ongoing macroeconomic situation in the world's economy, namely, weak economic growth and soaring inflation, the US dollar is set to flex its muscles. A lot of reputable analysts are poised to predict the euro's slump to 1.0200 against the US dollar later this year.

Pound sterling

On Tuesday, the British currency was also weighed down by the firm US dollar, though thesterling was not as bruised as the euro. GBP/USD went to around 1.2000. However, the pair is unlikely to break this level at present. Currency strategists at UOB Group rejected this scenario today. They believe the odds are against that GBP/USD will make another test of 1.1970. The currency pair is expected to consolidate between 1.2080 and 1.2170. Notably, the lower border of the expected trading range has been already broken today.

Meanwhile, GBP/USD is following the overall bearish trend. Suggesting their bearish forecastson the sterling, experts at JPMorgan underpin their argument with the fact that inflation in the UK is the highest in G10. Moreover, the UK economic growth would be below the GDP figures of most advanced economies. Domestic jitters are denting the outlook for the pound sterling. The Bank of England will hardly succeed in reducing downward pressure on the British pound.

Among other gloomy prospects for the UK economy is that inflation is unlikely to reach its peak until October. JPMorgan experts reckon that the CPI will approach 11% on year in the autumn. The Bank of England signaled that it is ready to speed up rate hikes and raise the key policy rate by 50 basis points at the nearest meeting. On the other hand, some analysts suggest weighty reasons why the central bank will retain its gradual pace of monetary tightening. In other words, the pound sterling has not a single factor for a gradual recovery. For the time being, the US dollar is extending its stunning rally. So, it is unclear when exactly it will top out.

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Hot forecast for EUR/USD on 06/07/2022​​​​​​​

The first full-fledged trading day of the current week began with a strong fall in the single European currency. To the lowest values since 2002. Of course, one can try to explain this by the fears of investors about the inevitability of a recession around the world, but it looks like a farce. After all, they have been talking about the possibility of a recession for more than a day. So this is nothing new. Moreover, the final data on business activity indices turned out to be somewhat better than preliminary estimates. In particular, the index of business activity in the service sector fell from 56.1 points to 53.0 points, while the forecast was 52.8 points. The composite index, which was supposed to fall from 54.8 points to 51.9 points, fell to 52.0 points. However, even the final data on the index of business activity in the manufacturing sector showed that investors now, in principle, do not look at these data.

Composite PMI (Europe):

Therefore, the reasons for such a noticeable drop must be sought in somewhat different ways. It's all about the European Central Bank. As early as Monday, the head of the Bundesbank, Joachim Nagel, urged the ECB to be extremely cautious in terms of tightening monetary policy, as higher interest rates would increase the cost of borrowing for the weakest economies in the euro area. Thus, putting them on the brink of bankruptcy. In principle, this statement intersects with the words of the representatives of the ECB themselves that one must be careful when tightening monetary policy, otherwise the result will be completely opposite. And instead of improving the economic situation, it may worsen. Immediately there were rumors that the central bank would very slowly raise the refinancing rate, which would not be enough to slow down inflation. This is what caused the sharp weakening of the euro. And the fact that this happened on Tuesday, and not on Monday, is explained by a non-working day in the United States.

So the market confidently returned to the long-lasting trend for the strengthening of the dollar. But after such an impressive fall, a correction is inevitable. That's just the European macroeconomic statistics somehow does not favor any growth of the single European currency. After all, the growth rate of retail sales in Europe should slow down from 3.9% to 3.1%. A decrease in consumer activity only confirms fears about the inevitability of a recession.

Retail sales (Europe):

Apparently, the reason for the rebound will be the data on open vacancies in the United States, the number of which should decrease from 11.4 million to 11.3 million, which indicates a slight deterioration in the situation in the labor market. But after such an impressive movement as yesterday, even this is enough for a local rebound. The final data on business activity indices, as shown by the experience of recent publications of similar data, will be left without attention, and will not affect investor sentiment in any way.

Number of open vacancies (United States):

During the inertial movement, the EURUSD currency pair updated the local low of the medium-term downward trend, as a result of which the quote turned out to be at the level of 2002.

Due to such a rapid descent, the RSI H4 technical instrument entered the oversold zone, which indicates that short positions are overheated. RSI D1 is still moving in the lower area of the 30/50 indicator, indicating continued downward interest among traders.

The moving MA lines on the Alligator H4 and D1 indicators are directed downwards, this is a sell signal.

Expectations and prospects

In this situation, the speculative hype is going through the roof on the market, which can lead to ignoring the signal about the euro being oversold. As a result, the downward move may accelerate towards the value of 1.0150-1.0000.

It should be noted that sooner or later short positions will be consolidated, which will lead to a technical correction.

Complex indicator analysis has a sell signal in the short, intraday and medium term due to the downward cycle.

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Analysis and trading tips for EUR/USD on July 7

Analysis of transactions in the EUR / USD pair

EUR/USD tested 1.0244 on Wednesday. At that time, the MACD line was just starting to move below zero, so the pair fell by more than 50 pips. It hit 1.0198, where buyers became active again, but the increase was only brief. The pair continued to decline after some time.

The Euro area's retail sales data for May, along with economic forecasts for the region, disappointed traders as they were relatively weaker than expected. Meanwhile, the business activity report from the IHS Markit exceeded expectations, strengthening the demand for dollar even further.

Ahead are key events that could drive the market, such as the release of ECB protocol, speeches of ECB representatives and the publication of industrial production data in Germany. Later in the afternoon, the US will post reports on the labor market, particularly the change in the number of people employed in the non-farm sector and the number of first-time claims for unemployment benefits. The two may provide more buying pressure to dollars. US trade surplus figures and speeches by FOMC members are unlikely to have a strong impact on the market.

For long positions:

Buy euro when the quote reaches 1.0228 (green line on the chart) and take profit at the price of 1.0268 (thicker green line on the chart). There is a chance for a rally today, but only after strong statistics in the Euro area and hawkish statements from the ECB. Also, make sure that when buying, the MACD line is above zero or is starting to rise from it. Euro can also be bought at 1.0195, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0228 and 1.0268.

For short positions:

Sell euro when the quote reaches 1.0195 (red line on the chart) and take profit at the price of 1.0151. Pressure will return if upcoming data in Germany and the Euro area are weak and if reports in the US, especially about the labor market, exceed expectations. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Euro can also be sold at 1.0228, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0195 and 1.0151.

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Tips for beginner traders in EUR/USD and GBP/USD on July 8, 2022

Economic calendar for July 8
The main macroeconomic event of the outgoing week is the report of the US Department of Labor, which predicts that the unemployment rate should remain unchanged, while 268,000 new jobs can be created outside of agriculture, which is noticeably less than 390,000 in the previous month. This indicates a loss of recovery momentum and the appearance of signs of the beginning of a deterioration in the situation in the labor market.

If expectations coincide, the US dollar may be under pressure from sellers.

Time targeting

US Department of Labor Report - 12:30 UTC

Trading plan for EUR/USD on July 8
There are only a few points left before parity, which means that the speculative hype is increasing. It is worth considering that the initial convergence with such an important psychological level can provoke traders to chaotic price jumps. This may lead to a reduction in the volume of short positions, which will lead to a technical pullback.

At the same time, holding the price below the control level may cancel a number of technical signals, which will lead to an inertial move towards the value of 0.98.

Trading plan for GBP/USD on July 8
The pound sterling rushed down through a positive correlation with the eurodollar. With the current mood of speculators, updating the local low of the downward trend is not excluded.

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Tips for beginner traders in EUR/USD and GBP/USD on July 11, 2022

Details of the economic calendar from July 8
The report of the US Department of Labor was considered the main macroeconomic event of the past week, where unemployment remained at the same level of 3.6%. At the same time, 372,000 new jobs were created outside of agriculture, while the forecast was 268,000. US labor market data came out noticeably better than expected, but, at this time, the dollar was already heavily overbought.

Analysis of trading charts from July 8
During the inertial movement, the EURUSD currency pair came close to parity, which led to a massive fixation of short positions. As a result, the market experienced a technical pullback.

The daily trading chart shows a gradual euro depreciation since June 2021. The scale of the decline is 2,150 points, which is about 17%.

The GBPUSD currency pair, despite many attempts to resume the downward cycle, still fluctuated along the psychological level of 1.2000 (1.1950/1.2000/1.2050). This indicates an overheating of short positions, which are trying to regroup the trading forces in the stage of a change of turbulence.

On the daily timeframe, the pound sterling has been losing 16.5% of its value since June 2021, which is about 2,300 points.

Economic calendar for July 11
Monday is traditionally accompanied by an empty macroeconomic calendar. Important statistical indicators in Europe, the United Kingdom, and the United States are not expected.

Trading plan for EUR/USD on July 11
In this situation, the descending mood remains among traders. For this reason, keeping the price stable below 1.0150 increases sellers' chances for a subsequent decline (towards parity).At the same time, traders are considering the scenario of a transition from a pullback stage to a complete correction if the price holds above 1.0220 in a four-hour period.

Trading plan for GBP/USD on July 11
In this situation, all of the traders' attention is focused on the deviation levels of 1.1950 and 1.2050 since the stable holding of the price outside of one or another value, at least in a four-hour period, may indicate a subsequent price path.

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Tips for beginner traders in EUR/USD and GBP/USD on July 12, 2022

Details of the economic calendar from July 11
Monday was traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the UK, and the United States were not published.

Analysis of trading charts from July 11
The EURUSD currency pair, ignoring the oversold signal, continued to decline, indicating a high interest of speculators in the current market situation.

The GBPUSD currency pair, following the euro, resumed its decline. The vicious cycle along the psychologically important level of 1.2000 was interrupted, and the market saw an increase in the volume of short positions. As a result, the pound sterling has updated the local low of the downward trend.

Economic calendar for July 12
Tuesday is not much different from Monday in terms of the macroeconomic calendar. Important statistics in Europe, the UK, and the United States are not expected. Thus, traders have to keep track of the information flow and work based on the technical picture.

Trading plan for EUR/USD on July 12
Traders are now watching a historical event: the quote has come close to parity with the intention of breaking it. Holding the price below it can lead to a local acceleration of the downward cycle. After that, a sharp change in trading interest is possible, caused by an increase in the volume of long positions, which will provoke a technical pullback in the market. Variable and high volatility will remain in the market indefinitely.

Trading plan for GBP/USD on July 12
In this situation, everything points to a subsequent downward move towards the values of 1.1700–1.1500. In the work, it is worth considering that at this time, the EURUSD pair is the leading pair, and GBPUSD is the slave pair. Thus, in the event of a sharp change in trading interests in the euro, through a positive correlation, it will pull the pound sterling along with it.

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Hot forecast for GBP/USD on 13/07/2022

What is happening with the pound should now be considered exclusively through the single European currency, the behavior of which determines the development of events in the foreign exchange market. And in general, everything happened exactly as predicted - as soon as the euro reached parity, a rebound immediately began. Confused only by the scale of the rebound. Less than a hundred points. And this despite the fact that the dollar is simply unimaginably overbought. So it is quite possible that a second attempt will be made today. Moreover, the single currency is again moving towards parity.

With that in mind, the just-released UK industrial production figures are irrelevant. Although its growth accelerated from 0.7% to 1.4%. Whereas, a decline of 0.3% was called before. But there was no reaction.

Industrial production (UK):

Today's attempt at a rebound will be more successful due to the fact that this time its implementation will be helped by a rather serious reason. The US will release its inflation report, which should accelerate from 8.6% to 8.8%. And if earlier the growth of inflation contributed to the dollar's growth, now the situation is somewhat different. Rising consumer prices forced the Federal Reserve to raise interest rates, the expectation of which just contributed to the dollar's growth. Now everything is clear with the increase in the refinancing rate - the US central bank will raise it until the middle of next year. So the only thing that reflects inflation now is only a further deterioration in the state of affairs in the economy and the approach of a recession.

Inflation (United States):

The GBPUSD currency pair, through a positive correlation with EURUSD, has similar price fluctuations. After the next update of the local low of the downward trend, the quote slowed down around the value of 1.1800, where a rollback eventually occurred.

The technical instrument RSI H4 and D1 is moving in the lower area of the 30/50 indicator, which indicates a high interest of traders in the downward move. RSI H1 in the rollback stage locally crossed the middle line 50 upwards.

The moving MA lines on the Alligator H4 and D1 indicators are directed downwards, which corresponds to the direction of the main trend.

Expectations and prospects

In this situation, everything will depend on speculators' behavior on the correlating euro/dollar pair. In the event of a transition to the stage of a full-size correction, the pound will also be able to strengthen its position towards the values of 1.1950-1.2000. Otherwise, we will update the local low of the downward trend again.

Comprehensive indicator analysis signals a buy in the short term due to a pullback. Technical instruments in the intraday and medium-term periods signal sell due to price movements within parity.

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Hot forecast for EUR/USD on 14.07.2022

As the market had been looking forward to the US inflation data, it neglected the report on the EU industrial production. Remarkably, the data was surprisingly strong. The EU industrial output was expected to rebound by 0.4% in May on year following a contraction of 2.0% in April. Nevertheless, the data for April was downgraded to -2.5%. The actual score for May was much better than expected at 1.6%. Thus, even despite the downward revision, the red-hot reading for May was beyond expectations. However, the single European currency again moved towards the parity level.

EU Industrial Producion, y/y

Interestingly, immediately after the release of the US CPI, the market was petrified and cameto a standstill. The thing is that the annual rate of consumer inflation surged to 9.1% following 8.6% a month ago. A faster inflation rate was recorded in November 1981. Analysts had projected the CPI at 8.8% in June. Such elevated inflation rates dispelled doubts that the US economy is firmly on the path to recession. Such warnings have been made by a good many economists. After the market had revived after the initial shock, the US dollar tumbled. It looked like a long-awaited drop. Nevertheless, an hour later, the US dollar reversed abruptly upwards and the single European currency again returned to the parity level. Indeed, inflation acceleration bears grave economic risks and forces the US Fed to raise interest rates more aggressively. Hot on the heels of the inflation report, analysts came up with their forecasts. They project that the US Fed will raise the funds rate by 100 basis points at a time at the nearest meeting. So, the federal funds rate will increase from 1.75% to 2.75%. Such forecasts pushed the euro back to parity.

US Consumer Price Index, y/y

It goes without saying that the US dollar is overbought. The market obviously needs at least acorrection. Still, it has not happened yet. We assume that the euro should go below the parity level with the dollar for a start. Perhaps the US factory inflation data which is due today could push the euro down. The US PPI could have logged an uptick to 10.9% from 10.8%. It would mean that the odds are against a slowdown in consumer inflation at least in the near future. Besides, it will reinforce expectations about the aggressive pace of rate hikes by the US Fed. By and large, the US dollar could push the euro below the parity level and even settle below it.

US Producer Price Index, y/y

Yesterday, EUR/USD was able to gain some ground but it was not enough to change a trend.As a result, the currency pair again retreated to the parity level and got stuck within a narrow range.

The H4 RSI could not grasp the buying interest. The indicator is still hovering in the lower area of 30/50. It means the prevailing selling interest. The D1 RSI is moving in the oversold area which means that short positions are overheated.

Moving averages on the H4 and D1 Alligators are directed downwards according to the overall bearish trend. The H1 Alligator has multiple intersections of moving averages, thus indicating a flat market.

Outlook and trading tips

Despite the fact that the euro is heavily oversold, traders are still interested in selling EUR/USD. The ongoing flat market is viewed as the process of gaining momentum. Once the flat market is over, the trading instrument will burst into sharp price moves. In case the price settles below the parity level on the 4-hour chart, the market will resume the downward cycle, neglecting some technical signals. Under this scenario, we expect the pair to develop an inertial speculative move so that the euro could weaken by another 150-200 pips.

At the same time, traders do not rule out a full-fledged correction bearing in mind the euro'soversold status. To generate the first buy signal, the euro has to recover to levels above 1.0100 on the 4-hour chart.

Complex indicator analysis provides mixed signals for intraday and short-term trading amid the ongoing range-bound market. Technical instruments signal selling in the medium term because the currency pair is still moving at around the parity level.

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Hot forecast for EUR/USD on 19/07/2022​​​​​​​

The long-awaited correction has finally come true. Although we are not talking about a full-fledged correction, but only about a local one. But even this is quite enough for the market to somewhat correct the resulting imbalances. So the market has prepared for the upcoming meeting of the board of the European Central Bank. But today the single European currency will have to decline somewhat, under pressure from inflation data. The growth rate of consumer prices may accelerate from 8.1% to 8.6%. Given that the issue of raising the refinancing rate has already been closed in principle, inflation data only plays the role of a parameter characterizing the general state of the economy. And judging by the fact that inflation continues to rise, nothing good is happening. Moreover, taking into account the experience of Great Britain, where the Bank of England began to raise the refinancing rate at the end of last year, that the increase in interest rates, all the more so modest, and the ECB plans to raise it from 0.00% to 0.25%, is not much more than will help. Another thing is that today we are talking about the final data, in general, already taken into account by the market at the time of the release of preliminary estimates. So the decline in the single currency will be limited.

Inflation (Europe):

The euro strengthened by more than 200 points against the US dollar from the local low of the downward trend. Despite the scale of price changes, the euro is still oversold in the medium term, this is indicated by a number of historical values in which the quote is currently located.

The oversold status was removed in the short-term and intraday periods, this is indicated by the RSI H1 and H4 indicator, which is moving within the 70 line.

The moving MA lines on the Alligator H4 indicators locally changed direction from downward to upward, which corresponds to a rollback-correction in the market.

On the trading chart of the daily period, there is a subtle rebound of the price from the area of the parity level. Downward interest in the structure of the medium-term trend is still considered the main direction.

Expectations and prospects

The volume of long positions decreased at the moment when the price hit 1.0150, as indicated by the stagnation. For the subsequent growth of the euro's value, it is necessary to return above the level of 1.0150. Otherwise, there may be a gradual recovery of dollar positions, with the price returning to the parity level.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to a rollback. Technical instruments in the medium term signal a sale due to price movement within the parity level.

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The dollar is in conflict with oil, and the euro is optimistic before the ECB meeting

The US currency had to slow down a bit, giving way to the European one, which spread its wings ahead of the European Central Bank meeting. However, the euro should not be in euphoria, and the dollar should not be self-confident, analysts believe. At the same time, the dynamics of the latter is in contradiction with oil quotes, causing concerns about the raw materials market.

The greenback partially surrendered its positions on Wednesday, July 20, allowing the euro to move up. The latter was given strength by the upcoming ECB meeting, at which a decision on the interest rate is expected. According to ABN Amro economists, the markets expect the ECB to raise the key rate by 25 bps. In addition, two important issues will be raised at the meeting – the further trajectory of rate hikes and consideration of a new tool to combat fragmentation.

The ECB has doubts about the future rise in interest rates, namely in September 2022. However, ABN Amro believes that "the September increase will be a step of 50 bps" if the medium-term inflation forecast remains at the same level. At the same time, in the autumn and until the end of this year, a "gradual but steady increase in rates" by 25 bps is possible.

The current situation contributed to the euro's steady growth, which had soared by 1% a day earlier on statements that the ECB leadership would discuss the possibility of increasing the key rate by 50 bps at once. The EUR/USD pair was trading at 1.0234 on Wednesday morning, July 20, playing back previous failures. To date, the pair has exceeded the psychologically important level of 1.0200, increasing its weekly growth to 1.50%.

According to preliminary data announced by Reuters, the ECB will consider both options: raising rates by 25 bps and 50 bps. At the last meeting, the ECB allowed the rate to rise by 25 bps in July and the possibility of further increases in September. However, market participants and analysts do not rule out a more aggressive tightening of the monetary policy amid a rapidly growing inflation. Recall that in the first month of summer, consumer prices in the eurozone soared by 8.6% year-on-year after rising by 8.1% in May.

Analysts believe that its fair price plays in favor of the euro, while the dollar becomes overbought. This prevents the latter from growing and conquering the next peaks. The greenback's dynamics is under pressure from being overbought, experts emphasize. In the coming week, analysts expect a correction of the US currency, against which market participants will expect further actions by the Federal Reserve on the rate. The current forecasts regarding the Fed's interest rate hike are the main driving force of the market.

In case of a rise in the price of the greenback, the raw materials sector is experiencing the greatest difficulties. The recent downward trend recorded in the hydrocarbon market demonstrates investors' fear of a possible recession. Market participants fear that the current downturn in the economy will lead to a reduction in demand for raw materials. Experts consider the fact that most commodities are valued in dollars to be another important reason for the decline in the oil market. Take note that the price of benchmark Brent oil peaked in June, and in dollar terms, raw material prices increased by 59%.

As the USD rises in price, the global commodity market also increases in value, increasing pressure on demand. Strengthening the greenback not only increases the cost of buying raw materials outside the US, but also encourages foreign producers to sell stocks. The reason is that after converting dollars into national currencies, the incomes of oil producers are steadily growing.

The rapid rise of the US currency is able to bring down the hydrocarbon market, experts believe. The current conflict between the USD and the commodity sector is a confirmation of this difficult relationship. According to analysts, the correlation of greenback and oil has always been accompanied by difficulties. Such disagreements put significant pressure on demand. According to International Energy Agency (IEA) estimates, a strong USD, combined with record-high fuel prices, is helping to reduce demand in developing countries.

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Hot forecast for GBP/USD on 21/07/2022

The intrigue is that investors have no idea what to expect from today's board meeting of the European Central Bank. Of course, the refinancing rate will be raised, but what's next is completely unclear. What exactly ECB President Christine Lagarde will say about the pace and extent of the tightening of monetary policy parameters will determine the further development of events. This uncertainty is the reason for the apparent stagnation in the market. The pound ignored even the data on consumer prices, the growth rate of which accelerated from 9.1% to 9.4%. That turned out to be slightly less than the forecast of 9.5%. And this can be interpreted as a sign of a possible slowdown in inflationary processes. Which of course is an extremely positive thing.

Inflation (UK):

So, the ECB today for the first time since July 2011 will raise the refinancing rate. It should be raised from 0.00% to 0.25%. The very fact of the first increase in interest rates in more than ten years will, of course, spur the market and lead to the growth of the single European currency. Through the dollar index, it will pull other currencies with it. So it will be like a global weakening of the dollar. But what happens after that depends solely on Lagarde's rhetoric.

Refinancing rate (Europe):

It is necessary to take into account the fact that quite recently everyone was sure that the refinancing rate would be raised by 50 basis points, that is, up to 0.50%, and then expectations were significantly reduced. In addition, the head of the Bundesbank recently announced the need for an extremely cautious approach to the issue of raising interest rates, as this will lead to an increase in the yield of government bonds of all countries in the euro area. The debt burden of which is already incredibly high. So they may find themselves in a situation of inability to service their own debts. From all this, a simple conclusion follows - Lagarde will announce just an extremely slow increase in interest rates, and that the next increase may occur in just one meeting. Or something like that. And if this is exactly what happens, then after a slight upward jump, the single currency will again begin to gradually lose its positions and move towards parity. Pulling the pound along.

If Lagarde's rhetoric turns out to be more hawkish, and a large-scale tightening of monetary policy is announced, then the subsequent weakening of the dollar will be much more impressive, and most importantly, prolonged.

The correction move for the GBPUSD pair slowed down within the area of the psychological level of 1.2000. As a result, a range of 1.1950/1.2050 emerged, which indicates the process of accumulation of trading forces, which can lead to new price jumps.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates a continuing corrective move in the market. RSI D1 ignores the correction, the main reference is the downward trend.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move. While the MA lines on Alligator H1 have a lot of intersections with each other, which indicates congestion.

Expectations and prospects

In this situation, the method of outgoing momentum from the current range of 1.1950/1.2050 is considered the most optimal trading tactic.

We concretize the above into trading signals:

Long positions on the currency pair are taken into account after keeping the price above the value of 1.2060 in a four-hour period.

Short positions should be considered after keeping the price below 1.1920 in a four-hour period.

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

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Hot forecast for GBP/USD on 21/07/2022

The intrigue is that investors have no idea what to expect from today's board meeting of the European Central Bank. Of course, the refinancing rate will be raised, but what's next is completely unclear. What exactly ECB President Christine Lagarde will say about the pace and extent of the tightening of monetary policy parameters will determine the further development of events. This uncertainty is the reason for the apparent stagnation in the market. The pound ignored even the data on consumer prices, the growth rate of which accelerated from 9.1% to 9.4%. That turned out to be slightly less than the forecast of 9.5%. And this can be interpreted as a sign of a possible slowdown in inflationary processes. Which of course is an extremely positive thing.

Inflation (UK):

So, the ECB today for the first time since July 2011 will raise the refinancing rate. It should be raised from 0.00% to 0.25%. The very fact of the first increase in interest rates in more than ten years will, of course, spur the market and lead to the growth of the single European currency. Through the dollar index, it will pull other currencies with it. So it will be like a global weakening of the dollar. But what happens after that depends solely on Lagarde's rhetoric.

Refinancing rate (Europe):

It is necessary to take into account the fact that quite recently everyone was sure that the refinancing rate would be raised by 50 basis points, that is, up to 0.50%, and then expectations were significantly reduced. In addition, the head of the Bundesbank recently announced the need for an extremely cautious approach to the issue of raising interest rates, as this will lead to an increase in the yield of government bonds of all countries in the euro area. The debt burden of which is already incredibly high. So they may find themselves in a situation of inability to service their own debts. From all this, a simple conclusion follows - Lagarde will announce just an extremely slow increase in interest rates, and that the next increase may occur in just one meeting. Or something like that. And if this is exactly what happens, then after a slight upward jump, the single currency will again begin to gradually lose its positions and move towards parity. Pulling the pound along.

If Lagarde's rhetoric turns out to be more hawkish, and a large-scale tightening of monetary policy is announced, then the subsequent weakening of the dollar will be much more impressive, and most importantly, prolonged.

The correction move for the GBPUSD pair slowed down within the area of the psychological level of 1.2000. As a result, a range of 1.1950/1.2050 emerged, which indicates the process of accumulation of trading forces, which can lead to new price jumps.

The RSI H4 technical instrument is moving in the upper area of the 50/70 indicator, which indicates a continuing corrective move in the market. RSI D1 ignores the correction, the main reference is the downward trend.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move. While the MA lines on Alligator H1 have a lot of intersections with each other, which indicates congestion.

Expectations and prospects

In this situation, the method of outgoing momentum from the current range of 1.1950/1.2050 is considered the most optimal trading tactic.

We concretize the above into trading signals:

Long positions on the currency pair are taken into account after keeping the price above the value of 1.2060 in a four-hour period.

Short positions should be considered after keeping the price below 1.1920 in a four-hour period.

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

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Hot forecast for EUR/USD on July 22, 2022

Until yesterday, the last time the European Central Bank raised the refinancing rate was in July 2011. That was exactly eleven years ago. So there is nothing surprising in the fact that as soon as it was announced that all interest rates were raised by 50 basis points, the single European currency immediately jumped. But it returned to its original position almost immediately, and began to show a downward trend. The ECB was able to surprise everyone greatly. And quite unpleasant. The fact is that, coupled with an increase in the refinancing rate, the launch of the TPI program was announced, which can be deciphered as a Transitional Protective Instrument. In fact, this is another quantitative easing program. It is aimed at supporting the countries of the euro area in the face of rising interest rates. The fact is that the increase in rates will lead to an increase in the yield of government bonds. So borrowing will become more expensive, and the level of public debt is extremely high. Many countries may well be unable to service their debts. This alone simply cancels out any effect from higher interest rates. But what is most important is that the parameters of this program are not known. No timing, no volume. Simply put, the ECB can print as much money as it wants. That opens the way not just to parity, but also to lower values.

Refinancing rate (Europe):

The EURUSD currency pair only locally showed speculative interest during the announcement of the results of the ECB meeting and the press conference. The scale of fluctuations was about 100 points. As a result, the current momentum led to forming a short-term flat within the boundaries of 1.0150/1.0270.

The technical instrument RSI H4 is moving in the upper area of the 50/70 indicator, which indicates a residual signal of a corrective move. RSI D1 has come close to the 50 middle line, which corresponds to the usual correction.

The MA moving lines on the Alligator H1 indicator have many intersections with each other, which indicates a flat. Alligator H4 is in the process of decelerating the upward cycle. Alligator D1 ignores local price rules. There is no intertwining between the MA sliding lines.

Expectations and prospects

In this situation, the current range focuses all the attention of traders on itself. For this reason, the most appropriate trading tactic is considered to be the method of breaking through one or another flat border.

We concretize the above into trading signals:

Long positions on the currency pair are taken into account after keeping the price above the value of 1.0280 in a four-hour period.

Short positions should be considered after keeping the price below 1.115 in a four-hour period.

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

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Tips for beginner traders in EUR/USD and GBP/USD on July 25, 2022

Details of the economic calendar from July 22
Preliminary data on business activity indices in Europe, Great Britain, and the United States reflected an overall decline. And since the picture is the same, there was no reason for fuss.

Details of statistical indicators:

In Europe, the index of business activity in the service sector fell from 53.0 to 50.6 points, while the forecast was 52.0 points. Manufacturing PMI fell from 52.1 to 49.6 points, with forcast of a decline to 51.0 points. The composite index fell from 52.0 to 49.4 points.

The situation is slightly better in the UK. Services PMI fell from 54.3 to 53.3 points, while the forecast assumed a decline to 53.0 points. Manufacturing PMI, on the other hand, fell from 52.8 to 52.2, with a forecast of 52.0 points. The composite index fell from 53.7 to 52.2 points.

In the US, Manufacturing PMI fell from 52.7 to 52.3 points. Services PMI fell from 52.7 to 47.0 points, while forecasts expected it to remain at the same level. As a result, the composite index fell from 52.3 to 47.5 points.

Analysis of trading charts from July 22
The EURUSD currency pair is in the flat stage, where the values of 1.0150/1.0270 serve as boundaries. The prolonged presence of the price in a closed amplitude indicates a characteristic uncertainty among traders. At the same time, this process can lead to a cumulative effect, which will lead to speculative price jumps.

The GBPUSD currency pair has been moving along the psychological level of 1.2000 for almost a week, only having a local deviation from the control range of 1.1950/1.2050.

Economic calendar for July 25
Monday is traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the United Kingdom and the United States are not expected.

Trading plan for EUR/USD on July 25
In this situation, trading tactics still considers the method of breaking through one or another border of the established flat. In this regard, buy positions will be valid after the price holds above 1.0280 in a four-hour period, and sell positions will arise after the price holds below 1.0115 in a four-hour period.

Trading plan for GBP/USD on July 25
In this situation, the pound sterling repeats the movement of the European currency, where there is a similar flat. Thus, based on a positive correlation, the completion of the euro flat will lead to a movement in the pound.

If we proceed from the price levels, then to increase the volume of short positions in the pound, it is necessary to keep below the value of 1.1950. Meanwhile, the conversation about buying the pound may come if the price holds above the 1.2050 mark in a four-hour period.

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US stock market closed mixed, Dow Jones up 0.28%​​​​​​​

At the close of the New York Stock Exchange, the Dow Jones rose 0.28%, the S&P 500 rose 0.13%, and the NASDAQ Composite index fell 0.43%.

Chevron Corp was the top performer among the components of the Dow Jones index today, up 4.29 points or 2.98% to close at 148.48. The Travelers Companies Inc rose 3.56 points or 2.28% to close at 159.98. Caterpillar Inc rose 3.19 points or 1.79% to close at 181.81.

The biggest losers were Salesforce.com Inc, which shed 5.18 points or 2.84% to end the session at 177.29. McDonald's Corporation was up 3.61 points (1.42%) to close at 250.38, while Boeing Co was down 1.52 points (0.96%) to close at 156.64 .

Leading gainers among the components of the S&P 500 in today's trading were SVB Financial Group, which rose 8.25% to 391.16, Marathon Oil Corporation, which gained 6.57% to close at 23.18, and also shares of CF Industries Holdings Inc, which rose 6.45% to end the session at 90.28.

The biggest losers were Newmont Goldcorp Corp, which shed 13.23% to close at 44.59. Shares of Align Technology Inc shed 5.19% to end the session at 252.07. IDEXX Laboratories Inc fell 4.56% to 375.56.

Leading gainers among the components of the NASDAQ Composite in today's trading were GeoVax Labs Inc, which rose 150.39% to hit 1.59, Redbox Entertainment Inc, which gained 81.97% to close at 5.55, and also shares of Virax Biolabs Group Ltd, which rose 62.48% to close the session at 16.80.

Shares of Yoshitsu Co Ltd ADR became the leaders of the decline, which decreased in price by 29.57%, closing at 1.62. Shares of Enveric Biosciences Inc shed 28.36% to end the session at 6.92. Quotes Addex Therapeutics Ltd fell in price by 28.28% to 1.42.

On the New York Stock Exchange, the number of securities that rose in price (1923) exceeded the number of those that closed in the red (1233), and quotes of 146 shares remained practically unchanged. On the NASDAQ stock exchange, 1,957 stocks fell, 1,816 rose, and 210 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 1.43% to 23.36.

Gold futures for August delivery lost 0.60%, or 10.35, to hit $1.00 a troy ounce. In other commodities, WTI crude for September delivery rose 2.13%, or 2.02, to $96.72 a barrel. Brent futures for October delivery rose 1.77%, or 1.74, to $100.12 a barrel.

Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.14% to 1.02, while USD/JPY quotes rose 0.43% to hit 136.63.

Futures on the USD index fell 0.29% to 106.31.

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The euro is trying to put pressure on the gas​​​​​​​

The euro once again demonstrated its dependence on the situation on the gas market. Difficulties encountered by the euro bloc countries regarding the payment of energy resources had a negative impact on the euro's dynamics. The euro's current task is to find a balance in the EUR/USD pair.

Significant pressure on the euro's dynamics was exerted by fears about the possibility of another reduction in Russian gas supplies. This topic is relevant for European countries dependent on the supply of blue fuel. Difficulties in resolving this issue jeopardize the euro's succeeding growth, experts believe.

Against this backdrop, the threat of a recession looms over the eurozone, which is complicated by the blue fuel conjuncture. The next round of the energy crisis in Europe reduces the single currency's chances to recover, which was violated after reaching parity with the dollar.

European countries are trying to solve the emerging problems in their own way. France has begun to limit domestic energy consumption, and Germany is in the process of state harmonization of moderate fuel consumption. The deteriorating situation with gas supplies and the lack of alternative mechanisms for solving the problems that have arisen are alarming signals for the euro.

Amid current difficulties, the euro exchange rate reached parity against the USD, but then won back its losses. However, the euro is walking on thin ice, risking repeating destructive actions at any moment. Support for the single currency, which grew moderately on Wednesday, was provided by the expectation of positive data on consumer confidence in the German economy. According to preliminary estimates, this indicator increased to -28.9 points after the previous mark (-27.4 points) recorded last month. The EUR/USD pair traded up to 1.0145 on Wednesday morning, July 27, trying to gain a foothold in current positions.

According to currency strategists at UniCredit Bank, EUR/USD's ability to stay above 1.0100 will help the euro survive the Federal Reserve's 75 bp rate hike expected today. Global markets are focused on the results of the Fed meeting. Note that an increase of 75 bp already included in current prices. At the same time, some experts do not rule out a 100 bp rate hike. According to analysts, the markets are fully prepared for any decision by the US central bank, although a 100 bp increase is expected. Unlikely and undesirable. Such actions are unlikely to help the dollar's growth, since the appreciation of the latter is a settled issue, experts conclude.

At the same time, the euro's positions after the Fed meeting remain shaky. The next interest rate hike by the US central bank will not add optimism to the euro, which is overcome by gas problems. Add fuel to the fire messages about the restriction of Russian gas supplies to Europe, knocking out the ground from under the feet of the euro.

According to experts, at the beginning of this week, the euro was among the outsiders. The reason is the difficulties with the supply of blue fuel through the Nord Stream gas pipeline and with the return of the turbine after repair. The situation is complicated by the increase in the wholesale price of gas by 17%, to 192 euros/MWh. At the same time, the European price for natural gas TTF Cal23 exceeded 150 euros per MWh, reaching the highest value for this contract.

Measures taken by Russia to reduce natural gas supplies to the EU have intensified global competition for blue fuel. According to Bloomberg, against this background, Asian importers are increasing their purchases of LNG for the winter, trying to get ahead of Europe. As a result, LNG prices may exceed $40 per barrel, experts believe. Note that Europe imports 35% of its energy from Russia, but the latter's energy income from trade with the EU is 70%. At the same time, these deliveries are made through pipelines that cannot be redirected to Asia.

Against this backdrop, the euro rate showed a decline, causing traders and investors to worry about the future of the single currency. At the moment, gas prices remain a ticking time bomb for the markets and for the EUR, risking "detonation" in the coming months. According to experts, a further reduction in the supply of blue fuel to the EU and rising prices for raw materials deprive the euro of chances for an effective and long-term recovery.

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Hot forecast for GBP/USD on 28/07/2022​​​​​​​

The increase in the refinancing rate of the Federal Reserve by 75 basis points, from 1.75% to 2.50%, did not come as a surprise. In principle, the market was ready for this since the previous meeting of the Federal Open Market Committee. It is surprising how rapidly the dollar began to lose its positions. It is noteworthy that this happened during the press conference of Fed Chairman Jerome Powell. Indeed, Powell's words caused complete surprise.

First, he did not give any specifics on the extent of the increase in the refinancing rate during the FOMC's September meeting. Powell only noted that it will be "massive." At the same time, he noted that when making a decision, the central bank will be guided by inflationary dynamics. So in September, the refinancing rate may be raised once again by 75 basis points, for which the market has long been ready. But the difference is that now there is no guarantee of such a rise in interest rates. On the contrary, there is a possibility of a somewhat more modest increase.

Second, Powell said nothing about the coming recession. More precisely, during his speech, he did not say anything about it. When asked a direct question, he only replied that there was no recession, and that the first estimate of GDP for the second quarter, which is published today, is likely to be not entirely accurate. It turns out that the Fed does not see any signs of the beginning of a recession, or pretends not to.

Thirdly, in the final part of his speech, Powell assured that the central bank would seek employment growth, although in the spring there were signs of overheating of the labor market. And this may well become a completely independent cause for a recession and an explosive increase in unemployment. In such a situation, the central bank, on the contrary, should strive to stabilize the labor market and slow down the rate of growth in the creation of new jobs.

Otherwise, the consequences will be horrendous. But according to Powell, nothing will be done in this direction. In other words, the central bank does not see any signs of a recession, and will continue to do everything to start it as soon as possible.

Refinance rate (United States):

All this, of course, not only surprised investors, but rather frightened them. Which weakened the dollar. However, a strong interest rate differential will take its toll and the dollar will soon rise again. Although today it is likely to continue to lose ground. Just under the pressure of GDP data. Of course, there is no talk of any recession in the second quarter, but there is no doubt that they will show a significant slowdown in economic growth. Which would contradict Powell's words. And this reduces the credibility of the central bank, which is probably even worse.

Change in GDP (United States):

The GBPUSD currency pair successfully rebounded from the psychological level of 1.2000, as a result, the primary signal about the prolongation of the corrective move was confirmed on the market. As a result, the quote rushed towards the level of 1.2155.

The technical instrument RSI H4 during the speculative price momentum came close to the level of 70. This approach may indicate a characteristic overheating of long positions. RSI D1 is at the levels of February this year. This may be a signal of a change in trading interest. In this case, this is only an assumption, we should get many more confirming signals of this theory.

The moving MA lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move. Alligator D1 has a clear intersection between the green and red MA lines, which indicates a slowdown in the downward trend.

Expectations and prospects

In this situation, much depends on how the quote behaves within the level of 1.2155. Since keeping the price above it with confirmation of the breakdown of the value of 1.2200 can strengthen the upward move.

At the same time, a slowdown in the upward cycle cannot be ruled out, where a rebound may occur amid overheating of long positions. In this case, the course may return to the previously completed level.

Complex indicator analysis has a buy signal in the short-term and intraday periods due to the prolongation of the correction.

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Analysis and trading tips for EUR/USD on August 9

Analysis of transactions in the EUR / USD pair

When EUR/USD tested 1.0178, the MACD line had just started to move below zero, which was a good signal to sell. Surprisingly, the quote did not decrease, but rose and tested 1.0195 instead. At that time, the MACD line was just beginning to move above zero, which was a good signal to buy. It prompted a 20-pip increase, while its second test did not bring significant profit.

As expected, the report on investor confidence in the Euro area was ignored by the market.

Today promises to be another calm day as investors are likely to be preparing for tomorrow's release of US inflation. The data will set the direction of the market, right before the end of this month. In the afternoon, reports on small business optimism, labor productivity and labor costs will be published in the US, all of which will affect EUR/USD. Expect it to trade horizontally.

For long positions:

Buy euro when the quote reaches 1.0215 (green line on the chart) and take profit at the price of 1.0248. However, there is little chance for a rally today, especially considering today's lack of statistics and tomorrow's inflation data in the US.

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 1.0193, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0215 and 1.0248.

For short positions:

Sell euro when the quote reaches 1.0193 (red line on the chart) and take profit at the price of 1.0161. Pressure will return if buying pressure decreases.

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 1.0215, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0193 and 1.0161.

Analysis and trading tips for GBP/USD on August 9

Analysis of transactions in the GBP / USD pair

When GBP/USD tested 1.2094, the MACD was far away from zero, so the upside potential was limited. But in the afternoon, its second test happened when the MACD line had just started to move above zero, which was a good signal to buy. This prompted to a price increase of more than 40 pips. Sadly, the target price of 1.2140 was not reached.

Today promises to be another calm day as investors are likely to be preparing for tomorrow's release of US inflation report. The highest value GBP/USD could reach is yesterday's local resistance level of 1.2135. In the afternoon, data on small business optimism, labor productivity and labor costs will be published in the US, all of which will affect the direction of the market. Expect the pair to trade horizontally.

For long positions:

Buy pound when the quote reaches 1.2092 (green line on the chart) and take profit at the price of 1.2132 (thicker green line on the chart). There is a chance for a rally today, but only after the breakdown of 1.2092.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. It is also possible to buy at 1.2068, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2092 and 1.2132.

For short positions:

Sell pound when the quote reaches 1.2068 (red line on the chart) and take profit at the price of 1.2031. Pressure will increase if the attempt to continue the upward correction fails.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Pound can also be sold at 1.2092, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.2068 and 1.2031.

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EUR/USD. The euro bear trap

The EUR/USD pair remains sensitive to the release of inflation data today. Will there be a surge of interest in one direction or another, or will it remain trading in the current range for quite a long time? Payrolls, although they turned out to be far off from the forecast, failed to stir up traders of the EUR/USD pair.

In the coming sessions, only the dollar will do the weather in the pair, since the calendar of European data is very disappointing. EUR/USD is influenced by geopolitical factors, statistics from the United States and the Federal Reserve press conference. However, no major changes are expected. According to ING, the euro will continue to trade in the middle of the 1.0100-1.0300 range until the end of this year. There will be small bursts, but they will not break the range limits.

Even if an exit does happen, it is more likely to go down than up. The strongest CPI data, especially in detail, may change the forecast for US rates for September, which will put pressure on the quote. Meanwhile, a surprise downside inflation is likely to have traders betting on a less hawkish approach from the Federal Reserve next month.

Euro bulls are pulling like a magnet towards the August high of 1.0293. Pushing the euro beyond this value, bulls will return the upward dynamics for a short time. The exchange rate, under the most optimistic scenario for the euro, may be around 1.0386.

In general, you can't argue with the trend, a bearish view of the pair remains relevant. While EUR/USD is trading below 1.0913, there is no chance of a change in direction.

The picture is that the dollar will continue to receive support, and the euro, on the contrary, will be bombarded with new negative factors. The 1.0100 area is a strong support, but with a steady and strong negative, it may not be able to resist – and then hello parity again!

Catalysts for the Dollar

Rabobank believes that the Fed seems to be going to announce another rate hike of 75 bps. Such a decision may be supported by an impressive report on the US labor market for July, published last week.

In addition, the US currency will find support from the demand for safe assets. The dollar is a widely used billing currency in the world by a wide margin. This means that the growth of the exchange rate tends to have a depressive effect on trade.

Another risk to the global recovery is a decline in demand for commodities from China.

The dollar will remain stable until the situation with risky currencies improves. Consequently, there is a potential for further growth not only this year, but also next year, bank analysts write.

Catalysts for the Euro

A steady sell-off, according to Rabobank, will provoke a number of factors. Firstly, it is a harsh winter for Europe. Cold weather plus the possibility of a complete shutdown of the gas supply via the Nord Stream-1 will do their job.

High energy prices are a serious obstacle for businesses and consumers. The chances of a recession in the euro bloc are high, this is the opinion of most strategists and economists.

As we can see, the euro does not have the slightest hope for growth. In such conditions, how not to fall lower than expected.

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SEC on a new form of cryptocurrency regulation​​​​​​​

Sentiment to increase regulatory oversight of cryptocurrencies continues to gain momentum after it was revealed on Wednesday that the Securities and Exchange Commission (SEC) asked major hedge funds to report their exposure to cryptocurrencies.

Under the proposal, the SEC and the Commodity Futures Trading Commission (CFTC) are seeking to amend the Form PF process to require accurate reporting of digital asset strategies that involve an amount of at least $500 million.

Form PF was created in the aftermath of the 2008 financial crisis to help regulators identify asset bubbles and other potential risks to financial market stability by bringing greater transparency to the opaque private equity landscape.

Both agencies cited the rapid growth of the hedge fund industry as the main reason for the proposed changes, as well as the fact that cryptocurrencies did not yet exist when the form was originally introduced. Consultations have been held with the Treasury Department and the Federal Reserve to ensure that there are no risks to the private fund industry as a result of the changes.The number of private funds increased by about 55% from 2008 to the third quarter of 2021, according to a newsletter published with the offer, with IBISWorld data showing that there were 3,841 hedge funds in the US as of early 2022.

SEC Chairman Gary Gensler noted that under this form of regulation, which includes business practices, complexity, and changes in investment strategies, the gross asset value of the private fund industry has risen nearly 150 percent.

As to why he supports the proposal, Gensler stated that "if passed, it would improve the quality of the information we get from all PF form fillers, with a particular focus on large hedge fund advisors, which will help protect investors."

The proposal requires comments from the investment community on whether the funds should disclose details of the cryptocurrencies they hold, such as their name and characteristics.

Members of the Securities and Exchange Commission voted 3-2 in favor of passing the motion, with Republican commissioners Hester Pierce and Mark Ueda voting against. Concerns raised by those who disagree included whether the government really needed all the information the new PF form would collect.

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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.

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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.

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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.

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