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KostiaForexMart
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  • Joined: 22/03/2019
Will gold fall for the Fed's entreaties?

The external calm often hides internal tension. Despite gold's stabilization near $1,750 an ounce, we can't say the periods of turbulent XAUUSD quotes are far behind. The precious metal paused ahead of Federal Reserve Chairman Jerome Powell's speech and is trying to see if he can do what the other FOMC members failed to do. Can he use hawkish rhetoric to persuade stock indices to fall and the U.S. dollar to strengthen? Both are fundamentally important to gold.

As a rule, when evaluating the prospects for XAUUSD, the dynamics of the USD index and Treasury bond yields are analyzed. The fall of the first of them below 106, according to DeCarley Trading, will contribute to the continuation of the peak to 98, raising the quotes of the precious metal significantly higher. Many factors have already been factored into the U.S. dollar, including a 5–5.25% federal funds rate ceiling and a shallow recession that the U.S. economy will plunge into in the second and fourth quarters of 2023, according to Barclays.

Dynamics of gold and US dollar

At the same time, capital flows also affect the value of gold. Queen Anne's Gate Capital says the current rally in XAUUSD is due to an outflow of money from the crypto market. In 2020, investors actively invested in ETFs and crypto assets. As a result, specialized exchange-traded funds grew from 80 million ounces to 110 million ounces. By now, they have fallen to 95 million ounces. Many are still under water, that is, in losses. They will take advantage of the rise in gold to close their positions. If ETFs shrink another 20 million ounces, the precious metal will plummet to $1,300.

The collapse of cryptocurrency broker FTX accelerated the collapse of BTCUSD, and money poured into gold, but a stabilization of bitcoin will reverse that process.

Gold and Bitcoin Dynamics

However, if the capital outflow from specialized exchange-traded funds stops and the demand for physical assets in Asia starts to fall, the downward trend of XAUUSD can be considered broken not only technically but also fundamentally. The fact is that, in an upward trend, gold tends to flow from the East to the West and vice versa during downturns—from China and India to the USA and Europe.

In this regard, a sharp drop in October imports of China's precious metal from Hong Kong to 18.7 tons, which is 45% less than in September, indicates a decrease in demand. However, Commerzbank believes that the dynamics of the indicator was affected by restrictions imposed by Beijing due to COVID-19. According to customs data from Switzerland, gold exports to China in October decreased slightly from 44 to 43.7 tons.

In the near term, the fate of XAUUSD will be affected by Powell's speech and the U.S. labor market report for November.

In technical terms, the 1-2-3 pattern can work out on the daily chart of the precious metal. However, for this, quotes must fall below $1,725, which will be a reason for selling. A fair price break of $1,762 per ounce is more likely to be a reason to buy.
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KostiaForexMart
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USD/JPY: that's it, no movie!

Federal Reserve Chairman Jerome Powell's dovish speech pulled down the dollar. Yesterday, the U.S. currency experienced a resounding sell-off on all fronts, but saw the biggest loss against the yen.

A crushing blow from Powell
At the middle of the week, Powell spoke about the economic outlook, inflation and US employment at the Brookings Institution.

It was Powell's first public speech since the November FOMC meeting, so traders were looking forward to his comments on the central bank's future course.

The market has been in a state of strong uncertainty. Softer inflation provoked speculations about a possible slowdown of tightening in the US, and recent hawkish comments made by Fed representatives have cast doubts on this.

Until yesterday, dollar bulls had illusions about further sharp rate hikes in the US. However, Powell just shattered their hopes: the central bank intends to slow down.

He said it makes sense to 'moderate' the pace at this stage to balance risks. He also hinted that the Fed might take less aggressive steps at its next meeting.

After Powell's dovish rhetoric, the likelihood of a 50 bps rate hike in December rose from 69.9% to more than 90%.

The sharp weakening of hawkish market expectations took a heavy toll on the dollar. It interrupted its 3-day climb and went into free-fall.

Yesterday, the DXY index posted its biggest daily loss of the week, falling more than 1% from its major peers.

Goodbye USD/JPY
The U.S. currency showed the worst dynamics on Wednesday against the yen. The USD/JPY plummeted 1.2%, testing the 3-month low at 136.50 in one moment.

A steep peak in yields on 10-year U.S. Treasuries contributed to the yen's sharp growth. The index fell to a one-month low of 3.6% after Powell's comments.

"The dollar is losing more altitude as the market embraces a less hawkish than feared message from the Chair," said Rodrigo Catril, strategist at National Australia Bank Ltd. in Sydney. The "big decline in 10-year Treasury yields sees the yen at the top of the leaderboard."

Recall that this year the Japanese currency suffered the most from the aggressive Fed rate, and the Bank of Japan's dovish policy adds more pressure on it.

The BOJ is the only major central bank that has never raised interest rates this year.

The hope that appeared last month that the Fed might soon slow down the pace of tightening helped the yen recover from its multi-year lows.

The JPY showed the best uptrend against the dollar in November. It strengthened by more than 7%. This is the biggest monthly gain for the JPY in 14 years.

Now, when Powell actually gave the signal to start a slowdown in interest rates in the U.S., many analysts have revised their forecasts for the pair - downward.

According to experts, the asset has already exhausted its bullish potential and is unlikely to return to spectacular and confident growth in the near future.

In the short term, the major will move mainly downwards, still weighed down by Powell's dovish statement.

Also, US economic data may become a headwind for the dollar-yen pair. If the market sees another symptom of the approaching recession, it will finally convince traders that the US central bank will hit the brakes this month.

Analysts predict this is likely to happen. The ISM manufacturing activity index for November will be released today. Economists are predicting that the index will fall from 50.2 to 49.8.

Another headwind for the dollar will be the return of risk sentiment to the market due to the easing of anti-Covid measures in China. This should also favor USD/JPY bears.
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KostiaForexMart
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EUR/USD. All eyes on Nonfarm

Traders are focused on today's NonFarm Payrolls report. Key US labor market growth data is especially important right now in light of recent events. If the data lets the dollar bulls down as well (in addition to the PCE and ISM manufacturing index), the greenback will bear significant pressure in all major pairs. Also, keep in mind that the NonFarm Payrolls will be released less than two weeks before the Federal Reserve's December meeting. The last speech of Fed Chairman Jerome Powell was not beneficial for the dollar (in my opinion - undeservedly), while a disappointing labor market report will only add fuel to the fire. In that case, the EUR/USD bulls, in particular, can already think about conquering the 6 figure in the medium term.

In general, recent events are not unfolding in favor of the U.S. currency. And it is not only because of objective circumstances. For example, the market reacted quite adequately to the decline of the ISM manufacturing index, which collapsed to 49 points, reaching its lowest value since May 2020. Traders also reacted fairly to the slowdown in the core PCE index, although this slowdown was minimal (and predictable).

No complaints here, as they say. At the same time, in my opinion, market participants are interpreting too many fundamental factors against the greenback - even in those cases where there is a less favorable aspect of the issue. For example, Powell said during his last speech that the time to reduce the pace of rate hikes "may come as soon as the December meeting." At the same time, he said that the final level of the federal funds rate will likely be higher than the September forecasts. It is noteworthy that Powell had previously voiced both theses, and each time the market reacted differently to his words.

Lately, the fundamental environment has not been in favor of the greenback: traders are keenly reacting to negative information for the dollar and are quite skeptical to positive (hawkish) signals. A vivid example of this is the market's reaction to Powell's speech: market participants went with the dovish messages and chose to ignore the statement that the final rate will be at a higher level.

All this suggests that today's Nonfarm data will also be treated in a "special" manner. In my opinion, the data can only support the dollar if all components of the report come out in the green. Otherwise it will be interpreted against the greenback.

Let me remind you that dollar bulls were not impressed by the last (October) Nonfarm data. Specifically, the unemployment rate climbed to 3.7% (from the previous value of 3.5%) and the average hourly wage growth rate slowed on an annualized basis to 4.7%, whereas it has been consistently above or in line with the 5% level since January. The share of the economically active population in October slightly decreased, but still, to 62.2%. All of the aforementioned indicators came out in the red, much to the disappointment of supporters of the strong dollar. After this report, the odds of a 75-point rate hike at the December meeting dropped to 20% (according to the CME FedWatch Tool). Accordingly, the 50-point scenario became the base case, with an 80% chance of being realized.

According to general forecasts, the number of employed people should increase by 200,000 in November. The unemployment rate is likely to remain unchanged at 3.7%. The annualized growth rate of average hourly earnings may slow to 4.5%.

In my opinion, the dollar will get no support even if all components of the release come out at projected levels. At the same time, there is definitely an implication that the numbers may not reach the forecasts at all. The alarm bells have already rung on this subject: The day before yesterday, the ADP released a disappointing report which showed an increase of 127,000 new jobs in the non-farm payrolls, contrary to its forecast of 200,000.

However, we have to admit that the ADP numbers do not always correlate with the official numbers, so there is still intrigue here.

At the moment, it is advisable to take a wait-and-see attitude towards all dollar pairs, and EUR/USD is not an exception here. The Nonfarm data will probably not be able to change the situation: as mentioned before, the fundamental situation is not in favor of the dollar. Nevertheless, opening long positions ahead of such an important release is a very risky action. Taking into account the "Friday factor", it is an unreasonable risk, especially since the pair is in the area of 5-month highs.
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KostiaForexMart
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EUR/USD regains upside position, dollar left with one trump card

Markets prefer to shoot first and then think later. Otherwise, they would miss the moment. When ECB President Christine Lagarde said that central banks should pursue policies that would anchor inflation expectations, investors began to buy the euro with renewed vigor, pushing EURUSD quotes to the highest levels since June. In reality, however, Lagarde's phrase does not guarantee that the deposit rate will rise by 75 bps in December. No matter how this shot turned out to be a blank.

The logic of investors selling the U.S. dollar is clear: inflation is slowing and will continue to do so, which means the Fed does not need to take giant steps down the road of tightening monetary policy. The factor of an aggressive federal funds rate hike, along with U.S. exceptionalism and high demand for safe haven assets, was the key driver of the EURUSD rally. If the ECB starts to catch up with the Fed, the dollar has one less trump card to play.

Lately, the macrostatistics of the euro area has been pleasantly surprising, which is reflected in the growth of the index of economic surprises. It is quite possible that the currency bloc will either manage to avoid recession or the recession will be quick and insignificant. It looks like the U.S. is not as far from the eurozone as previously thought. A change in investors' outlook on the matter has given EURUSD a helping hand.

Dynamics of Economic Surprise Indices

In fact, the U.S. dollar has only one trump card left—its status as a safe-haven asset, and even that fails. When the yield of Treasury bonds grew, the competitors of the grenback in the face of gold, yen and franc were in disgrace. However, the decline in interest rates on debt has turned them from outsiders into favorites. As a global recession approaches, investors will no longer park their money in North America, but will prefer Japan, Switzerland, or a perpetual asset.

Jerome Powell had a chance to turn things around. Had he voiced his dissatisfaction with financial conditions, the EURUSD pair would hardly have been able to soar above 1.05. The weakening of the latter makes it difficult for the Fed to fight inflation, but the central bank also seems to believe that the PCE will continue to slow.

Dynamics of financial conditions in the USA

Unlike Lagarde, who believes that the global economy is entering an era of volatile inflation. That is why central banks should anchor inflation expectations at the target level of 2%. Households must trust that their work will lead to price stability. That's the only way to win.

Volatile inflation makes it doubtful that EURUSD will continue to go further upward in the same way as in October and early December. Most likely, it will be stormy.

In technical terms, the euro approached the target by 161.8% by the Crab pattern within an arm's length. It is located near the $1.061 mark. A rebound may follow from it or from the 1.057 pivot point, which will allow to partially take profits on the longs formed above 1.0395. Subsequently, we use pullbacks to buy EURUSD.

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KostiaForexMart
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USD unlikely to start long-term rally​​​​​​​

The US dollar managed to settle at the current highs thanks to upbeat US macro stats. The euro. on the contrary, dived down. Nevertheless, analysts believe that the greenback will hardly will be able to start a long-term rally even though it has risen significantly in the short term.

On December 5, the greenback grew markedly against the euro amid positive reports on the US PMI Indices. In November, the ISM Services Index increased to 56.5% from October 54.4%. The reading surpassed forecasts as economists had anticipated a decline to 53.3%.

Unexpectedly strong macroeconomic reports helped the greenback regain momentum. On December 6, the uptrend continued but it was not as strong as the day before. The dynamic of the US currency is relatively calm as the economic calendar is empty. At the same time, the EUR/USD pair was trading at 1.0487, trying to consolidate at the recent highs.

In October, factory and durable goods orders also exceeded forecasts. Market participants were surprised by a sharp increase in the ISM Services Index. According to economists, it signals a rise in inflationary pressure in the service sector although some signs of disinflation have already been seen in the commodity sector.

Analysts at the St. Louis Fed point out that current inflation expectations in the United States somewhat reflect the effectiveness of the Fed's hawkish stance. They are mainly fueled by geopolitical woes and strong US macro stats. They also note that there may be a lull on Forex. Only on December 6, the US trade balance report is due. According to preliminary estimates, the trade deficit is expected to grow to $80 billion from the previous $73.3 billion.

Next week, several central banks will hold their monetary policy meetings. Investors are curious to find out the size of the rate increase. The Fed is expected to hike the interest rate by 50 basis points, up to 4.25%-4.5% at the December meeting. There is also a chance that the Fed could take a pause in monetary tightening. Fed Chairman Jerome Powell admitted that "slowing down at this point is a good way to balance the risks." Yet, he added that the watchdog would keep raising rates as "restoring price stability will likely require maintaining a restrictive policy stance for some time."

Against this background, a slight decline in the US currency is possible. Last month, the greenback noticeably weakened. However, it will hardly start a downtrend in the near term. A downward reversal could take place after a period of high volatility, analysts at MFK Bank pinpointed. They reckon that the US dollar could remain volatile in the next three to four months. By the end of 2023, it may drop significantly. At the same time, they see no reason for a prolonged decline of the greenback although it is unable to start a steady correction due to current economic conditions.

The US currency may lose ground if the Fed takes a less hawkish stance. However, if the Fed remains strongly committed to aggressive tightening, it will boost a long-term rally of the US currency. Hence, It will recover next year.

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KostiaForexMart
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Will the dollar still be at war? USD/JPY forecast for 2023

The USD/JPY pair plummeted in November, which made many question its bullish potential. However, the dollar's recent growth convinces investors otherwise. So what to expect from the major?

The dollar is winning so far
The greenback rose 0.3% against its major peers on Wednesday night. The dollar was supported by rising concerns about the global recession.

The day before, three leading U.S. banks - J.P. Morgan, Goldman Sachs and The Bank of America - said they expect a slowdown in global economic growth next year, as rising inflation is threatening consumer demand.

The pessimistic outlook reinforced the anti-risk sentiment that prevailed for the third consecutive session. The MSCI All-Country World Index, which tracks stock market performance in 48 countries, fell 1.26%, down from a three-month high last week.

The loss of appetite for equities and increased demand for the dollar was also triggered by strong US macrodata. Recall that earlier this week the Institute for Supply Management (ISM) said that economic activity in the services sector grew from 54.4 to 56.5 in November.

The data followed Friday's report from the U.S. labor market, which also pleased dollar bulls. The nation's NonFarm Payroll employment rose more than forecast last month.

The portion of optimistic data greatly strengthened the market's hawkish expectations for further monetary policy by the Federal Reserve.

Currently, most traders expect the U.S. central bank to raise the rate by 50 bps next week. The probability of an increase by 75 bps is only 5%.

However, talk of a higher peak in U.S. interest rates has returned to the market. Many investors believe the rate could reach 5.25% in 2023, whereas now it is in the 3.75-4% range.

The hope that the Fed will continue to raise rates next year and keep them high for a long time acts as a very powerful trigger for the dollar at this point. This factor particularly helps the greenback against the yen.

After USD/JPY plummeted to a 3-month low of 133.64 last week, it has now gained 3% and has managed to stay above 137.

There aren't many new factors that can strongly influence the asset's dynamics now. In the coming days, investors will focus on two events: the US consumer price index for November and next week's Fed meeting.

If investors see more robust inflation and hear hints of a higher peak in U.S. interest rates from U.S. officials, it will likely trigger a new wave of growth in the USD/JPY pair.

What's in store for the USD/JPY next year?
In November, the U.S. currency posted its worst monthly performance in 14 years against the yen. It fell by more than 7% due to fears that the US central bank is going to slow the pace of rate hikes.

However, most currency strategists, recently surveyed by Reuters, believe that in the next few months, USD/JPY will be able to hold its annual growth, which amounted to 20%.

The growing threat of recession in the U.S. and other countries should provide support to the dollar. In the backdrop of risk aversion, the greenback will once again feel a surge of strength, which will help it recover its recent losses on all fronts, even against the yen.

"For now, the forces that have supported the USD this year remain valid, despite the recent correction lower. Other currencies do not look as attractive yet," said Athanasios Vamvakidis, head of G10 FX strategy at Bank of America.

In the BofA baseline, the U.S. dollar will remain strong early next year and will only start a more sustained downward path after the Fed pauses.

Despite the dollar's recent pullback, major currencies are not expected to recoup their 2022 losses against the USD until at least late 2023, the survey showed.

Analysts estimate that the Japanese yen, down nearly 20% for the year and currently trading around 136.50 per dollar, was expected to change hands around 139.17, 136.17 and 132.67 per dollar over the next three, six and 12 months respectively.
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KostiaForexMart
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EUR/USD. The Fed to set the stage for longer drop in USD in 2023

The euro seems to leave its lows behind. What does the EU currency await next year?

In 2022, the energy crisis affected the EUR/USD pair significantly. It triggered the strongest collapse of the European currency. According to analysts, the peak of fears about the energy crisis in the eurozone has passed. There are reasons for optimism now.

"Outside of an unseasonably harsh winter, the energy situation in Europe looks manageable given the securing of alternative energy supplies and double-digit energy demand erosion. The drawdown of critical stocks is already progressing better than feared," NatWest reported.

The key factor for the euro/dollar pair exchange rate should continue to be seen primarily through the lens of the balance of payments and terms of trade shift driven by energy prices.

The trade deficit has worsened this year. The cost of energy imports skyrocketed after Russia cut gas exports to the region. As a result, the region's current account became deficit for the first time in years.

NatWest economists expect the euro area's new trade deficit to be counterbalanced by positive net capital flows.

"There is potential for earnings and holdings to be repatriated if the USD strengthens further," the experts noted.

However, winter has just started and it is too early to make any conclusions. If temperatures in Europe fall below critical levels, investors may focus on the supply problem again.

In December, a sharp cold snap is expected in the region, which could lead to a noticeable increase in consumption.

"The winter may turn out to be colder than average, but it's impossible to have that as a base case. Yet valuations appear to include an unrealistically high probability of such a risk case," NatWest added.

It is unlikely that cyclical lows in the EUR/USD pair will be revised next year. Its decline should also be limited to a rebalancing of central bank reserves. The rebalancing should occur to the detriment of the greenback and to the benefit of currencies such as the euro.

This could mean that market players will have to sell USD to buy other currencies in their reserves every time the US currency rallies.

The downtrend for the dollar is inevitable, it is a question of timing. In the coming months, its exchange rate is expected to fall as the peak of the Fed's rate hikes is reached.

NatWest's forecasts for the euro/dollar pair are relatively contained. At the end of the first quarter, the quote should remain below 1.0500, and it should grow up to 1.0600 by the end of the second quarter. At the end of the third quarter, it is projected to rise to 1.0700 and 1.0800 by year-end.

Short-term outlook

On Thursday, the EUR/USD pair attempted to stabilize above 1.0500. The technical picture suggests that buyers maintain control over the market in the short term.

On Thursday, markets expect the weekly US labor market data. Traders are likely to ignore this report. This means that the EUR/USD pair's direction will be driven by the market sentiment with regard to risk.

The growth of the major US indices will hinder the upward trend of the US dollar, which will help the EUR/USD pair to rise. A negative shift in sentiment will have the opposite effect on the quote.

The list of events for the euro includes a speech by ECB head Christine Lagarde at a virtual conference. However, we should not expect any important statements on the prospects of rates, as the ECB is in silent mode ahead of next week's monetary policy meeting.

Thus, risk appetite will have a huge importance for the short-term outlook.

The intermediate resistance level is at 1.0540, further - 1.0580, and 1.0600. The bearish scenario should be considered after the price breaks through 1.0500. Following this scenario, the euro may fall to the area of 1.0460 and 1.0430.

Bulls need to protect the level of 1.0450 to prevent the bearish scenario.

Since no fundamentally important events are expected in the short term, investors are again focused on recession risks. This now helps keep the greenback from falling.

On Thursday, the US dollar index fixed above 105.00, continuing to rise this week and benefiting from risk aversion in the market. Support was also provided by speculation that the Fed will continue to raise rates and hold them higher longer after the release of unexpectedly strong US employment, services, and manufacturing data.

Now traders are waiting for data on CPI in the US to be released next week, as well as the Fed meeting, where a more moderate rate hike of 50 bps is expected.

In general, the US dollar looks oversold, it has experienced its strongest monthly drop since 2009. A correction is possible in the coming weeks. However, it will resume its decline next year. Prerequisites for a longer fall in the exchange rate may be created by the Fed.
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KostiaForexMart
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Weekly forecast for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and GOLD from December 12 (simplified wave analysis)

EUR/USD

Analysis:

The September 26 incomplete wave algorithm determines the short-term trend of the major European currencies. The movement's overall level has now surpassed the D1 scale. After its breakout, the intermediate resistance became support. The quotes have been forming an imperfect interim correction over the past week.

Forecast:

The general sideways trend of euro price fluctuations is anticipated to continue in the early days of this week. Its second half is more likely to see an increase in volatility, a reversal, and a continuation of the price rise.

Potential zones for reversals

Resistance:

- 1.0760/1.0810

Support:

- 1.0450/1.0400

Recommendations:

Sales: are potentially unprofitable and have limited potential.

Purchases: Your vehicles may be suggested for trading transactions once the corresponding signals for those vehicles appear in the support zone.

USD/JPY

Analysis:

The imperfect algorithm of the descending stretched plane of the major pair of the Japanese yen determines the primary direction of intraday trends. The wave has reached its peak. The price breached a strong support level that had previously served as resistance.

Forecast:

The price of the pair anticipate mainly moving "sideways" along the predicted resistance over the coming few days. You can anticipate a reversal and a continuation of the bearish course closer to the weekend. The calculated support represents the lower bound of the expected weekly entry of the pair.

Potential zones for reversals

Resistance:

- 137.50/138.00

Support:

- 133.60/133.10

Recommendations:

Purchases may be made during different sessions. It is advised to purchase a fractional lot due to the low potential.

Sales: this will only be important once your vehicle's corresponding reversing signals appear in the resistance zone area.

GBP/JPY

Analysis:

Since the end of September, the waves on the pair's chart between the British pound and the Japanese yen have been descending. The wave structure is still undergoing correction as a horizontal plane forms. There aren't any completion signals at the time of analysis.

Forecast:

The general lateral mood of the pair's fluctuations is anticipated to persist this week. When there is likely pressure on the resistance zone, you can watch for a change in course. Most likely, the decline stops at the calculated support.

Potential zones for reversals

Resistance:

- 168.60/169.10

Support:

- 164.00/163.50

Recommendations:

Small-lot purchases are possible during a single day. Lowering the trading lot is safer.

Sales: are available following the occurrence of verified reversal signals in the vicinity of the resistance zone.

USD/CAD

Analysis:

The Canadian dollar chart's most recent wave structure, which is useful for forecasting and trading, is directed downward and has been decrementing since September 26. In its structure, the middle part (B) is formed. After it is finished, part (C) will come next, bringing the wave's overall wave scale to the level of the reversal.

Forecast:

The upward movement is anticipated to continue at the start of this week, up to the limits of the calculated resistance. When a reversal forms and the downward course resumes, you can wait for it to happen.

Potential zones for reversals

Resistance:

- 1.3740/1.3790

Support:

- 1.3190/1.3140

Recommendations:

Purchases: are highly risky and could end up being unprofitable.

After the emergence of reversal signals in the vicinity of the resistance zone, sales may be advised.

NZD/USD

Short analysis

Since the end of September, an upward trend has been forming on the chart of the major New Zealand dollar pair. The price has reached a strong potential reversal zone over a broad timeframe. The wave structure's analysis suggests that quotations could increase to their maximum level.

Forecast for the coming week:

The likelihood of a sideways flat at the start of the upcoming week is very high. The price could move downward, but only as far as the support boundaries allow. The second half of the week should see the most activity and the start of price growth again.

Potential zones for reversals

Resistance:

- 0.6500/0.6550

Support:

- 0.6350/0.6300

Recommendations

Sales in the vicinity of the resistance zone should only be made once confirmed reversal signals have appeared.

Purchases: advised by a cut-down quantity from the support zone. The resistance zone restricts the potential.

GOLD

Analysis:

A downward wave has been driving the trend in the gold market since March of this year. Gold prices have been correcting over the previous two months, forming the middle of the wave. The price is close to a significant resistance area at the time of analysis. The ascending section's structure needs to be completed.

Forecast:

The upward movement vector is anticipated to carry on this coming week until the resistance zone rise is fully completed. A brief decline in the support area is not ruled out over the next few days.

Potential zones for reversals

Resistance:

- 1830.0/1845.0

Support:

- 1785.0/1770.0

Recommendations:

There won't be any restrictions on sales in the upcoming days.

Purchases: Within the parameters of individual trading sessions, fractional lots may be purchased from the support zone.

Reasons: Each wave has three components in a simplified wave analysis (UVA). The final, incomplete wave is examined at each TF. The dotted line depicts the predicted movements.

Be aware that the wave algorithm needs to account for the instruments' temporal movement length!
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KostiaForexMart
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USD/JPY badly hurt by inflation, waiting for a counter shot from the Fed chair

Yesterday was a black Tuesday for the dollar. A cooler than expected US inflation report sent the greenback into free-fall in all directions. The biggest losses were sustained by USD/JPY.

Just like last month, U.S. inflation gave traders a shocking surprise. The consumer price index increased by only 7.1% from a year ago. That was less than economists' preliminary estimate of 7.3% and the previous value of 7.7%.

The so-called core CPI, excluding volatile food and energy prices, also turned out to be softer. It rose 6% on an annual basis against a forecast of 6.1% and an increase of 6.3% in October.

The significant reduction in inflationary pressures eased the market's hawkish expectations about the Federal Reserve's future monetary policy.

Following this data, the dollar collapsed on all fronts. Yesterday, the DXY index plummeted about 0.9% to 104.02.

The USD/JPY pair showed the worst dynamics, as the yen jumped, boosted by a rally in Treasuries. US bond yields sank with the US 10-year falling from 3.60% to 3.43%.

In this backdrop, the major collapsed by more than 250 points, or 1.5%. Tuesday's low was the lowest of the week at 134.67.

Such a sharp decline in USD/JPY significantly damaged the outlook for the dollar. The price is back under the area of the 200-day Simple Moving Average, which indicates a clear technical advantage of the bears.

A break under 134.60 would expose the next support around 134.10. Below attention would turn to the monthly low at133.60.

According to analysts at Rabobank, by the end of the week, the USD/JPY risks falling even lower, if the bears stay the course. The downtrend may get support from today's Fed monetary policy meeting.

If the Fed's stance turns out to be more dovish, there is a high probability that the USD/JPY pair will test the level of 130.00 even before the weekend. It has not been uncommon for the yen to fly 500 pips in a week, experts said.

Eyes now turn to the Fed meeting with investors particularly interested in the press-conference of Fed Chairman Jerome Powell.

Investors have already fully taken into account the possible slowdown in rate hikes in the U.S. Now most market participants expect that the rate will be raised not by 75 bps, but only by half a percentage point.

If the forecast comes true, it probably won't put much pressure on the dollar. What could really bring down the U.S. currency is the Fed's hint at lower interest rates.

In light of the latest U.S. inflation data, traders have revised their forecast for peak interest rates downward.

At this point, the rate is expected to rise to 4.8% next year, after which the U.S. central bank will wind down its anti-inflation campaign.

The lower end rates also suggest a less drastic tightening. Many traders are now inclined to expect the Fed to raise interest rates by 25 bps in February and March.

Such a scenario is extremely unfavorable for USD/JPY, which rose to 30-year highs this year due to a strong interest rate differential between the Fed and the Bank of Japan.

Now that there is hope for a less aggressive rate of the U.S. central bank, the yen might regain its lost ground.

However, let's not bury the dollar just yet. Its fate is now completely in the hands of Powell. Many analysts believe that Powell will try to convince investors that the current slowdown does not mean a dovish pivot.

Most likely, the Fed chief's main argument for further tightening will be the fact that inflation is still very high. It is now running three times higher than the central bank's target level.

Earlier, Powell repeatedly stressed that officials won't prematurely end their assault against inflation until the consumer price index returns to 2%.

If he succeeds in strengthening the hawkish expectations of the market, the dollar may gain support and consolidate in tandem with the yen in the short term.
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EUR likely to recover

This week, the euro has been extremely volatile. After a sharp rise amid the weakening of the US dollar, it rolled back again. However, there is still a chance for recovery.

On Thursday morning, the European currency noticeably declined against the US dollar. Traders are now looking forward to the ECB meeting. The central bank will announce its rate decision as well as provide comments on the likelihood of a recession. Analysts believe that the euro could take advantage of the situation and resume an upward movement. Currently, the EUR/USD pair is trading near 1.0655, trying to reach new highs.

The euro has a high upside potential because the greenback is climbing solely thanks to the Fed's hawkish rhetoric. However, this bullish momentum may weaken at any moment. According to Credit Suisse, by the end of 2022, the EUR/USD pair is projected to test the May high of 1.0800.

As the New Year and Christmas holidays are approaching, many analysts have once again brought up the topic of the parity level. Opinions are polarized. Many FX strategists do not expect the pair to retreat to this level, while others believe that the odds are extremely high. Economists at Rabobank reckon that the EUR/USD pair is likely to reach parity in 2023.

Now, speculators are digesting the results of the Fed meeting. The central bank raised the interest rate by 50 basis points to 4.25%-4.5% on an annual basis. The fed funds rate is expected to peak at 4.75%-5.00% next year. Fed officials confirmed that they would stick to further tightening to tame inflation.

The so-called dot plots show that Fed policymakers have a median forecast of 5.1% for the fed funds rate at the end of 2023. The watchdog also said it would not plan to cut the key rate over the next year. The Fed also expects its rate to come down by the end of 2024 to 4.1% and to 3.1% by the end of 2025.

Apart from that, the Fed will continue to reduce its balance sheet. It announced this move in May of this year and started to trim its balance sheet in June. Currently, the Fed's assets stand at $8.6 trillion.

Now, the central bank's main priority is to cap inflation, pushing it to the 2% target. Inflation is still high although it is gradually decreasing. The Fed sees inflation risks 'weighted to the upside'. For this reason, it will stick to a hawkish stance until inflation declines to the target level.

Later, the ECB will announce its rate decision. According to preliminary forecasts, the ECB is projected to hike the key rate by 50 basis points, taking it to 2.5%. Earlier, the ECB raised the rate by 75 basis points. In addition, it will also unveil its macroeconomic projections.

Analysts at Credit Suisse contemplate that a 50 basis point rate hike could adversely affect the euro. However, it will hardly undermine the bullish trend. It might occur only if Christine Lagarde provides rather dovish comments on the future plans for monetary policy and the final range for the key rate. Such a scenario looks unlikely, Credit Suisse pointed out. However, persistently high inflation and rising wages increase the chance of a 75 basis point rate hike. If so, the euro will definitely rise.

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EUR/USD. Analysis for December 27, 2022

The euro/dollar instrument's 4-hour chart still shows a convincing wave marking, and the entire upward section of the trend is still very complex. It now has a clear corrective and lengthened form. The waves a-b-c-d-e have been combined into a complex correction structure, with wave e having a form that is significantly more complex than the other waves. Since the peak of wave e is much higher than the peak of wave C, if the current wave layout is accurate, construction on this structure may be nearly finished or may already be finished. In this scenario, we must construct at least three waves. In any case, I'm getting ready to lower the instrument. The market has demonstrated to everyone this year that it would rather wait and rest than actively work, so it may start as early as next year. The market is prepared to sell when an attempt to surpass the 1.0726 level, which corresponds to 200.0% Fibonacci, fails. Despite what might seem to be everything needed for it, the demand for US currency is still not increasing. The wave e's internal wave structure is extremely ambiguous, making it challenging to identify sub-waves.

A depressing start to the new week.

On Monday, the euro/dollar instrument increased by 20 basis points. Please note that these statistics are highly conditional, so readers should not draw any conclusions from them. The opening and closing levels of the day rarely fall on the same level. Therefore, even if there is no movement at all, one of the currencies will still rise or fall at least slightly at the end of the day. In contrast, there are currently no movements, amplitudes, or market participants.

Due to the fact that many nations celebrated Christmas on Monday, the volume of trade and subsequent movements were negatively impacted. There were no changes from yesterday when it was possible to completely avoid opening the trading terminal. The wave marking hasn't changed in over a week. No news context is provided. I still anticipate a decline in quotes based on the current wave markup because I think the upward trend section is finished. The markets will be ready to increase demand for the euro currency if an attempt to break the 200.0% Fibonacci mark is successful. Many analysts discussed the potential movements of the instrument in January 2023 in the final days of the previous year, and the majority of them agreed that the US currency should start to strengthen. I concur with this viewpoint in light of the wave analysis. You must wait because there have been no movements at all thus far. Maybe just until the holidays are over, or maybe it will be much longer. I don't believe the market will start operating actively on January 1 right away. Nearer to the middle of next month, active work is most likely to be seen.

Conclusions in general
I draw the conclusion from the analysis that the upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. Although there is a chance that the upward portion of the trend will become even more extended and complicated, and the likelihood that this will happen is still high, at least we now have a signal for a decline from which we can start.

The wave marking of the descending trend segment noticeably becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this section is complete, work on a downward trend section can start.
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Trading signal for GOLD (XAU/USD) onDecember 29 - 30, 2022: buy above $1,802 (21 SMA - 6/8 Murray)

Early in the European session, Gold (XAU/USD) was trading around 1,806.05 above the 21 SMA and below the key resistance of 6/8 Murray located at 1,812.50.

The positive sentiment in the markets triggered by the news from China lifted the market's spirits, thus boosting the demand for gold. But it could last a short time due to technical reasons. In the daily chart, gold is very overbought and it is expected that there will be a fall in the short term to the levels of 1,750 and 1,720.

A return below 1,800 would make gold vulnerable to a decline to test the bottom of the uptrend channel around 1,794. A sharp break below could trigger further losses to the area of 1,781 (5/8 Murray). If bearish pressure prevails, it could reach the next support at 1,773 (200 EMA).

On the 4-hour chart, we can see that gold could resume its bullish cycle if it trades above 1,802.50 (21 SMA). The next target is at 1,812 and the strong resistance area is at 1,823.

Conversely, in the event that the XAU/USD pair trades below the psychological level of 1,800 we could expect a continuation of the bearish movement and it could reach 1,772 (200 EMA).

The eagle indicator is giving a positive signal but has technically lost its bullish momentum and any technical bounce is likely to be seen as an opportunity to sell. If in the next few hours, gold fails to consolidate above 1,812, and while the price of gold is trading below this level, it could be seen as an entry point to sell.

Our trading plan for the next few hours is to buy gold above 1,802 (21 SMA) with targets at 1,812 and 1,823. In the event that gold fails to break the resistance of 1,812, it will be seen as a signal to sell with targets at 1,795.

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European stocks lower on New Year's Eve trading​​​​​​​

On the last trading day of 2022, the leading stock indices of Western Europe were balancing in the red zone after a strong growth the day before. Those that were sharply trading lower were stocks in the consumer, utilities and health care sectors.

In addition, the volume of trading on European stock exchanges on Friday was lower compared to the previous days of the week in the run-up to the New Year. The stock markets of England and Germany had a shortened session, and on Monday trading floors will be closed due to the New Year celebration.

At the time of writing, the pan-European Stoxx 600 fell by 0.5% - to 428.21 points.

Earlier, Bloomberg, the leading American provider of financial information, reported that the STOXX Europe 600 indicator ended the current year with a drop of more than 12%. This will be the sharpest decline for European equities since 2018, and its main reasons are the negative consequences of the situation in Ukraine, the global energy crisis, as well as the permanent acceleration of inflation and decisive actions of the world central banks to combat it.

French CAC 40 fell by 0.71%, German DAX dropped by 0.68% and British FTSE 100 - by 0.21%. At the same time, since the beginning of the current year, CAC 40 fell by 8.7%, DAX - by 11.9% and FTSE 100 increased by 1.4%.

Leaders of the fall
The share price of the German energy company Uniper SE plummeted by 4.3%.

German biopharmaceutical company MorphoSys AG fell by 3.8%.

The share price of the Swiss chain of pharmacies Zur Rose Group AG fell by 2.9%.

British oil giant Pantheon Resources PLC collapsed by 43.4% after the company's pretax loss for fiscal 2022 almost doubled.

Market Sentiment
On Friday, European investors continued to analyze news about easing of coronavirus restrictions in China. The Chinese government has announced that the country will drop its Covid-19 quarantine requirement for passengers arriving from abroad starting January 8. At the same time, a negative test for coronavirus will be required to enter the state.

In addition, Beijing authorities reduced the level of surveillance of the coronavirus, rejecting the legal basis for the introduction of enhanced infection control measures.

In response to this move by Chinese authorities, some states have tightened requirements for visitors from the PRC. The United States, for example, is introducing mandatory testing for people arriving by air from China as of Jan. 5.

Traders around the world have recently been seriously concerned about China's "zero-Covid" policy, as new and existing restrictive measures in China have had a negative impact on the country's economic activity.

At the end of November, mass protests erupted in Shanghai against China's stringent Covid restrictions. The police dispersed protesters with gas canisters.

After that, markets began to hope that mass protests in Chinese cities would force local authorities to loosen regional restrictions. Fresh news from China sent a welcome positive signal that the world's second-largest economy could return to robust growth.

On Friday, European investors were also analyzing data for the countries of the region. Thus, according to new data from the Nationwide Building Society, UK property prices rose 2.8% year-on-year in December against November's 4.4%.

Meanwhile, Spain's statistical office INE reported the country's annual inflation rate fell to 5.8% in December of 2022, the lowest since November 2021. Thus, in the outgoing month consumer prices rose by 5.6% against the November increase of 6.7%. At the same time, analysts had forecasted inflation at 6.5%.

Trading results the day before
On Thursday, the leading stock indices of Western Europe closed in the green zone. However, at the beginning of the trading session, the market was steadily pessimistic, caused by investors' concerns about the permanent acceleration of inflation and tight monetary policy of the world central banks.

As a result, the pan-European Stoxx 600 rose by 0.68% - to 430.35 points.

The French CAC 40 gained 0.97%, the German DAX gained 1.05% and the British FTSE 100 gained 0.21%.

Those that were sharply trading lower were stocks in oil and gas and consumer companies.

The share price of European oil corporations British Petroleum and Shell dropped by 0.7% and 0.3%, respectively. Companies were under pressure due to the sharp fall in world prices for crude oil (by more than 1%).

The share price of key consumer companies - British Unilever and British American Tobacco - fell by 0.6%.

Swiss drugstore chain Zur Rose Group AG grew by 5.2%.

The share price of British online retailer THG Plc increased by 3.2%.

European airlines easyJet PLC, Wizz Air Holdings Plc and Deutsche Lufthansa AG fell by more than 2%.

German online retailer of shoes, fashion and beauty Zalando SE dropped 1%.

The share price of the German truck manufacturer Daimler Truck Holding AG decreased by 0.8%.

Adidas AG, a German manufacturer of clothing, footwear and accessories, decreased by 0.6%.

The share price of Evraz Plc, a British metals and mining company, plummeted by 12.6%.

British company Ocado Group Plc, which licenses grocery technology, sank by 1.5%.

TThe share price of German energy company Uniper SE soared by 10.9%.

German air carrier Deutsche Lufthansa AG dropped by 3.3%.

An important factor supporting the stock market in Europe on Thursday was a strong performance of the U.S. stock exchanges. On Thursday, the Dow Jones Industrial Average jumped 1.5%, the S&P 500 soared 1.75% and the NASDAQ Composite gained 2.59%.

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Hot forecast for GBP/USD on 09/01/2023

To put it mildly, the labor market data in the United States was fantastic. Especially when you look at the unemployment rate, which fell from 3.6% to 3.5%. Especially since the previous data was revised up from 3.7%. And it was projected to remain unchanged. In addition, 223,000 new jobs were created outside of agriculture. That's certainly not much more than the forecast of 220,000, but it's still a bit more to keep the unemployment rate stable. In other words, there's all the makings for further job growth. Although unemployment continues to be at record lows. But the interesting thing is that the dollar has been getting cheaper. It's all about the incredibly good macro data. Oddly enough, they show a clear overheating of the labor market. Especially since the United States is actively pursuing a policy to lure industrial production to its territory.

And the question arises - where will companies get workers for all these companies with such a high level of employment? And in general, an overheated labor market can lead to a sudden and steep rise in unemployment and with it a catastrophic drop in investment. Not to mention losses for the companies themselves. After all, companies invest in business expansion and job creation, and when they can't find employees then the investment doesn't pay off. So companies have to write off losses and cut costs to at least compensate for the negative consequences. This prospect is the reason why the dollar is weakening.

The unemployment rate (United States):

Nevertheless, this situation creates prospects for the dollar's growth in the long term. The fact is that the monetary authorities have only one tool to fight overheating of the labor market - an increase in interest rates. In other words, although the Federal Reserve will slow down the pace of rate hikes, there is no question of its reduction in the near future. Most likely, the cycle of rising interest rates in the United States will continue through 2023. While the European Central Bank is likely to begin to gradually reduce its rate as early as the middle of this year.

The pound appreciated by more than 250 points against the US dollar on Friday. As a result, it won back all the decline since the beginning of the month, and the quote was above 1.2100. It is worth noting that we have a sell-off in dollar positions across the Forex market.

The H4 RSI has crossed the middle line of 50 upwards. This indicates a high demand for long positions on the pound.

Moving averages on the H4 Alligator have changed direction from downward to upwards. This is a signal to buy.

Outlook

In this situation, the upward move may persist due to the speculative sentiment of traders. I expect a further increase in long positions once the price stays above 1.2150 on the four-hour chart.

Take note that such rapid price changes often lead to excessive trading positions. For this reason, a technical pullback should not be ruled out.

Based on complex indicator analysis, there is a buy signal for short-term and intraday trading because of the upward movement.
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EUR/USD and GBP/USD trading plan for beginners on January 10, 2023

Details of the economic calendar on January 9
The data on unemployment in the EU did not affect the market in any way, as figures remained at the same level.

The eurozone unemployment rate remains at 6.5%, coinciding with the estimates.

Analysis of trading charts from January 9
The EURUSD currency pair reached 1.0760 during the inertial movement from the 1.0500 support level. As a result, the local high of the upward trend from October last year was updated.

During the rapid inertial course, the GBP/USD rose to the value of 1.2200, despite the fact that a few trading days ago, the quote was around the 1.1850 mark. The overbought condition is obvious, but speculators ignore this technical signal.

Economic calendar for January 10
No important statistical data are scheduled to be published today.

For this reason, investors and traders will monitor the incoming information flow. At 14:00 UTC, the speech of Federal Reserve Chairman Jerome Powell is scheduled.

EUR/USD trading plan for January 10
In this situation, the inertial move still takes place in the market, where speculators ignore technical signals about the overbought euro. Updating the local high of the previous day may bring the price closer to the level of 1.0800. As for the corrective movement, this scenario will be considered by traders in case the price declines below 1.0700.

GBP/USD trading plan for January 10
In this situation, there is a slight pullback, during which the quote returned to the level of 1.2150, while the upward mood is still maintained among traders. For this reason, the return of the price above the value of 1.2200 may restart the inertial move.

At the same time, keeping the price below 1.2130 in a four-hour period may be the first technical signal for the formation of a full-size correction in the direction of the 1.2000 psychological level.

What's on the charts
The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low.

Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance.

Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future.

The up/down arrows are landmarks of the possible price direction in the future.
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Hot forecast for GBP/USD on 11/01/2023​​​​​​​

In just a couple of days, the pound gained almost 350 points, and a local correction was justified. However, despite a completely empty macroeconomic calendar, which usually promotes all sorts of bounces, the British currency lost only 50 points. And it proves that investors don't really believe in the dollar's growth potential right now. At least, in the short-term perspective. Moving forward, I don't think the dollar is going to strengthen. Most likely, the market will continue to stand still. And it's been staying in the same place since the middle of yesterday. In fact, the macroeconomic calendar is also absolutely empty today. The market obviously needs a good reason for it to move in any direction. The pound can't grow because it's overbought, and there's no particular reason for it to fall.

The pair's upward momentum has slowed down around 1.2200. As a result, there was a pullback of about 90 pips, which is considered as a process of regrouping trading forces.

On the four-hour chart, the RSI technical indicator is moving in the upper area of 50/70, which reflects traders' interest in long positions on the euro.

On the four-hour chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle.

Outlook

The current pullback has smoothly turned into stagnation along 1.2150, which may support new price surges. Using technical analysis, I expect long positions on the pound to grow even more once the price stays above 1.2200. In this case, the subsequent upward movement will resume.

As for the bearish scenario within the corrective move, the price should stay below 1.2130 over the four-hour period.

Based on complex indicator analysis, there is a variable signal for short-term and intraday trading due to a flat. In the medium term, there is still a buy signal.

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Hot forecast for EUR/USD on 12/01/2023

The market has been stagnating for a couple of days and only the US inflation report, which will be released today, can get it out of this state. As a matter of fact, investors are waiting for it. Especially in the light of Friday statements of representatives of the Federal Reserve, which basically boils down to a slowdown in the growth of interest rates. In principle, the US central bank did not hide the fact that this year it will complete the cycle of rate hikes. And it's clear that before that, from meeting to meeting the growth of interest rates will be reduced. But everyone was shaken by the statement that during the next Federal Open Market Committee meeting the Fed funds rate may be raised by only 25 basis points. This caused the dollar to weaken.

In this regard, inflation forecasts are highly important. The fact is that the main forecast remains unchanged, and the growth rate of consumer prices should slow down from 7.1% to 6.7%. However, judging by the market behavior, as well as the nature of reports, traders might assume that events will develop according to the most optimistic scenario, and inflation will slow down to 6.5%. Such forecasts do exist, but they are not mainstream. And this creates an interesting perspective. Traders may believe in a broader decline in inflation, and when they see a slightly lesser slowdown, sentiment will change dramatically, and the dollar will begin to recoup its losses as investors drastically revise their expectations, and begin to assume a 50-point reduction in the rate is coming instead of 25. That will be the start of the correction. If inflation actually slows down more, then the potential for the euro's further growth is rather limited since it is excessively overbought.

Inflation (United States):

The EURUSD pair, after briefly being stuck in the 1.0710/1.0760 range, has finally crossed its upper limit. As a consequence, the upward cycle continued.

The RSI technical indicator is moving within the overbought zone, indicating that long positions on the euro are way above its intrinsic or fair value. It is worth noting that the lack of a full-size correction in the market suggests that traders are ignoring the technical signs of it being overbought.

On the four-hour and daily charts, the Alligator's MA are headed upwards, which corresponds to the current cycle.

Outlook

Keeping the price above 1.0760 will eventually lead to a breakdown of the subsequent resistance level of 1.0800. In turn, this step allows for the subsequent formation of a medium-term uptrend in the euro.

As for the bearish scenario, traders will consider this option in case of a reversal, with the price moving below 1.0700. In this case, a correction is possible.

In terms of the complex indicator analysis, we see that in the short-term, intraday and medium-term periods, there is still a buy signal because of the upward cycle.

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The Fed promises to continue raising the rate, but the market no longer believes

Today, January 12, Thursday, the US dollar dropped significantly once more. Let me remind you that last Friday, reports on the unemployment rate, the labor market, and business activity were released in the United States for the first time in 2023. 223 thousand people were employed, the unemployment rate declined to 3.5%, and the ISM index unexpectedly went below the 50.0 level. Generally speaking, the only ISM index that is detrimental to the dollar is the one for the services sector. The remaining news is all favorable in my opinion, but the demand for the US dollar is still down significantly. The demand for the dollar was steady at the start of this week, but today data on inflation in the United States was released, which did not appear to startle the market but sparked a strong reaction. The market anticipated a decrease in the consumer price index of 6.5% y/y, which exactly happened. The market also anticipated a 5.7% y/y decline in the base index. There were no additional significant occurrences today.

It turns out that although both results from the same report were almost exactly in line with predictions, the demand for US dollars nonetheless decreased, preventing both instruments from starting (or continuing) to build the correction portion of the trend. It is vital to note that the subsequent activities of central banks, in this case, the Fed, are more significant than inflation itself. Michelle Bowman, one of the FOMC's voting members, recently predicted that the rate will increase because inflation is still too high. At a Florida event, Bowman stated, "I believe we can cut inflation without a big economic slump as the jobless rate continues at its historic lows. Other FOMC members had previously argued for the continuation of monetary policy tightening. However, the market appears to be responding that all interest rate increases have already been fully absorbed by the US dollar's constantly declining demand. The rate is anticipated to climb to a maximum of 5.5% by the market, though it may be lower following today's inflation report

It is important to keep in mind that the demand for the currency is supported by a tighter monetary policy. Therefore, as expectations for the rate decline, so does the demand for the currency. Therefore, from a wave perspective, I continue to anticipate the development of downward trend sections. Despite their significant length and complexity, the market indicates that it is willing to build upward segments. Only figures on British GDP, European and British industrial production, and the American University of Michigan's consumer sentiment index are available this week. The recession in the UK has reportedly already started, thus the most significant GDP data is likely to show a decrease. If this is the case, it would be difficult to predict that the GDP will increase over a single month.

I conclude that the upward trend section's building is about finished based on the analysis. As a result, given that the MACD is indicating a "down" trend, it is now viable to contemplate sales with targets close to the predicted 0.9994 level, or 323.6% per Fibonacci. The potential for complicating and extending the upward portion of the trend remains quite strong, as does the likelihood of this happening.

The building of a downward trend section is still assumed by the wave pattern of the pound/dollar instrument. According to the "down" reversals of the MACD indicator, it is possible to take into account sales with objectives around the level of 1.1508, which corresponds to 50.0% by Fibonacci. The upward portion of the trend is probably over, however, it might yet take a lengthier shape than it does right now.
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EUR/USD and GBP/USD trading plan for beginners on January 17, 2023

Details of the economic calendar on January 16
The economic calendar was traditionally empty on Monday. No important reports were published in the EU, the United Kingdom, and the Unites States.

Martin Luther King Day was celebrated in the United States. For this reason, banks, funds, and stock exchanges were closed.

Analysis of trading charts from January 16
EURUSD reached the 1.0800 level during the pullback stage, where there was an amplitude move within 70 pips. In fact, the market remains in an upward mood, otherwise there would be a full-blown correction.

GBPUSD reduced the volume of long positions during the price convergence with the 1.2300 resistance level. As a result, there was a pullback of about 100 pips, which eventually turned into a stagnation.

Economic calendar for January 17
Since the opening of the European session, data on the UK labor market have been published, which came out without any fundamental changes. Unemployment in the country remained at 3.6%. Employment increased by 27,000, while jobless claims rose by 19,700.

Expectations coincided with the forecast; there is no reaction in the market.

EUR/USD trading plan for January 17
Presumably, the 1.0800/1.0870 amplitude will focus the market on itself only for a while. As a result, the stagnation will end with an impulse emanating from the stagnation, which will indicate one of the possible scenarios.

The first scenario considers the prolongation of the current upward cycle in the market in case of a stable holding of the price above the value of 1.0880 in a four-hour period.

The second scenario considers the transition from a pullback stage to a full correction if the price holds below 1.0770 in a four-hour period.

GBP/USD trading plan for January 17
Stagnation possibly serves as a process of accumulation of trading forces, which can become a lever for new price jumps. The 1.2150 level serves as a variable support, while the resistance is at 1.2300.

In this situation, cardinal changes will occur only after the price stays outside one or another control level for at least a four-hour period.

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Hot forecast for GBP/USD on 19/01/2023​​​​​​​

UK inflation fell from 10.7% to 10.5% in December, and the pound gradually increased. Inflation eased for the second month, and it hints at the possibility of a more subdued increase in the Bank of England's interest rate. And these very expectations in regard to the Federal Reserve's actions just recently were the reason why the dollar is getting weaker. Moreover, during the previous meeting, two members of the Board argued for rate cuts. So, everything indicates that not only will the US central bank complete its cycle of interest rate hikes soon, but that the BoE could follow suit. And this means there is no reason for the pound to rise substantially. Investors haven't probably realized this fact yet.

Inflation (UK):

But the main reason why the dollar weakened during the European session was the latest US reports, forecasts for it were also negative. In December, U.S. retail sales softened 1.1% and industrial production fell 0.7%. So some pessimism about the dollar was justified. Especially when it became known that previous data had been revised downward. Retail sales climbed 6.0% and industrial production to 2.2%. And if you look at the final industrial report, things got even worse as the growth rate slowed to 1.6%. But the dollar started to rise after the data was released. It's all about retail sales, which remained unchanged with the revision. And this report is significant because it best reflects the state of consumer activity, which is the engine of economic growth. And the data turned out to be significantly better than expected, which of course will inspire confidence that the United States can avoid a recession.

Retail Sales (United States):

First of all, due to the inflationary dynamics in the UK itself, the pound's growth potential is extremely limited. Investors will have to gradually start changing their positions, not in favor of the British currency. But now it has nowhere to go today either. The total number of unemployment claims in the US may grow by 8,000. Of course, the growth itself isn't very significant, but the forecasts are still negative, so there is no reason for the dollar to rise, at least for today. Hence, the market is likely to consolidate around the current values.

Unemployment claims (United States):

GBPUSD crossed the resistance level of 1.2300. As a consequence, the upward momentum gave the pound the opportunity to come close to the December high. The subsequent swing was expressed in a pullback, indicating a decline in the volume of long positions.

On the four-hour chart, the RSI technical indicator was in the overbought area, above the 70 line. This occurred when GBP crossed 1.2300 and approached the December high. Subsequently, there was a price pullback, which is expressed on the RSI indicator by its return below 70.

On the four-hour and D1 chart, the Alligator's MAs are headed upward, which corresponds to the general bullish sentiment.

Outlook

The pullback stage brought the quote back to 1.2300, which, taking into account the current strengthening, is considered as the least possible price change. For the pullback to pass the stage of correction, the quote should return below 1.2250 on the four-hour chart. In this case, GBP could reach 1.2150.

However, staying above 1.2300 may eventually restart long positions in the pound, and it could update the local high of the upward cycle.

Comprehensive indicator analysis suggests a price pullback for the short-term and intraday trading. While the bullish sentiment is still valid for the medium term.

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Hot forecast for EUR/USD on 20/01/2023

The multidirectional nature of the unemployment claims data in the United States was the main reason why the currency market is stagnant. Initial claims for state unemployment benefits dropped 15,000, although it should have increased by 2,000. However, if the data on initial applications turned out to be noticeably better than forecasted, the situation with repeated applications is diametrically opposite. According to forecasts, the so-called continuing claims should have grown by 6,000, but in fact it rose 17,000. Nevertheless, the total number of applications increased by 2,000, i.e. remained virtually unchanged. And as we can see from the forecasts, it was supposed to grow by 8,000. Well, the final data themselves were slightly better than forecasted.

The number of jobless claims (United States):

Today the macroeconomic calendar is completely empty, so it will probably be another stage of a flat market. And this may last till Thursday, when preliminary data on US GDP will be released. In the meantime, not much interesting macro data is expected.

The EURUSD pair has been moving in the sideways range at the peak of the upward cycle all through the trading week. This price move indicates the process of accumulation of trading forces, otherwise the market would have already had a corrective move, which was brewing at the beginning of the week.

On the four-hour chart, the RSI technical indicator is moving along the mid line 50, which corresponds to stagnation. On the D1 chart, the RSI is at 64, which points to the bullish sentiment among traders.

Moving averages on the H4 Alligator are intersected with each other which means sideways trading. On the daily chart, moving averages are directed upward which corresponds to the overall bullish cycle.

Outlook and trading ideas

Based on the structure and the price movement, we can assume that the current flat is ending. A prolonged stagnation may serve as a lever for new speculative price spikes.

The optimal strategy to consider is the method of outgoing momentum, which in the theory of technical analysis can indicate the subsequent direction of the price.

Complex indicator analysis suggests mixed signals for the short-term and intraday trading on the back of the flat market. The overall bullish sentiment is still valid for the medium term.

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EUR/USD: Dollar back in disgrace, while euro gains momentum​​​​​​​

The euro-dollar pair tested the 9th figure at the start of the new trading week for the first time since April last year. Such price dynamics is due not only to the weakening of the U.S. currency (the U.S. dollar index opened trading with a downward gap), but also to the strengthening of the euro (as evidenced by the main cross-pairs involving euro). Such a fundamental background allows EUR/USD bulls to move towards the upper line of the Bollinger Bands indicator on the D1 timeframe, which currently corresponds to the 1.0950 mark. Overcoming this resistance level will open the way for traders to the 10th figure.

Dollar in disgrace

The U.S. dollar is declining amid an almost empty economic calendar on Monday, following Friday's trading inertia. The U.S. dollar index fell from 102.30 to 101.70 on the last day of last trading week. The weekend didn't change traders' minds: today, the index resumed its downward marathon, heading to the base of the 101st figure. Major currency pairs changed their configuration accordingly, with the exception of USD/JPY, which rose after the publication of the minutes of the Bank of Japan's December meeting (according to some members of the Governing Council, the central bank should "clearly explain that expanding the yield range is not the first step in exiting the ultra-loose policy").

But in general, the greenback is under significant pressure. Recent releases indicate that the Fed is guaranteed to reduce the pace of rate hikes to 25 points, and will do so at its February meeting. On Friday, Fed Governor Christopher Waller (who has long been one of the main hawks in favor of an aggressive rate hike) advocated a 25-point scenario. Earlier, a similar position was voiced by other representatives of the Fed, in particular, Patrick Harker, Lorie Logan, and Esther George.

Such statements were made amid a slowdown in U.S. inflation indicators: note that not only the consumer price index, but also the producer price index came out in the red zone. If this week, core PCE index comes out at least at the predicted level (not to mention the "red color"), the puzzle will be finalized. However, the market already de facto has no doubt that the Fed will reduce the pace of rate hike to 25 points. According to the CME FedWatch Tool, the probability of this scenario at the February meeting is estimated at 99%. I think additional comments are unnecessary here.

Euro outlook

Unlike the dollar, the euro enjoys support from the ECB. Representatives of the central bank are vying to voice hawkish messages, assuring traders that the regulator will not change its hawkish course. Last week, there were rumors in the market that the European Central Bank may reduce the rate hike to 25 points in March. The relevant information was published by Bloomberg, citing its sources in the central bank.

The published insider, to put it mildly, surprised market participants (it was then that the EUR/USD pair updated the local high, dropping to 1.0795) since many ECB members voiced opposite signals in public. Christine Lagarde came to the aid of the euro here: speaking at the Davos economic Forum, she said that the European Central Bank is still far from its target, and the regulator has to take "several significant steps." The hawkish minutes of the ECB's December meeting only complemented her words, keeping the EUR/USD pair within the 8th figure.

Today the "hawkish marathon" got its development. Firstly, ECB Governing Council member and Bank of Finland Governor Olli Rehn said that he sees all grounds for a significant interest rate hike "both in winter and this coming spring." Second, a Reuters poll of leading economists was released today. According to most experts, the European Central Bank will raise rates by 50 points, not only at the February meeting, but also at the March meeting. The polled economists also predicted that the rate will reach 3.25% by the middle of the year (the highest value since end 2008).

Conclusions

The fundamental background formed last week contributes to further growth in the price of EUR/USD. And to date, the situation has not changed: the comments of the head of the central bank of Finland, as well as the published Reuters survey, only added to the fundamental picture, allowing buyers of the pair to test the borders of the 9th figure.

Today's main news flow is expected during the U.S. trading session. Eurozone consumer confidence index will be released (positive dynamics is expected), and ECB representatives Christine Lagarde and Fabio Panetta will give a speech (they can also support the euro). In general, the pair remains bullish. The price echelon has shifted one step up, to the range of 1.0850–1.0950. Probably, in the medium term, EUR/USD buyers will try not only to gain a foothold within the 9th figure, but also to precipitate the 1.0950 resistance level, which corresponds to the upper line of the Bollinger Bands indicator on the daily chart.

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EUR/USD. Analysis for January 25. Statistics from the European Union again prevented the euro from falling.

The wave marking on the euro/dollar instrument's 4-hour chart is still quite compelling and getting more intricate, and the entire upward segment of the trend is still quite convoluted. Although its length is better suited for the pulse portion, it has taken on a powerful corrective and extended form. The waves a-b-c-d-e have been combined into a complicated corrective structure, with wave e having a form that is far more complex than the other waves. Since the peak of wave e is substantially higher than the peak of wave C, if the wave markings are accurate, construction on this structure may be nearly finished. I'm still planning for a decline in the instrument because we are predicted to build at least three waves down in this scenario. The demand for the euro currency increased in the first three weeks of 2023, and during this time the instrument only managed to move marginally lower from previously established levels. A new attempt to surpass 1.0721, which according to Fibonacci amounts to 200.0%, was successful, allowing the wave e to take on an even longer form. Unfortunately, there is another delay in starting to build the trend correction part.

The euro is making every effort to maintain its part of the trend.

On Tuesday, the euro/dollar instrument rose by 15 basis points, and the instrument's amplitude was extremely small throughout the day. I think that all of yesterday's movements were just "market noise." Movements of 20–30 points in a variety of directions cannot be interpreted by me as a market response to news or deliberate market activity. It is still true that there is a stagnant increase in demand for US cash. If you pay close attention to the news context, there can be no justification for the market to raise its demand for the dollar. For instance, business activity indices in the US continued to be below the critical value of 50.0. On the other hand, when compared to the data from a month ago, all three indices have increased. In other words, the market could have raised the demand for the dollar but chose not to. If you ignore the fact that two of them stayed below 50.0, the European business activity indices also turned out to be rather strong. But because the statistics were so vague, the market could give them its interpretation. In recent months, it has taken an interest in purchasing euro currency. Another day has passed when, if not an increase, then certainly a decline in demand for the euro.

We can assume that the market paid no attention to this news if we think back to the instrument's overall amplitude. The market seems to be anticipating meetings for the coming week. Before the meetings, perhaps the euro will even be able to increase a little bit further. However, if the increase persists after them, it will be even more challenging to discuss rational movements. Corrective waves, which we frequently saw at the start of the rising trend section, are now completely absent.analytics63d0bd375a595.jpg

Conclusions in general
I conclude that the upward trend section's building is about finished based on the analysis. As a result, given that the MACD is signaling "down," it is now possible to contemplate sales with goals close to the predicted mark of 1.0350, or 261.8% per Fibonacci. The potential for complicating and extending the upward portion of the trend remains quite strong, as does the likelihood of this happening. The market will be ready to finish the wave e when a bid to break through the 1.0950 level fails.

The wave marking of the descending trend segment notably becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this portion is complete, work on a downward trend segment can start.
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USD/JPY. Its own atmosphere

The USD/JPY pair has been trading in its own "coordinate system", prioritizing fundamental factors. For example, the pair was actively rising at the start of the week, despite the decline in the U.S. dollar index. Traders of USD/JPY ignored the general weakening of the US currency and even updated the local high (131.14). We will discuss the reasons for such behavior below, but first of all we should pay attention to the most important fact: the bulls failed to settle above the resistance level of 131.00 (middle line of the indicator Bollinger Bands on the D1 chart). Bulls found it hard to climb above this level, which speaks about how unstable their position is. The scale is still in favor of the yen, even in that isolated "coordinate system", in which the pair has to trade.

Yen at the helm
What is the peculiarity of the pair's behavior?

For so many years, the yen acted as a follower, while the greenback took the lead. The Bank of Japan's monetary policy with Governor Haruhiko Kuroda, who was appointed to his post in 2013, repeated the same mantra month after month - that the central bank is committed to accommodative policy and, if necessary, ready to further ease monetary policy parameters. Everybody got used to this rhetoric and did not react to it, at least in the context of the USD/JPY pair. Nearly all of the BOJ meetings were of a pass-through nature, so they had little effect on the price values.

But everything changed in December, when the BOJ allowed long-term Japanese government bond (JGB) yields to move in a wider range at the end of the last meeting in 2022. This decision was made, firstly, quite unexpectedly, and secondly - ahead of Kuroda's resignation (he will leave his post in April). Therefore, the market interpreted the outcome of the December meeting very unambiguously, coming to the conclusion that the central bank had taken the first step towards the normalization of monetary policy. Since then, the yen has ceased to be a "slave" in the USD/JPY pair: the focus is no longer just on the Federal Reserve's monetary policy prospects, but also on the prospects of a pivot in the Japanese central bank's policy.

The BOJ strikes back
The BOJ obviously did not expect such a violent reaction from the market and such unambiguous, categorical conclusions. That is why Kuroda said back in late December that the central bank was not going to abandon its ultra-loose monetary policy in the near future. But the market ignored his rhetoric.

Earlier this week, the bears had to deal with another blow: the BOJ published the minutes of its December meeting where several Governing Council members stressed that the "the Bank should carefully explain that it needs to continue with monetary easing, that its accommodative policy stance has not been changed,". The bears were then forced to retreat. Bulls took the initiative and hit a new local high on Tuesday, testing the 131.00 level of resistance. But they failed to hold on to their positions: the bears took the initiative as soon as the bullish momentum faded. At the moment, when this article was being written, the pair was already going down to the bottom of the 129th figure, almost 200 points away from the local high (in only 2 days!).

The pair is going down not only because the dollar is "moping" (dollar index is moving to the base of the 101st figure again), but the yen is also strengthening its positions due to "its" own fundamental factors.

Inflation, inflation, inflation
First, inflation in Japan continues to show an uptrend, renewing multi-year records. Overall consumer price inflation accelerated to 4.0% in December. Excluding fresh food and energy, consumer prices climbed 3.0% annually, and the corporate goods price index was up 10.2% y/y. On Friday, January 27, Japan will publish another important inflation indicator, the January Tokyo Consumer Price Index. It is considered a leading indicator for price movements across the country, so certain conclusions can be drawn from the published figures. If it will be in favor of the yen again, the USD/JPY pair may return to the area of 127-128 figures, where it was traded in early January.

Traders of the pair are now acting ahead of the consolidated forecasts. Thus, according to most experts, Tokyo's overall CPI will rise to 4.2%: the last time the figure was at that high was in November 1981. The other components of the report (excluding fresh food prices; excluding food and energy prices) should also show an uptrend.

Conclusions
Judging by the results of the last few days, we can conclude that the yen held its ground and did not let the bulls settle above the resistance level of 131.00. Undoubtedly, the greenback, which is getting weaker all over the market again, has also played its part. But we should also consider that the pair was rising this week while the USD index was falling. Therefore, the pair is bearish also due to the strengthening of the Japanese currency. Further price declines will largely depend on this week's key releases: if US GDP growth data for Q4 and the core PCE index come out in the red, while Tokyo CPI surprises with its greenback, the pressure on the pair will only intensify. The main bearish target is 127.30 (bottom line of the Bollinger Bands indicator on the D1 chart).
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Hot forecast for GBP/USD on 27/01/2023

US economic growth is expected to have slowed from 1.9% to 1.6%, but the first estimate of GDP for the fourth quarter showed a slowdown to 1.0%. This is perfectly in line with speculation that the US economy is at risk of sliding into recession. And with it the global economy. In theory, this would lead to the inevitable depreciation of the dollar. However, this has not happened. If you look at the pound, it has actually remained in place. The dollar edged up when the report was published, but then it quickly returned to the positions at which it was just before the US GDP report was released. The reason for such a strange reaction to obviously weak data lies in the preliminary estimates themselves. Yes, in annual terms, the growth rate slowed down significantly. However, if we look at the quarterly data, the economy grew by 2.9% in the fourth quarter, while the growth forecast was 2.7%. And if you also look at the durable goods orders, which suddenly rose as much as 5.6%, well above the 2.2% forecast, then you would see that the market's reaction is quite understandable. Yes, the economy has slowed down a lot, but there are signs that a recession can be avoided. The durable goods report hints at the possibility of an economic recovery as early as the first quarter.

GDP change (United States):

Despite the obvious interest in long positions, GBPUSD failed to update the local high of the upward cycle. As a result, 1.2440 has become a kind of resistance level against which stagnation/rebound occurs.

On the four-hour chart, the RSI technical indicator is moving in the upper area of 50/70, which points to the bullish sentiment. There is a similar technical signal on the daily chart.

On the four-hour chart, the Alligator's MAs have numerous intersections, which corresponds to the flat movement. The MAs are headed upwards.

Outlook

Based on the fact that the price has been fluctuating this week, the pair has been trading within the sideways channel of 1.2300/1.2440. At the peak of the upward cycle, this movement points to an accumulation process. As a result, an outgoing momentum should emerge that may indicate the price's succeeding direction.

In terms of the complex indicator analysis, we see that in the short-term and intraday periods, the indicator is providing a mixed signal because of stagnation. In the mid-term period, the indicators are moving in the direction of the upward cycle from the previous fall.
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EUR/USD and GBP/USD trading plan for beginners on January 30, 2023

Details of the economic calendar on January 27
The economic calendar was almost empty on Friday. No important reports were published in the EU, the United Kingdom, and the Unites States.

However, it was possible to highlight the U.S. Pending Home Sales Index, which grew by 2.5% in December. Despite the positive data, no one paid attention to them.

Analysis of trading charts from January 27
The EURUSD currency pair has been within the sideways movement of 1.0840/1.0930 throughout the past week. This amplitude indicates the process of accumulation of trading forces, where, in the light of upcoming economic events, it will be won back in the form of price leverage.

Despite the fact that the GBPUSD currency pair had a wider amplitude compared to EURUSD, in general terms, everything is the same. The borders of price fluctuations are clamped between the values of 1.2300 and 1.2440, where the quote has been moving for almost two weeks. In fact, this price movement, as well as for the euro, indicates the process of accumulation of trading forces. Otherwise, a full-blown correction would have already occurred in the market.

Economic calendar for January 30
The economic calendar is traditionally empty on Monday. No important reports are expected. But do not be discouraged as the heat will begin at the middle of the week: the results of the Fed meeting, followed by the ECB, the Bank of England, inflation in the EU, and U.S. Department of Labor report. We expect high volatility in the financial markets.

EUR/USD trading plan for January 30
In this situation, where there is a price movement looped in a sideways range, it is appropriate to work according to the method of breaking through one or another stagnation border. As a result, with a high degree of probability, an outgoing impulse will arise, which will lead to the completion of the flat, indicating the subsequent movement.

Based on the above, consider two possible scenarios:

The upward move will be relevant if the price holds above 1.0940 in a four-hour period. This move will lead towards the 1.1000 psychological level.

The downward move will be applied if the price holds below 1.0840 in a four-hour period. This move could initially push the euro towards 1.0800. After that, a transition to the full-blown correction stage is possible.

GBP/USD trading plan for January 30
Based on the fact that the flat still takes place in the market, the tactics of working by the method of breaking through one or another range boundary is considered the most optimal.

Let's concretize the above:

The downward move will be relevant if the price holds below the level of 1.2300 in a four-hour period. This step can lead to the formation of a full-blown correction.

The upward move is taken into account in case of a stable holding of the price above the value of 1.2450 in a four-hour period. This move will indicate a continuation of the upward trend.

What's on the charts
The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low.

Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance.

Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future.

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

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AUD/USD. A black streak for the Australian dollar

A "black streak" came for the AUD/USD bulls after a streak of gains. The pair was rising almost the entire week and hit 0.7147, a seven-month high. But traders couldn't keep it at the level of the 71st figure: the price went down for the second day and tested the 69th price level. Although, it is worth taking note of the fact that the pair is losing ground not only because of the greenback's strength ahead of the Federal Reserve meeting.

Australia: Labor market and inflation
In exactly one week's time, the Reserve Bank of Australia will hold its meeting on February 7. Therefore, traders are not only discussing the outcome of the Fed meeting, but are also preparing for the announcement of the RBA's verdict.

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AUD/USD. A black streak for the Australian dollar
Take note that last week, the pair received strong support from Australian inflation. Data on consumer price index growth in Australia turned out to be in the green zone, surprising market participants. For example, the monthly CPI indicator rose to 8.4% in the twelve months to December (with a forecasted increase to 7.6%). As for Q4 as a whole, all indicators were also in the green zone, exceeding analysts' expectations. In particular, Australia's annual rate of inflation has risen to a record high of 7.8% (with the forecast of 7.5%). The indicator continued the uptrend that it demonstrated throughout last year. The CPI rose 1.9% in the December 2022 quarter, while most experts had forecast a decline to 1.6% (after 1.8% in the third quarter). Core inflation in Australia (weighted average CPI) in quarterly terms also exceeded forecasts, coming in at 1.7%.

The inflation report "revived" the aussie after the previous labor market report. This report, on the contrary, turned out to be very controversial. The growth rate of the number of employed people fell to -14,600, while the growth rate was forecasted to +27,000. After the report, there were rumors in the market that the RBA might take a break in hiking rates in the beginning of spring. Unexpectedly strong inflation refuted these rumors, and the pair managed to conquer the resistance level of 0.7000.

The decline was due to investors' concerns over the actions of the Australian central bank. In my opinion, these fears are exaggerated.

The next steps of the RBA
Let me remind you that after the previous (December) meeting, RBA Governor Philip Lowe said that the central bank does not follow the pre-planned course: according to him, "the size and timing of future rate hikes will continue to be determined by incoming data and the Board's assessment of the outlook for inflation and the labor market". And while the labor market has generally "let down" the bulls, rising Australian inflation clearly speaks in favor of further rate hikes.

In this context, another phrase from Lowe is also noteworthy - that "the Board's priority is to return inflation to target over time".

One would assume that the central bank would slow the pace of rate hikes. But in this case, the RBA played ahead of the curve, lowering the rate to 25 points ahead of many of the leading central banks in the world. That's why this issue was off the table months ago.

As for rumors that the RBA may pause in monetary tightening, first of all, representatives of the central bank have repeatedly denied such intentions, and secondly, inflation indicators have offset the "dovish" talk, even amid weak "Australian Nonfarm".

Conclusions
The Australian dollar, in my opinion, unreasonably yields to pressure from the US currency. Certainly, ahead of the announcement of the results of the Federal Reserve's February meeting, it is detrimental and even dangerous to open any trading positions on the pair. But if the Fed does not ally with the greenback, the upward route for the pair's bulls will be open, even despite some doubts regarding the RBA's further actions. The bullish target will be 0.7150 again.

Technically speaking, the pair is between the middle and the upper lines of the Bollinger Bands indicator on the D1 chart, as well as above all lines of the Ichimoku indicator, which demonstrates a bullish "Parade of Lines" signal. In other words, technically, the pair retains the potential for further growth, to the major resistance level of 0.7150 (the upper line of the Bollinger Bands indicator on D1). A breakdown of this level will open the way to the area of the 72nd figure.
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Aggressive Fed rate hike is ending

Euro rose above 1.1000 after the Fed signaled a change in their stance on monetary policy. Their statements during yesterday's meeting were more dovish compared to December, with interest rates increasing by only 25 basis points to a range of 4.5%-4.75%.

At first, markets did not react much to the news as everyone was waiting for the speech of Jerome Powell. But when the Fed Chairman confirmed that they will no longer be aggressive in terms of interest rates, risk appetite surged. The decision was kind of in line with what everyone was expecting, that is, a more optimistic view of inflation and the economy. Of course, Powell was not objectively dovish, but neither was he overly hawkish, which was enough for the market.

Speaking to reporters on Wednesday, Powell said they are forecasting "a couple more" rate hikes, but are ready to adjust their plans if price pressures eased faster than expected. When asked about easing conditions in financial markets that could complicate the central bank's path to return to its 2.0% inflation target, he did not sound particularly concerned.

The 25 basis point hike that was made yesterday was another step towards policy normalization after a half-point rate hike in December and four giant hikes of 75 basis points before that. Most likely, the soft inflation data in recent months has been persuasive enough for the Fed to consider suspending their rate hike campaign. Although the committee continues to cite high prices, the hint of two more 25 basis point hikes confirms market expectations of a final rate hike of 5.25%.

During the press conference, Powell admitted that the US economy is now in an era of disinflation with cooling price pressures. He stressed that more data is needed before they can declare victory, but did not specify how much they need to ensure that inflation is on the right track.

In terms of the forex market, demand for euro surged, but buyers need to protect 1.1000 in order to maintain the chance of rising above 1.1050. Possible price levels in such a situation are 1.1090 and 1.1125. In the event of a decline, EUR/USD could move below 1.1000 and head towards 1.0960 and 1.0920.

For GBP/USD, the sideways trend persists, so buyers need to return above 1.2420 to regain their advantage. Only the breakdown of this resistance level will strengthen the hope of a rise towards 1.2470, after which it will be possible for the pair to reach 1.2540. If pressure returns and sellers take control of 1.2350, the pair will fall to 1.2290 and 1.2230.
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EUR/USD. The Fed hit the dollar, the ECB hit the euro

The European Central Bank increased the interest rate by 50 points at this year's first meeting, while announcing a 50-point hike at the next meeting in March. Despite such hawkish results of the February meeting, the euro came under pressure. The single currency retreated from a multi-month price peak (1.1034) and returned to the area of the 9th figure. Anomalous, at the first glance, market reaction is due to several factors.

Spring is near
If you assess the February meetings of the Federal Reserve, Bank of England and ECB, you can take note of one general characteristic. On the one hand, central banks declared the continuation of a hawkish course, but on the other hand, they made it clear that aggressive monetary policies are coming to an end. That's why the dollar was under attack at the end of the Fed meeting, the pound was under pressure by the end of the BoE meeting, and the euro was losing ground by the results of the ECB meeting. At the same time, traders actually ignored the fact that the central banks announced further steps to monetary tightening.

For example, ECB President Christine Lagarde without any vague wording, which is considered "straightforward", announced that the ECB intends to raise interest rates by another 50 basis points during the next meeting in March. According to her, the disinflationary process hadn't begun, despite the slowdown in the overall consumer price index (core inflation continues to show an uptrend).

It would seem that such straightforward hawkish verbal signals should have served as a springboard for the euro. But instead of growth to the resistance level of 1.1090 (the upper line of the Bollinger Bands indicator on the weekly chart), the price turned 180 degrees and was marked in the area of the 8th figure, followed by the retreat to the area of the 9th price level.

Why did this happen?
First of all, Lagarde, while announcing monetary tightening in March, questioned the further growth of interest rates. According to her, after the March decision "the ECB will evaluate the subsequent path of monetary policy." At the same time, market expectations (in particular, currency strategists at Danske Bank and a number of other large conglomerates) are more hawkish. The assumed scenario includes a 50-point hike in March and a 25-point increase at the next meeting (by 50 points according to some other analysts). Therefore, Lagarde's "wrap-up" sentiment was negatively received by EUR/USD bulls. The single currency was under pressure as traders took the ECB's message as a sign that the central bank nears the end of its rate hike cycle. In my opinion, the market adequately assessed the situation and correctly perceived the signals of the ECB.

Secondly, the ECB head emphasized her stance on problematic aspects - in particular, she said that economic activity in the European region has slowed down noticeably. At the same time, "high inflation and tighter financing conditions, these headwinds dampen spending and production,". Such comments put pressure on the euro.

Nevertheless, despite the euro's negative response, the EUR/USD pair did not collapse into the area of 7-6 figures, but only retreated from the multi-month price high to the base of the 9th price level. The underlying reason for such stress tolerance is that Lagarde tried to maintain a balance in her rhetoric. On the one hand, she announced a "guaranteed" 50-point hike in March, on the other hand, she questioned further steps towards tightening. On the one hand, Lagarde complained about the slowdown in economic activity; but then she also admitted that the European economy has been more resilient than expected. Moreover, according to forecasts, the economy will show signs of recovery in the coming quarters. At the same time, the ECB head pointed to the optimism of entrepreneurs (obviously referring to the PMI and ifo indices), stable gas supplies to Europe and reduced interruptions.

Conclusions
Figuratively speaking, the scales are back in equilibrium again: The Fed put pressure on the dollar, and the ECB put almost as much pressure on the greenback. The bulls couldn't conquer the 10th figure, the bears couldn't pull the price down to the 7th figure (and even failed to get a foothold at the 8th price level). Now everything will depend on the values of the key macroeconomic indicators, first of all, in regards to inflation. If core inflation in the European region persistently climbs up, the ECB may raise the rate not only in March but also at the next meeting. The US faces a similar situation: the Fed chief has declared a hawkish course, "tying" the scope of monetary tightening to the dynamics of key inflation indicators. Each inflation report and each inflation component (both in the US and Europe) will be viewed through the prism of further central bank actions.

Following the Fed and ECB meetings, the pair remained in the 1.0850-1.0970 range within which it has been trading for several weeks. In my opinion, in the mid-term perspective, the pair will fluctuate in the given price range, alternately pushing back from its limits, reacting to the current information flow.
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EUR/USD: euro seeks growth opportunities as US dollar remains under pressure from statistic data

The US currency began this week on the back foot. USD retreated significantly after an earlier upsurge triggered by US labor market data. The euro took advantage of the situation and once again rebounded, trying to consolidate its past gains.

On Monday, February 6, the US dollar extended its Friday rally, which began after the release of strong labor market data. However, USD could not overtake EUR. On Friday, February 3, the US dollar index (USDX) jumped and tested the three-week high at 102.7.

As the greenback surged, US stock futures declined considerably. The release of strong US labor market data prompted investors to avoid risky assets, and sent USD higher, as it indicated that the Fed's policy expectations should be reconsidered. Market participants are expecting the regulator to continue its hawkish policy and put the peak interest rate at 5%-5.25%. According to preliminary estimates, this could be achieved with two additional hikes. Analysts say that the non-farm payrolls for January show that the US labor market is overheated. This would give the Fed more room for further rate hikes, experts say.

In the meantime, the European currency rallied after dropping on Friday by 1%. At the beginning of the new week EUR rose against USD and hit 1.0796. EUR/USD traded at 1.0790 early on Monday, February 6, trying to hold on to its gains. FX strategists at TD Securities believe the pair will move near 1.0800, but may retreat to the low of 1.0600 in the near future.

According to the US Bureau of Labor Statistics, unemployment in the United States dropped unexpectedly by 0.1% in January, reaching an all-time low of 3.4%. Experts expected the rate to rise to 3.6%. The latest data shows that employment rose by 894,000 in January, while the number of unemployed declined by 28,000. At the same time, the number of non-farm payrolls rose by 517,000, far exceeding forecasts. The non-farm payroll report for December 2022 was also revised upward.

According to estimates, the number of new jobs in the US economy was almost three times higher than expected. The unexpected growth gave the American economy a new impulse, experts noted. In January, the world's largest economy added 517,000 jobs. This is almost twice as much compared to 223,000 new jobs registered in December 2022.

In addition, average hourly earnings in the US rose by 0.3% last month. Last December average hourly earnings increased by 0.4%. As a result, year-on-year wage growth declined to 4.4% from 4.8% in the previous month. According to current data, public sector employment in the U.S. increased substantially, with 74,000 new jobs added.

Business activity in the US service sector also picked up in January. After a brief dip in December 2022, the index was back above the key level of 50 points, which separates growth from decline. As a result, the ISM Services PMI went up noticeably and advanced to 55.2 points from 49.6 points in November 2022. Recall that in November last year this indicator was 49.6 points.

The current macroeconomic data supported the US dollar, which gained 1% against the euro at the end of last week. However, on Monday, February 6, USD reversed course. As a result, the European currency got the upper hand, recouping its earlier drop.

Analysts believe that upcoming retail sales data in the eurozone may change this situation. Earlier, the euro decreased after the ECB made its decision on interest rates, only to increase after the statements made by the Federal Reserve. Last week, Fed chairman Jerome Powell suggested that there were only two rate hikes left for the regulator. In addition, the head of the Federal Reserve made it clear that the regulator may likely change its monetary policy interest rate, as the rate could reach its peak in 2023 (5%-5.25%).

Amid this situation, analysts noted that the market has become "tired" of endless USD sell-offs. This trend has been continuing throughout the last four months. This might lead to a corrective pullback of EUR/USD by 3%-4%, experts argue. In case of such a scenario, market participants will be able to take their current profits and balance their investment portfolios.
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EUR/USD and GBP/USD trading plan for beginners on February 8, 2023

Details of the economic calendar on February 7
The macroeconomic calendar was empty. No important reports were released in the EU, the United Kingdom, and the Unites States.

In this regard, investors and traders focused on the incoming information and news flow. Federal Reserve Chairman Jerome Powell spoke before the Economic Club of Washington, where he once again pointed out the hawkish position of the regulator. However, the markets ignored Powell's words, perhaps due to the fact that all his statements were already known from the recent Fed meeting.

The main theses from Powell's speech:

- inflationary pressure is decreasing

- there is still a lot of work to be done

- interest rates need to be raised further

- national employment report was much stronger than expected

- monetary policy is still not sufficiently restrictive

- if the data continues to come out stronger than expected, the Fed will raise the rate even more

- 2% inflation target will not change

- inflation to fall significantly in 2023

- the labor market is strong because the economy is strong

- no decline in service sector inflation yet

- no decline in real estate inflation so far, expected in 2H 2023

- in order to fully reduce inflation, easing in the labor market is necessary

- if strong labor market reports or reports of higher inflation continue, the Fed may need to raise rates more than the markets are laying

- The Fed will respond to incoming statistics

Analysis of trading charts from February 7
The EURUSD currency pair reached 1.0670 during the downward cycle, where there was a reduction in the volume of short positions. As a result, the market rebounded slightly above 1.0750, but this movement did not lead to anything cardinal. So far, all this reminds of the stagnation that arose at the stage of the downward cycle.

The GBPUSD currency pair, despite the manifestation of local activity, continued to move within the area of the 1.2000 psychological level. This price stagnation may well indicate a realignment of trading forces, which will eventually play into the hands of speculators.

Economic calendar for February 8
Today, the macroeconomic calendar is again empty. No important reports are expected in the EU, the United Kingdom, and the Unites States.

In this regard, investors and traders will continue to focus on the incoming information and news flow.

EUR/USD trading plan for February 8
Based on the euro's oversold status due to the strong price action the days before, the current stagnation-pullback is a justified move in the market. At the same time, the update of the correction low points to the continuing downward mood among traders in the market.

In this situation, the technical signal about the completion of the corrective move may be the price holding above the level of 1.0800 in a four-hour period.

As for the downward scenario, a prolonged corrective move may occur when the price holds below 1.0660.

GBP/USD trading plan for February 8
In this situation, special attention is paid to two values, these are 1.2100, where holding above it for at least a four-hour period may indicate the completion of a corrective move, and 1.1950, if the price holds below this value in the daily period, it may prolong the current downward cycle.

Until the above technical signals are confirmed, the market will continue to have variable turbulence along the 1.2000 psychological level.

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EUR/USD: Breaking forecast on February 13, 2023

At the beginning of the previous week, Fed Chair Jerome Powell said that there was a need for more rate hikes. Meanwhile, ECB member Isabel Schnabel gave vague answers to questions about interest rates in an interview on Friday. Thus, we can see how the stance of the two regulators differs. That adds more pressure on the euro. At the same time, a predictable ECB is what investors need right now. Above all else, the market believes that the European regulator will be the first to cut rates this year. Therefore, the greenback goes up in price. Nevertheless, the dollar is significantly overbought. So, a correction in the market is needed. Given that the macroeconomic calendar is empty today, now is the perfect time for it. However, taking into account the rhetoric of the central banks, technical factors might not be enough for triggering a correction. Without macro statistics, the market will simply consolidate near the current levels.

Moving down, EUR/USD hit a new low, and the corrective move went on from the high of the medium-term trend.

The RSI technical indicator is moving down between lines 30 and 50 in the 4-hour time frame, which indicates a corrective move. In the daily time frame, the RSI is near the levels of October last year, which reflects strong bearish sentiment in the market.

The Alligator's moving averages (MA) are headed down in the 1-hour, 4-hour, and daily time frames, signaling a corrective move from the high of the upward cycle.

Outlook

At this point, consolidation below 1.0650 in the 4-hour time frame at least could cause an increase in selling volumes, which in turn could prolong the corrective move.

Alternatively, if the downtrend cycle slows, the price may retrace and come to a standstill.

Based on complex indicator analysis, there is a sell signal for short-term and medium-term trading due to a correction continuation.
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Trading signal for GOLD (XAU/USD) on February 15-16, 2023: buy above $1,856 (221 SMA - bearish channel)​​​​​​​

Early in the Asian session, gold is trading around 1,853.79, below the 21 SMA, and below the 3/8 Murray. It is likely that the bearish force in gold could be running out and a technical bounce could follow.

Yesterday during the American session, gold reached the support of 1,843 (3/8 Murray) in light of the US inflation data. Since then, the metal has been rebounding and reached the top of the downtrend channel which has been underway since February 2 but could not break it.

A sharp break above this downtrend channel could be a signal for a sustained gold rally. The price could hit 5/8 Murray at 1,906.

The key to buying should be to wait for XAU/USD to consolidate above the 200 EMA and 4/8 Murray around 1,875. From there, the instrument could reach 1,900 and 1,937(6/8 Murray).

Conversely, below 1,858, we would expect gold to continue to consolidate but for a clear continuation of the bearish move, we should wait for a daily close below 3/8 Murray located at 1,843 (3/8 Murray).

If in the next few hours, gold consolidates above the daily pivot point located at 1,854 and 1,856 (21 SMA) or above 1,843, we could expect it to reach 1,865 (top of the bearish channel) and 4/8 Murray at 1,875.

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Technical Analysis of EUR/USD for February 16, 2023

Technical Market Outlook:

The EUR/USD pair has been seen moving lower after the bounce from the level of 1.0656 had been capped at 50 MA on H4 time frame chart. The High Tide candlestick pattern was followed by Bearish Engulfing candlestick pattern and then Marubozu candle was done as well. The market is in progress of the ABC corrective cycle and now the wave C in being developed. So far the wave C had reached the level of 1.0656 again, but a breakout is imminent. When the corrective cycle is done, the next target for bears is the technical support located at 1.0622. The momentum remains weak and negative, so all bounces are being used by bears to sell the EUR for a better price. Please keep an eye on the level of 1.0787 because this is the key short-term technical resistance.

Weekly Pivot Points:

WR3 - 1.07422

WR2 - 1.07078

WR1 - 1.06916

Weekly Pivot - 1.06734

WS1 - 1.06572

WS2 - 1.06390

WS3 - 1.06046

Trading Outlook:

Since the beginning of October 2022 the EUR/USD is in the corrective cycle to the upside, but the main, long-term trend remains bearish. This corrective cycle might had been terminated at the level of 1.1033 which is 50% Fibonacci retracement level. The EUR had made a new multi-decade low at the level of 0.9538, so as long as the USD is being bought all across the board, the down trend will continue towards the new lows.
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EUR/USD and GBP/USD trading plan for beginners on February 20, 2023​​​​​​​

Details of the economic calendar on February 17
Friday's U.K. retail sales data reflected a slowdown in the rate of decline from -6.1% to -5.8%. However, it should be taken into account that the previous data was revised negative from -5.8% to -6.1%.

The pound declined amid the statistical data.

Analysis of trading charts from February 17
EURUSD locally dropped below the level of 1.0650, but the quote did not manage to hold on to the new values. As a result, a pullback occured, which brought the quote back above the previously passed level. Based on the dynamics during the pullback period, there was a sharp reduction in the volume of short positions in the euro. Thus, the breakdown of the 1.0650 level might have been false.

GBPUSD failed to stay below the value of 1.1950. As a result, there was a reduction in the volume of short positions on the market, leading to a slowdown in the downward cycle, which caused a price pullback.

Economic calendar for February 20
Today, the macroeconomic calendar is empty, the publication of important statistics is not expected. It is worth noting that today is a non-working day in the United States on the occasion of a national holiday. For this reason, banks and stock exchanges are not working, which may adversely affect trading volumes.

EUR/USD trading plan for February 20
If the current pullback leads to strengthening of long positions in the euro, it may return the quote to the local high of the past week.

As for the downside scenario, the quote must first return below the level of 1.0650 and stay there in the daily period. In this case, the breakdown of 1.0650 will be confirmed on the market, which will open the way towards 1.0500.

GBP/USD trading plan for February 20
The area of the 1.2000 support level still puts pressure on sellers, despite the fact that it was locally broken by the price. Presumably, the current pullback-stagnation will play the role of accumulation of trading forces. This, in turn, will lead to new price hikes.

As for the signal values, the boundaries of the deviation from the 1.2000 psychological level will be 1.1950 and 1.2050. These values are highly likely to become the starting point for speculators. Note that the quote needs to hold beyond this or that value in the daily period.

What's on the charts
The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low.

Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance.

Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future.

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

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EUR/USD and GBP/USD trading plan for beginners on February 22, 2023

Details of the economic calendar on February 21
Particular attention was given to the preliminary assessment of business activity indices in Europe, Great Britain and the United States.

Details of PMI statistics:

The Eurozone manufacturing PMI fell from 48.8 to 48.5 in February, with a forecast of 49.5. Services PMI for the same period rose from 50.8 to 53.0, with a forecast of 51.5. And the composite PMI rose from 50.3 to 52.3, with a forecast of 51.0.

The euro did not win back the news flow in any way.

UK manufacturing PMI rose from 47.0 to 49.2, with a forecast of 47.5. Services PMI rose from 48.7 to 53.3, while composite PMI rose from 48.5 to 53.0.

The pound sterling reacted to the statistical data with a rise in value.

U.S. Manufacturing PMI rose from 46.9 to 47.8. Services PMI rose from 46.8 to 50.5 points, while composite PMI rose from 46.8 to 50.2 points.

The dollar reacted not quite typically to positive statistics.

Analysis of trading charts from February 21
Despite the local manifestation of speculative activity, the EURUSD currency pair continues to move within the level of 1.0650. This indicates a typical uncertainty of the direction of movement among market participants.

The GBPUSD currency pair was able to overcome the stagnation in the upper area of the 1.2000/1.2050 psychological level due to the upward momentum. This led to an increase in the volume of long positions on the pound sterling and a further rise of quotes to 1.2150.

Economic calendar for February 22
Today, the macroeconomic calendar is almost empty except for a few publications which are unlikely to attract the attention of large investors. However, familiarization with the FOMC protocol, which will be released at 19:00 UTC, may be informative.

EUR/USD trading plan for February 22
In order for the market to have a technical signal about the continuation of the current corrective trend, the quote needs to stay below the level of 1.0650 in the daily period. In such a situation, an increase in the volume of short positions on the euro is possible, which will lead to a decrease in the price to the level of 1.0500.

If the market moves in an alternative direction, the quote needs to rise above the level of 1.0750 to continue the upward trend. In this case, an increase to the level of 1.0800 is possible.

GBP/USD trading plan for February 22
Buyers face resistance at 1.2150, which leads to a decrease in the volume of long positions and stagnation-pullback in the market. In order to continue rising, the quote needs to be kept above the level of 1.2150 within a 4-hour period. If this level is not overcome, the quote may return to the 1.2000 support level.
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GBP/USD: Breaking forecast on February 28, 2023

Yesterday, the greenback plunged on the back of disappointing macro statistics in the US. Thus, durable goods orders tumbled by 4.5% after surging by a downwardly revised 5.1% in the previous month. Figures had been expected to show a 3.5% decline. In this light, consumer spending in the US may soon drop, with its growth now slowing.

United States Durable Goods Orders:

Today's macroeconomic calendar is empty. The greenback has recently been bearish only when under the pressure from weak macroeconomic statistics. When the calendar was empty, the dollar either strengthened or traded sideways. The first scenario is unlikely to play out due to the greenback's current overbought status. Therefore, we may see a flat trend in the market today.

GBP/USD gained about 1% yesterday. Despite such a sharp price change, the quote is still hovering around a psychological level. In other words, the graphical picture on the chart remained almost unchanged.

Moving up, the RSI crossed line 50 on the H4 chart, signaling a bullish bias.

The Alligator's MAs are intertwined on the H4 chart, indicating a slower downward cycle.

Outlook

The pair is hovering in the 1.1950/1.2050 range, with the psychological level seen at 1.2000. It can be assumed that the current fluctuations near this mark will go on for a while. However, consolidation beyond one of the limits of the 1.1950/1.2050 range on the daily chart may reveal the pair's further movement.

Speaking of complex indicator analysis, there is a signal to buy in the short term and intraday in the wake of the recent impulse.
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EUR/USD looking for direction as market faces uncertainty

Yesterday, the greenback lost almost 0.6% against its main rivals, including the euro.

On Monday, the US dollar stopped its four-day winning streak, giving away profits received in the previous session and rolling back to Friday's levels.

The recent jump in USD was driven by the US Personal Consumption Expenditure Price Index (PCE), which rose by 0.6% last month after increasing by 0.2% in December. In annual terms, the indicator accelerated by 5.4% after rising by 5.3% a month earlier.

"Inflation remains too high and the latest data reinforces my view that we still have a long way to go to bring inflation down to our 2% target," Boston Fed President Susan Collins said in a statement.

"The PCE price index report indicates that more effort will be needed from the Fed to put inflation on a sustained path down to 2%," Cleveland Fed President Loretta Mester said.

The latest data cast doubt on the assertions of Fed Chairman Jerome Powell about the start of a disinflationary process in the United States.

This sentiment seemed to be shared by most FOMC members and justified the central bank's decision to raise interest rates by 25 basis points at its monetary policy meeting on January 31-February 1 after a string of larger moves in 2022.

"If the Fed had received this data at the last meeting, it would probably have raised rates by 50 basis points, and Jerome Powell's stance at the press conference would have been very different," strategists at Cetera Investment Management said.

Fed officials speaking on Friday did not push for a return to last year's massive rate hikes, suggesting the central bank is content with a gradual tightening for now, despite signs that inflation is not declining as they had hoped.

It is expected that the Fed will increase the cost of borrowing by another 25 basis points at its next meeting on March 21-22.

However, some analysts see the possibility of raising rates by 50 basis points if inflation remains high and US economic growth is strong.

"We now believe that the likelihood of a 50 basis point Fed rate hike in March is much higher. We estimate the chances of such an outcome at about 60%," NatWest experts noted.

Barclays experts also do not rule out an increase in the cost of borrowing in the US next month by 50 basis points at once.

According to the CME Group, 76% of traders expect the Fed to hike the key rate in March of 25 basis points, while 24% predict a rise by 50 basis points.

The prospect of more robust US inflation, which requires more consistent monetary tightening from the Fed, saw Wall Street's key indicators suffer their biggest weekly losses of the year on Friday.

Over the past week, major US stock indices have lost an average of 3%.

"We have learned that US inflation is proving to be much more stubborn and US activity more resilient than we anticipated in December and January. It is clear that investors are now more serious about the statements of the Fed hawks and have priced in three more rate hikes of 25 basis points in March, May, and June," ING strategists said.

The derivatives market expects the Fed's key rate to peak at 5.4% this year, although a month ago the maximum rate was estimated at 5%.

Traditionally, the Fed raises the rate to support the US currency.

While the US stock market was knocked out by the PCE price index, the dollar hit seven-week highs at 105.30 on Friday and posted its biggest weekly gain since late September 2022, gaining more than 1.3%.

Meanwhile, EUR/USD came under bearish pressure on Friday and went down by about 0.5% to close the day near 1.0545. As a result, the pair lost about 150 pips.

On Monday, the greenback retested multi-week highs and approached 105.40 but failed to hold on to these levels and retreated, following the decline in US Treasury yields.

The demand for USD weakened after the release of disappointing data on US durable goods orders for January.

Last month, the indicator fell by 4.5% compared to December when it jumped by 5.1%.

In addition, renewed risk appetite has left USD on the sidelines.

American stock indices finished yesterday's trading with a moderate rise, recovering by 0.2-0.6% after a sharp decline in the previous week.

Taking advantage of the general weakening of the dollar, EUR/USD managed to recover from multi-week lows in the range of 1.0535-1.0530. The pair gained over 60 pips on Monday and closed in positive territory for the first time in five days, hitting 1.0610.

On Tuesday, the greenback sank to its lowest level since Thursday, reaching the area of 104.40. Later, it managed to win back all the daily losses, rising by about 0.2% from the previous close near 104.60.

The resumption of growth in Treasury yields on Tuesday after a modest retreat on Monday served as a tailwind for USD.

Deteriorating risk sentiment also helped the US dollar to recover.

The "rally of relief" after the correction in equity markets on Friday caused by a negative surprise in the US PCE price index turned out to be short-lived.

Wall Street's key indices were down again on Tuesday.

Traders continue to assess the risks of further tightening of the monetary policy by major central banks in the context of stubbornly high inflation.

Back in January, investors were confident that a slowdown in economic growth would prompt Fed officials to pause the cycle of aggressive rate hikes but strong data has since changed this view.

As a result, investors are reconsidering their soft-landing scenario and are worried that major central banks could tighten monetary conditions too much in response to positive data, triggering a deep recession.

"The market is aware that inflationary pressures in developed countries, namely in the US and the eurozone, are more stable than previously thought," Commerzbank said.

"This is a positive factor for the US dollar because the Fed is seen as being more proactive compared to the ECB. Thus, the EUR/USD levels near 1.1000 have not proved sustainable yet. The pair may struggle to stay above 1.0600 in the coming months," they said.

Nordea strategists expect EUR/USD to drop occasionally to 1.0300 until the summer.

"We assume that the Fed and other central banks will continue to raise rates more than previously expected to tighten financial conditions and reduce inflation. Thus, a rate hike by the Fed would support the dollar, and risk-free market conditions associated with higher interest rates could put pressure on equity markets, further boosting interest in the safe-haven greenback," they said.

Societe Generale believes that the EUR/USD pair will remain under downward pressure.

"The problem facing the ECB, as well as the Fed, is that it may have to extend the tightening cycle and thereby force a harder downturn in the economy. This could lead to a fall in stocks and credit markets. Since the beginning of the year, European securities have been outperforming their American counterparts, and the re-convergence will be a test of the prerequisites for the strengthening of the EUR/USD pair," bank economists said.

"The major currency pair has recently dropped by five figures over the past month on the back of a possible 60-basis-point rate hike implied Fed tightening. If the markets revise the rate forecast to 6%, it would be unwise to rule out further selling," they added.

Stronger-than-expected data from the United States boosted yields in the US more than anywhere else and pushed the dollar higher against most currencies for the first time since it hit a cyclical peak last September, analysts at Capital Economics said.

"While the resilience of the US economy will allow the dollar to remain strong in the near term, we hold the view that recessions in most advanced economies and reduced risk appetite will eventually be the factor that returns USD to its cyclical high later this year," they said.

Despite a recent bout of weakness, the greenback has gained 2.5% since early February and is close to posting its first monthly rise since last September.

The 10-year US Treasury yield could rise by about 40 basis points in a month.

The S&P 500 was down by more than 2% in February after a 6% jump in January.

The market is now waiting for data on the US consumer price index which will be released on March 14.

The data will have an impact on the Fed's policy on interest rates, as well as show whether the efforts of the central bank to slow inflation to the target level are bearing fruit.

If fresh numbers point to accelerating US disinflation, stock markets could turn bullish again, thus triggering a return to the dollar's downtrend.

"But if instead the data released during March confirm the worst-case inflationary no-landing scenario, the resulting March madness could send the 10-year Treasury bond yield above its most recent high of 4.25% on October 24 and the S&P 500 tumbling toward its bear-market low of 3,577.03 on October 12," Yardeni Research said.

In such a scenario, USD is sure to continue the uptrend and EUR/USD is set to decline.

"The repricing of the higher interest rate and reduced expectations of interest rate cuts later this year has breathed new life into last year's strong US dollar trading," MUFG Bank economists said.

They believe that the recent greenback bounce has room for further development in the near term.

"After a break above 105.00, USD could retest its yearly high of 105.63 and then the 200-day moving average in the area just below 106.50," MUFG Bank strategists said.

MUFG believes that the US dollar is the main driver of the EUR/USD exchange rate.

"We expect the pair to fall back to the support at 1.0330 near which the 200-day moving average runs," the experts said.

Meanwhile, analysts at Pantheon Macroeconomics believe that data on the consumer price index, which should be published before the next FOMC meeting, will dispel some of the market's fears.

However, investors are unlikely to willingly sell the US currency until they become familiar with the next consumer price index data.

In addition, the market admits that the path of inflation returning to the Fed's target of 2% may be longer and more tortuous.

"Inflation is likely to mean stability and upside potential for the US dollar in the near term, given the low unemployment rate. However, we expect this upside to be more limited, with EUR/USD targeting 1.0500 for the first half of this year," Bank of America said.

"We maintain our overall view on the currency market and believe that the overvaluation of the US dollar determines the long-term outlook, including our forecast of 1.1000 for the EUR/USD pair at the end of the year," they added.

On Tuesday, the major currency pair tried to extend the growth recorded on Monday but failed to maintain positive momentum amid deteriorating market sentiment.

The immediate obstacle for EUR/USD is seen at 1.0620 (the 50-day moving average), followed by 1.0660 (the 23.6% Fibonacci retracement level of the recent downtrend) and the psychological level of 1.0700.

On the other hand, a close below 1.0600 would trigger a drop to 1.0560 (20-day moving average) and then to 1.0520.
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European stock markets show declines

Yesterday, European stock exchanges closed mostly with declines. The exception was the FTSE 100 index, which rose by 0.49%. All other indices dropped. The DAX index fell by 0.39%, the CAC 40 index decreased by 0.46%, the FTSE MIB lost 0.59%, and the IBEX 35 index slumped by 0.76%. The composite STOXX Europe 600 was down by 0.74%.

European indicators dropped after the release of the latest statistical data on inflation in Germany. According to last month's results, the growth in consumer prices in the country increased to 9.3% from January's level of 9.2%. This indicator exceeded the forecasts of experts, who projected a reduction of 9%.

In addition, France and Spain posted an upsurge in consumer prices over the past month.

Today, the statistical data for all eurozone countries will be published. According to the preliminary forecast, consumer price growth over the past month is expected to decrease to 8.2% from the January level of 8.6%, as well as core inflation is forecasted to maintain at 5.3%.

Skyrocketing inflation is causing fears among investors about a further increase in interest rates by the European regulator more than previously expected. According to analysts' forecasts, the interest rate is expected to rise by 0.5% this month from the current level of 2.5%. In the future, the rates may soar to 4% by February next year.

Another factor was the eurozone manufacturing PMI which dropped to 48.5 from 48.8 on a monthly basis. At the same time, this indicator was in line with preliminary forecasts.

At the same time, the growth of the UK manufacturing PMI was promoted by the release of the latest statistical data from China, which indicate the recovery of the country's economy as a result of the easing of restrictions since the beginning of 2023. In China, the industrial and service sectors expanded.

Among the British FTSE 100 companies, Rio Tinto rose by 4.6%, Glencore gained 3.5%, Anglo American increased by 3.3%, as well as BHP Group added 2.3%. All companies listed above demonstrated the highest gains.

The stocks of European companies were trading mixed. Thus, Siemens AG gained 0.4% due to the company's announcement about the creation of a new company Innomotics, which will start operating independently on July 1, 2023. This division will be engaged in the production of various types of engines and converters.

By contrast, Puma SE fell by 6.8% due to a more than five-fold drop in net profits in the last quarter to €1.4 million, while revenues rose by 24% to €2.2 billion.

In addition, the company's gross margin dropped to 44% as a result of higher promotional costs for products that need to be sold to make room in warehouses.

Just Eat Takeaway.com NV declined by 3.2% due to a sharp increase in net losses last year, which was the result of large write-downs totaling €4.6 billion after the revaluation of previously acquired assets.

On the contrary, Aston Martin Lagonda rose by 3.2%, despite the company's report of a 2.3-fold increase in the company's loss last year. One of the reasons for this was the weakening of the British currency against the US dollar.

Beiersdorf decreased by 0.5%, despite the increase in revenues last year by 10.2%, to €8.8 billion. At the same time, the company predicts a decline in sales growth this year.
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Trading signals for GOLD (XAU/USD) on March 6-7, 2023: buy above $1,853 (200 EMA-21 SMA)

Early in the European session, gold is trading around 1,852.80, above the 200 EMA and above the 21 SMA. We can see a bullish bias but no signs of exhaustion.

According to the 4-hour chart, we can see that gold is entering an overbought zone. In the next few hours, gold could fall below 1,850. A technical correction toward the 21 SMA at 1,835 is likely.

Last week's US Durable Goods Orders came in worse than expected. As a result, XAU/USD rallied from the low of 1,804. The performance was about $50 of profit which could mean a change in trend in the short term, but before, we should wait for a technical correction.

This week, Chairman Jerome Powell will release the Federal Reserve's semi-annual monetary policy report. In the event that Powell communicates that it is unlikely that the interest rate increases by more than 0.50% again, the US dollar could be affected and could help gold resume its bullish cycle.

According to the technical chart, gold is in a key zone. If it consolidates above 1,853 in the next few days, it could reach 4/8 Murray at 1,875 and finally could reach the psychological level of 1,900.

According to the eagle indicator, gold is in an overbought zone (95-points). In case it trades below 1,850 we could expect it to consolidate around 1,843 (3/8 Murray). If it breaks below 1,835 (21 SMA), it could then fall until reaching the area of 1,818. At this level, gold left a GAP that still needs to be covered.

Our trading plan for the next few hours is to sell below 1,850, with targets at 1,843 and 1,835. On the other hand, in case the trade is above 1,853, we should continue buying with targets at 1,875 (4/8 Murray).
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Breaking forecast for EUR/USD on March 9, 2023

Jerome Powell's speech led to a slump in the single currency and forced investors to revise their attitude toward the current state of affairs. Against the backdrop, all the macroeconomic reports were ignored yesterday. Notably, a lot of information was issued. Thus, the third estimate of the eurozone GDP was worse than the previous one. The economic growth contracted to 1.8% from 2.4%. This means that Europe may slip into a recession. Meanwhile, US employment increased by 242,000 instead of 191,000, thus pointing to further improvement in the US labor market. Both reports should have led to the appreciation of the greenback but the market got stuck. Investors are trying to predict the future actions of the Fed.

Today, the market is likely to remain stagnant if the forecasts for the US unemployment claims meet reality. A change is expected to be insignificant. Thus, the number of initial claims may increase by 2,000, whereas the number of continuing claims may drop by 5,000. Such figures will hardly revive the market. However, traders should keep in mind that the US dollar is overbought and it may unexpectedly drop.

The euro is stagnant but may rebound against the US dollar after a bearish rally recorded on March 7. Short positions have become overheated amid a sharp price change. This points to the euro's oversold conditions in the short-term periods.

On the one-hour chart, the RSI managed to leave the oversold area thanks to the current stagnation. On the four-hour and daily charts, the indicator is hovering in the lower area of 30/50, which points to the mainly bearish sentiment among traders.

On the four-hour and daily charts, the Alligator's MAs are headed downwards, which corresponds to the existing cycle. On the one-hour chart, the indicator is pointing to a pause in the downward cycle as MAs are intersecting each other.

Outlook

The current stagnation within the range of 40 pips could be considered an accumulation process. This, in turn, may spur an outgoing impulse, indicating the price direction.

The complex indicator analysis unveiled that in the short-term period, indicators are signaling mixed opportunities amid stagnation. In the intraday and mid-term periods, indicators are still providing a bearish signal.
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Hot forecast for GBP/USD on 10/03/2023

At first glance, it is not surprising that the pound was able to show quite good growth yesterday, as the data on unemployment claims in the United States was not only worse than expected, but also pointed to a clear deterioration of the situation in the labor market. For example, the number of initial applications has grown by 21,000 instead of the expected 2,000. The number of new applications, which was expected to fall by 5,000, jumped by 69,000. It turns out that the data only confirmed the validity of this growth. While its main reason was because the pound was oversold. The most important thing is that all the labor market data is coming out in different directions and it is quite obvious that the content of the report, which will be published today by the U.S. Labor Department, will be very different from the forecasts. It is just not clear in which direction it will head.

The number of jobless claims (United States):

Anyway, the start of the trading day isn't going to be very good for the pound as the pace of industrial production decline is expected to accelerate from -4.0% to -4.8% in Great Britain. Moreover, monthly GDP data is not expected to be very encouraging either as it should show a -0.2% drop of the economy. So the British economy is steadily sliding into recession.

Industrial production (UK):

The main event not only of the day, but also of the week, is the report of the United States Department of Labor. If we proceed from current forecasts, which are the only ones we can rely on for the time being, then everything looks good. With a stable level of unemployment, 210,000 new jobs should be created outside of agriculture. This is enough to keep the unemployment rate, which is already incredibly low, stable. And results like that should help the dollar strengthen. The problem is that the data will most likely not match the forecasts. But it's hard to tell whether it will be better or worse. In other words, investors will not take chances and will wait for the report and then they will make their decision.

Unemployment Rate (United States):

GBPUSD reduced the volume of short positions around 1.1800. As a result, there was a slowdown in the bearish cycle, and then the quote reversed. This movement caused the pound to recover relative to its decline on March 7.

On the four-hour chart, during the process of recovery, the RSI crossed the 50 middle line and made its way upwards. This confirms the bullish sentiment.

On the same chart, the Alligator's MAs are intertwined with each other. This is the primary signal of the slowdown of the downward cycle. One the one-day chart, the indicator lines are directed downwards, which corresponds to the downward movement from the beginning of February.

Outlook

As a result, the quote returned to the lower limit of the horizontal channel (1.1920/1.2150) it had already passed. At the moment, the 1.1920/1.1950 area may serve as resistance, and in terms of technical analysis, this can reduce bullish sentiment on the pound. This in turn allows the price to rebound.

However, in case the bullish sentiment persists among traders, and the quote is able to stay above 1.2000, then the pound can rise further.

The complex indicator analysis in the short-term and intraday periods indicate an upward bias or bullish sentiment, this is because the price bounced from 1.1800.
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Hot forecast for EUR/USD on 13/03/2023

All of the recent labor market data in the United States clearly indicated that the content of the Labor Department report would be very different from what had been predicted, and the only question was in which direction. Since all of this data showed different directions. This is exactly what happened. And everything went according to the negative scenario. The unemployment rate, which should have remained unchanged, increased from 3.4% to 3.6%. And so the dollar instantly began to lose its positions. And quite substantially at that. And it didn't matter that 311,000 new jobs were created outside of agriculture. Which is 101,000 more than it was forecasted. The very growth of the unemployment rate clearly points to the worsening situation on the labor market, the state of which bound the hands of the Federal Reserve, forcing it not only to raise interest rates, but even consider a 50 bps hike, despite the slowdown of inflation. In other words, the content of the United States Department of Labor report removes any questions about the extent of the upcoming refinancing rate hike, which will pass at the minimum bar. This is the main reason why the dollar weakened.

The unemployment rate (United States):

But the problems for the dollar seems to be just beginning, because on Friday night, Silicon Valley Bank announced bankruptcy, one of the second ten largest credit institutions in the United States. This is the biggest bankruptcy since 2008. Almost immediately thereafter, the Federal Reserve Bank of New York decided to close Signature Bank. According to the central bank's statements, the reason was systemic risks caused by massive deposit outflows. At this moment, events are developing in a typical way for a banking crisis - the bankruptcy of one bank entails a chain reaction, as the other banks that issued short interbank loans to the bankrupt credit organization face liquidity shortages and are not able both to return the funds already raised by them or provide credit resources to other financial institutions. If monetary authorities did not immediately intervene, other bankruptcies would follow. For this reason there is immediate talk of the need to turn on the printing press and provide immediate emergency aid to credit institutions. This is nothing but another iteration of quantitative easing, or trivial money emission. And a $1.1 trillion figure even came up. In addition, some media have already found the culprit in the bankruptcy of Silicon Valley Bank - the Federal Reserve. They say that the increase in interest rates has severely shaken the stability of the financial system. It's very reminiscent of an attempt to put pressure on the central bank to start cutting interest rates. As a result, both the prospect of switching on the printing press and reduction of the refinancing rate will weigh on the dollar and facilitate its further weakening. And the situation is so serious that Joe Biden is speaking about it today, and much will depend on the words of the President of the United States.

The euro strengthened in value by about 100 points against the U.S. dollar last Friday. This was caused by a massive reduction of dollar positions due to the release of the U.S. labor market report. As a result, the quote reached the local highs of the week.

On the four-hour chart, the RSI was in the overbought zone during the bullish momentum, which indicates that long positions could "overheat" in the short term. The RSI is moving within the 70 zone, which is also consistent with an overbought signal.

On the four-hour and one-hour charts, the Alligator's MAs are pointing upwards, which points to the bullish momentum. However, on the daily chart, it is still on the bearish cycle from the beginning of February.

Outlook

In this situation, keeping the price above 1.0700 might push the euro to rise further, ignoring the sign that it is overbought in the short term. However, things could change if the euro falls below 1.0650.

The complex indicator analysis unveiled that in the intraday and short-term periods, technical indicators are pointing to bullish sentiment due to the upward momentum.
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Rally in euro and pound may end quickly

The unexpected crisis in the US banking sector has crushed all hopes for a new acceleration in the pace of interest rate hikes. Goldman Sachs economists said they no longer see the Fed raising rates next week, even after US authorities took steps to contain the crisis caused by the collapse of Silicon Valley Bank and Signature Bank. This caused two-year Treasury bond yields to fall by 18 basis points to 4.34%, reaching its sharpest three-day drop since October 1987. Expectations of a less aggressive policy stance and sharp demand for German bonds also affected the euro.

Most likely, Fed officials will announce a pause in interest rate hikes this week ahead of their meeting on March 21-22. Economists were expecting to see around 0.25% to 0.5% increase earlier, but everything changed since last Sunday, when US authorities had to act very quickly in order to contain the spreading of SVB's problem to other US banks. The Fed had to open an emergency line of credit, allowing banks to pledge a range of high-quality assets to obtain cash for a period of one year. They also pledged to fully protect uninsured depositors in SVBs, as well as relax lending conditions through the Fed's discount window. These measures should provide liquidity shortages to banks.

Now, the Fed is expected to raise the rate by a quarter point next week, which means that the peak will be around 5.1% in six months, slightly lower than the previously projected 5.74%.

The current situation is quite negative for dollar as it most certainly raises risk appetite. However, market players should keep in mind that if the crisis in the US banking sector is not solved quickly, it will spread to other regions, which will result in a collapse in other currencies such as euro and pound.

Ahead is an important US report, that is, the inflation data for February this year. Economists are predicting that the index will show a 0.4% increase, slightly lower than the previous month's 0.5%. Yearly data should be 5.5%, which is also lower than the 5.6% earlier.

Demand for euro has intensified after all the news, so buyers have a chance to continue building the new upward trend. However, the quote needs to stay above 1.0700 as only by that will euro go beyond 1.0730 and head towards 1.0770 and 1.0800. Should the quote decline below 1.0700, EUR/USD will slip to 1.0666.

In GBP/USD, bulls also control the market, but the quote needs to stay above 1.2130 so that pound could have the chance to break through 1.2170 and head towards 1.2215 and 1.2265. If bears manage to gain control, the pair may dip to 1.2080 and 1.2050.

Hot forecast for EUR/USD on 15/03/2023

The US media has already found the culprit in the banking crisis, and of course it is the Federal Reserve. They're saying that everything happened because the Fed has aggressively lifted interest rates. Supposedly, the main reason why two banks went bankrupt was because of the central bank. Now they are demanding that the Fed immediately start reducing interest rates and switch on the printing press and put out the fire with money. Furthermore, critics of the Fed have another reason to celebrate. Yesterday, we learned that US inflation slowed from 6.4% to 6.0%. It is decelerating for the eighth straight month, and in such circumstances, it will be very difficult for Fed Chairman Jerome Powell to explain the need not only to further raise interest rates, but also to do anything other than lower the refinancing rate.

Inflation (United States):

The dollar, on the other hand, will continue to be under pressure, as it loses ground not only because of the banking crisis in the United States and the clouds gathering over the Fed. Apparently, the banking crisis is already starting to spill over to Europe as well. We're talking about macro data, which are starting to point to more and more problems in the United States, and the stabilization of the situation in the euro area. In particular, the rate of industrial production decline in Europe should be replaced by growth from -1.7% to 0.5%.

Industrial production (Europe):

In the United States, the growth rate of retail sales should slow down from 6.4% to 4.3%. And if all of these forecasts are confirmed, the dollar will have no choice but to keep losing ground.

Retail Sales (United States):

The euro continued to rise against the U.S. dollar after a brief pullback. It passed 1.0700 earlier, which played the role of support, strengthening the bullish sentiment in the market.

On the four-hour chart, the RSI technical indicator is moving in the upper area of 50/70, which indicates bullish sentiment among traders. On the daily chart, the RSI recently climbed above the 50 midline, which indicates a change in sentiment.

On the four-hour and one-hour charts, the Alligator's MAs are headed upwards, which corresponds to the upward cycle from the middle of last week. On the daily chart, the primary signal will show change in trading sentiment, as the moving lines are intertwined with each other.

Outlook

The technical signal that shows change in sentiment, which indicates that the euro will gradually recover against the decline in February, will emerge if the price stays above 1.0800. Until then, that level will act as resistance, relative to which it is possible to reduce the volume of long positions on the euro.

The complex indicator analysis unveiled that in the intraday and short-term periods, technical indicators are pointing to bullish
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Trading Signal for GOLD (XAU/USD) for March 17 - 20, 2023: key level $1,921 (21 SMA - symmetrical triangle)

Early in the European session, Gold (XAU/USD) is trading around 1,927, above the 21 SMA, and within a symmetrical triangle formed in the last 48 hours.

The outlook for gold remains bullish. If it consolidates above the daily pivot point (1,920), it could continue rising to reach 1,945, the level which coincides with the third weekly resistance.

A technical bounce around the 21 SMA located at 1,921 could give us the opportunity to resume buying with targets at 1,937 and 1,945.

On the contrary, in case gold breaks the uptrend channel formed since March 10 and consolidates below 1,917 in the next few hours, we could expect a further bearish movement and the instrument could reach 5/8 Murray located at 1,906 and finally could fall towards the EMA 200 located at 1,882.

According to the 1-hour chart, gold has upside potential. It is likely that if it trades above 1,920 (21 SMA), we could expect it to reach the resistance zone of 1,945.

Our trading plan is to watch a key level of 1,921 which could set the trend for gold. If it trades below this level in the next few hours, it will be considered an opportunity to sell and could accelerate the bearish movement until the price covers the gap left at 1,867.
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Hot forecast for GBP/USD on 20/03/2023

The US industrial production report turned out to be much worse than expected and the previous data was revised from 0.8% to 0.5%. And instead of slowing to 0.2%, the industrial production showed a decline of 0.2% year-on-year. These results made it possible for the pound to fully recover its losses, which the pound suffered right after the Credit Suisse announcement, which triggered the euro's fall and eventually pulled the pound down. The single currency has not returned to its previous values and it will probably do that during the day. Moreover, we found out that Credit Suisse has been purchased by another Swiss bank - UBS. So it looks like Europe managed to save the emerging bank crisis, which gives investors optimism of course. Anyway, the GBP has won back its losses, and now it will wait for the euro. So, a temporary stagnation is the most likely outcome. Moreover, the macroeconomic calendar is totally empty today.

Industrial Production (United States):

GBP/USD ended last week with growth. As a result, it came close to the local high of the uptrend, which indicates the bullish sentiment prevails.

On the four-hour, one-hour and one-day charts, the RSI technical indicator is moving in the upper area of the indicator, which confirms the signal of growth of the volume of long positions on the euro.

On the four-hour and one-day charts, the Alligator's MAs are headed upwards, which corresponds to the bullish momentum.

Outlook

We can assume that keeping the price stable above 1.2200 will strengthen long positions in the market, which in turn will open the way towards 1.2300. However, falling below 1.2100 may lead to another move towards the psychological level of 1.2000.

The complex indicator analysis unveiled that in the intraday, medium-term and short-term periods, technical indicators are pointing to bullish sentiment.
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EUR/USD and GBP/USD trading plan for beginners on March 23, 2023

Details of the economic calendar on March 22
The U.S. Federal Reserve raised its benchmark interest rate for the eighth time in a year. During the March meeting, the regulator expectedly raised the interest rate by 25 basis points to 4.75–5%. The central bank also stressed some additional policy firming ahead.

As for the banking sector, Fed Chairman Jerome Powell has repeatedly said that the U.S. banking system is reliable and stable. According to him, recent events are likely to tighten credit conditions for households and businesses and put pressure on economic activity, hiring, and inflation.

Analysis of trading charts from March 22
EUR/USD broke through the 1.0800 resistance level during the inertial movement. As a result, there was an increase in the volume of long positions, which indicated the recovery of the euro relative to the decline in February.

GBP/USD jumped above 1.2300 during the general sale of dollar positions. This move indicates a subsequent price recovery from the fall in February.

Economic calendar for March 23
The Bank of England will hold a meeting today, where interest rate is expected to be raised by 25 basis points to 4.25%. Of particular interest will be the regulator's commentary on future actions. Note that inflation data released yesterday showed an acceleration in growth to 10.4%. This may serve as a basis for a further interest rate hike.

Time targeting:

Bank of England meeting results – 12:00 UTC

EUR/USD trading plan for March 23
Based on the technical signal that the euro is overbought in the intraday period, we can assume that a pullback will appear on the market. During which, there will be a regrouping of long positions. However, speculators may ignore signals from technical analysis in vain. In this case, the price may move towards the local high of the medium-term upward trend (1.1033).

GBP/USD trading plan for March 23
A stable holding of the price above the level of 1.2300 allows the further growth of the British currency up to complete recovery. However, it is worth taking into account the technical factor of overbought, which can reach a critical point in this price move.

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Hot forecast for EUR/USD on 27/03/2023

At first glance, preliminary estimates of PMIs in Europe turned out to be very good. At 55.6, the services Purchasing Managers' Index hit a 10-month high in March, up from 52.7 in February, with a forecast of 52.3 points. In other words, it should have declined, but instead it rose. Due to that the flash composite output index, which should have decreased from 52.0 to 51.3 points, rose more-than-expected to 54.1 in March. Only the manufacturing PMI fell to a four-month low of 47.1 from 48.5 in the previous month, though it should have increased to 49.8 points. To a certain extent this was what prevented the euro from rising further.

Composite PMI (Europe):

And after the opening of the US trading session, the euro fell, because in America, not only were the same PMIs better than forecasts, in fact, they turned out to be much better. The US Manufacturing PMI in March was 49.3 points, up from the previous value of 47.3 points. It was expected to have fallen to 47.0 points. Meanwhile, the Services PMI jumped to 53.8 points instead of increasing from 50.6 to 51.0. As a result, the composite purchasing managers index rose from 50.1 points to 53.3 points, with a forecast of 49.0 points.

Composite PMI (United States):

Today, the macroeconomic calendar is completely empty and the market is likely to consolidate around the reached values.

The euro entered a bearish correction after it sharply rose last week. The pair broke through a resistance level of 1.0800. As a result, the volume of short positions increased.

On the four-hour chart, the RSI downwardly crossed the 50 middle line, thus reflecting bearish sentiment among traders.

On the same chart, the Alligator's MAs are intertwined, signaling a slowing bull cycle. On the one-day chart, the Alligator's MAs are still headed upwards.

Outlook

Based on the corrective phase, its scale has already reached the possible limit. Therefore, the euro can still recover and climb above 1.0800. However, in case the bearish sentiment persists, and the quote stays below 1.0700, the market situation may still change.

The complex indicator analysis points to a correction in the short-term and intraday periods.
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Oil prices have many positive factors for growth

Oil prices were up and down on Wednesday afternoon. The West Texas Intermediate (WTI) for May delivery was trading at $73.39 a barrel, up 0.36% on the New York Mercantile Exchange.

Oil prices have been hit especially hard by the banking crisis - falling all of 13% two weeks ago. However, last week ended with the price rising by about 3%.

Oil prices were also moving up on Tuesday. The market, obviously, overestimated the prospects amid a decline of exports from Iraq's Kurdistan and considering the dynamics of stocks in the United States. The activity of M&A in the US banking sector was also extremely positive.

Recall that oil pumping from Kurdistan through the Kirkuk-Ceyhan pipeline was suspended. It means that 370 million barrels a day of oil from Kurdistan and another 75,000 from the fields of northern Iraq simply would not come to the world market. And it's all about the International Chamber of Commerce, which decided that the supply of this oil is illegal.

It is clear that oil prices benefit from this supply cut in light of an already tight market. However, we don't know how long the Kurdish supply will stop.

Meanwhile, strikes are ongoing in France, leading to the shutdown of some major refineries, in particular the TotalEnergies plant in Gonfreville-l'Orcher, which processed 240,000 barrels of oil a day. And on Monday, the strike at the refinery was extended for another three days, which created a temporary but very negative impact on crude oil consumption in the European Union. At the same time, problems with fuel availability at gas stations are worsening in France, adding to the already significant pressure on consumers' costs.

Meanwhile, a weekly review by the Energy Information Administration of the U.S. Department of Energy reported that the country's commercial oil inventories fell by 7.5 million barrels, or 1.6%, last week.

According to the terms of the OPEC+ agreement, the allowed production level for Russia in February was 10.478 million bpd. In other words, Russia did not produce about 537,000 bpd in the reporting month in order to reach its full production quota.

Since December 5, oil sanctions came into force, according to which the European Union does not accept the Russian oil, which is transported by sea. In addition, the G7 countries, Australia and the European Union imposed a price cap on Russian oil transported by sea at $60 per barrel, and more expensive oil can no longer be transported and insured. Russia, in response to such measures, banned from February 1 to supply oil to foreign parties if the contracts directly or indirectly provide for the use of the marginal price fixing mechanism.
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Gold to climb above $2,000​​​​​​​

Throughout this week, many analysts predicted that gold could jump to $2,000 and even above. The yellow metal met expectations and reached the specified peaks. Now the primary task for the precious metal is to sustain its gains, experts believe.

Weak data on the US labor market has acted as a strong driving force behind gold's rally. Recall that in February, the number of job openings in the US labor market (JOLTS) dropped to 9.93 million, the lowest level since May 2021. Notably, in January 2023, the figure was 10.56 million. According to analysts, the current data indicates a cooling labor market. Previously, Fed officials, including Chairman Jerome Powell, emphasized that the overheated US labor market hinders the regulator in their efforts to curb inflation. Therefore, the Federal Reserve is confidently moving towards its goal, specifically achieving a 2% inflation rate.

Experts estimate that the current JOLTS reports have reinforced market expectations of the Fed's shift to a softer approach to monetary policy. Currently, the majority of analysts (almost 60%) expect the regulator to keep the key interest rate in a range of 4.75% - 5% per annum at the May meeting. At the same time, some experts anticipate a 25 basis-point rate hike.

After the JOLTS reports were released, the yellow metal broke through the level of $2,000 per troy ounce. On Tuesday evening, April 4, gold prices jumped from $1,990 to $2,020 within 20 minutes. Later, the precious metal stabilized at around $2,010, reaching the highest level since March 2022. On Wednesday, April 5, gold slightly appreciated, rising to $2,040 per troy ounce.

According to experts' estimates, the precious metal added 2% amid a weaker greenback. As a result, the US dollar index, which measures the performance of the dollar against a basket of six currencies, fell by 0.55% to 101.58. However, despite a decline in the dollar and a rise in the precious metal, Commerzbank economists believe that gold may enter a correction and lose value. This is facilitated by a recent increase in oil prices, which worries market participants and increases the risk of another inflationary spiral.

Currently, the value of gold is being formed by "fears of the dollar as economic factors do not provide substantial support for the US currency," David Lennox, an analyst at Fat Prophets, said. In addition, demand for the yellow metal as a safe-haven asset increased amid the recent banking crisis and geopolitical tensions.

Economists at Swiss investment bank UBS assume that gold will gain ground in the near future, proving its traditional "safe-haven" status in the current uncertain environment. Amid recent turmoil in the financial market, spot gold prices surpassed the $2,000 mark, reaching a 12-month high. The yellow metal gained momentum due to falling yields in the US, a weaker dollar, and increased risk appetite, experts estimated.

According to UBS forecasts, in the current situation, gold will reach the target mark of $2,100 per troy ounce in 2023. Previously, bank analysts expected the metal to achieve this height by the end of March 2024. However, things have changed, and the precious metal is now actively gaining value. This can be attributed to the global banking crisis. Against this background, gold prices soared to an all-time high, rising above $2,000 per troy ounce. A subsequent minor correction did not change investors' views. Market participants remained bullish on the precious metal.

Another factor contributing to higher gold prices is increased demand from central banks seeking to diversify their investments. Notably, gold is a great choice for investors to hedge against potential financial risks amid possible monetary policy easing. Market players are currently pricing in such a scenario.

Many analysts believe that by the end of this year, the FOMC may move to lower interest rates. However, this step is not favorable to gold. A perfect driving force for gold would be a situation where the Fed and the ECB begin to cut rates earlier than anticipated, while inflation targets are not met. In this case, demand for gold as a safe-haven asset will increase sharply. However, there is an alternative scenario. It suggests that the precious metal will trim some of its early gains if higher oil prices raise concerns about another inflationary spiral and further interest rate hikes.

Among recent forecasts, there is an almost fantastic one. Some economists expect gold prices to reach $3,000 per troy ounce. They believe it is a matter of time as the financial system has faced serious shocks. Against this background, interest in safe-haven assets is growing, primarily in gold. After the metal overcomes the barrier of $2,000 per troy ounce, it will probably head toward a new high. This scenario is possible in the long run.

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Hot forecast for GBP/USD on 10/04/2023

There is nothing surprising about the fact that the market stood still on Friday despite the release of the US Department of Labor report, as both Europe and North America were observing Good Friday. However, the contents of the report were quite interesting. It was not about the unemployment rate, which remained unchanged as expected, but about the number of new non-farm jobs created, which was only 236,000. It was expected to be 250,000, while in the previous month 326,000 new jobs were created. In other words, the US labor market is clearly losing momentum, which of course increases the chances of a gradual easing of the monetary policy of the Federal Reserve. And it will naturally put pressure on the dollar. The only thing is to wait for the market's reaction after the opening of the US trading session, since Europe is still observing a holiday.

Number of new non-farm jobs created (United States):

The GBPUSD pair is in the stage of a pullback from the resistance level of 1.2500. As a result, the pound has lost about 0.8%, which is approximately 110 pips. Despite the ongoing pullback, the uptrend persists, as shown by the recent update of the local high of the medium-term.

On the four-hour chart, the RSI downwardly crossed the 50 middle line, during the pullback. In the intraday period, the signal points to the growth in the volume of short positions.

The Alligator's MAs are intertwined in the 4-hour time frame, signaling a slowing bull cycle. In the daily chart, the Alligator's MA's are still heading upward, reflecting a bullish cycle.

Outlook

We can assume that the pullback serves as a time of regrouping trading forces, during which a new wave of growth is possible. However, in order to make this a reality, a number of technical conditions must be met. First and foremost, the current pullback should end. The 1.2380/1.2400 area may serve as a support. A subsequent signal in favor of growth is when the price trades within the level of 1.2500, and as a result, the volume of long positions may increase.

As for the bearish scenario, traders consider it as a full-size correction, where the current pullback will remain towards the level of 1.2300.

The complex indicator analysis unveiled that in the intraday and short-term periods, technical indicators are pointing to the pullback. Meanwhile, in the medium-term periods, the indicators are reflecting an upward cycle.
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EUR/USD. The inflation report has bumped the dollar. Welcome to the 1.10th figure?

The EUR/USD pair approached the limits of the 10th figure, impulsively rising to 1.0990. The greenback fell across the market, reacting to the US inflation report, and the dollar index updated its weekly low. However, despite the upward momentum, bulls have not yet been able to test the 10th figure, let alone consolidate above the 1.1000 mark. The fact is that the inflation report is somewhat contradictory: while the Consumer Price Index continues to fall, the core index showed an upward dynamic. Therefore, the 1.1000 level holds steady, although the positions of the dollar bulls have noticeably shaken.

In the language of dry numbers:

The CPI fell quite sharply in March - by 1% compared to the February value. With a forecasted decline to 5.6% (according to other estimates - to 5.2%), the indicator came out at 5.0% in annual terms (in February, the index was at 6.0% y/y). This is the weakest growth rate since May 2021. In monthly terms, the index was also in the "red", reaching 0.1% (with a forecasted growth of 0.3%).

At the same time, the core CPI, excluding food and energy prices, came out at the forecasted level: in annual terms, the indicator rose to 5.6%. Notably, for the last 5 months, the core index consistently declined from 6.6% (in September 2022) to 5.5% (in February 2023). For the first time in the last six months, the growth rate of the core CPI accelerated.

The report indicates that energy prices in March fell by 6.4% after February's growth of 5.2% (in particular, gasoline prices dropped by 17.4%). Food prices in March rose by 8.5% after an increase of 9.5% in February. Used cars became cheaper by 11.6% (in February, a decline of 13.6% was recorded). Overall, most price categories showed easing price pressure - even rent. This segment is important because high rental prices have prevented underlying inflationary pressure from easing. However, according to some experts' estimates, in the mid-term (in the coming months), a further decline in rental inflation can be expected.

Market reaction

Markets reacted quite significantly to the sharp drop in inflation. The US dollar index fell within a few hours from 101.85 to the current low of 101.16. If the current rates persist, the index will test the hundredth figure – for the first time since early February. Treasury yields also fell: in particular, the yield on 10-year government bonds has currently dropped by 5 basis points (i.e., to 3.378%), while the yield on 2-year notes has fallen by 7.9 basis points, to 3.945%.

On the other hand, gold is showing an uptrend: June gold contracts on the New York Comex exchange have impulsively risen by almost 1% to $2,037 per troy ounce.

The dollar is also getting weaker amid growing hawkish expectations. According to data from the CME FedWatch Tool, the probability of a 25 basis point rate hike in May is currently over 70% (72.2%). On Tuesday, the chances of this scenario being realized were estimated at 60% (and accordingly, the probability of maintaining the status quo was 40%).

Conclusions

Despite the growth of hawkish expectations, the dollar remains under significant pressure, even in the EUR/USD pair. In my opinion, this is due to the assumption that the anticipated 25-point rate hike at the May meeting will be the last in the current cycle of monetary tightening. The recent "banking crisis" did not go unnoticed – including for the Federal Reserve, which significantly softened its position after the March shocks in the banking sector. It is unclear how these events will affect lending and, consequently, economic activity in the United States in the mid- and long-term. Therefore, in addition to the expected completion of the current tightening cycle, the Fed also has the option to lower rates in the second half of this year. Whether the Fed will use this option or not is an open and debatable question, but the mere fact of such a discussion will put pressure on the greenback. By the way, according to Fed Chairman Jerome Powell, such a scenario "is not a base case" (meaning it is not completely ruled out). At the same time, the European Central Bank shows a more hawkish stance, allowing, in particular, a 50-point rate hike in May.

Thus, the fundamental background for the pair continues to favor the growth of EUR/USD. The report weakened the dollar across the market and triggered a bullish momentum for the pair, and so bulls approached the limits of the 10th-figure closely. A slight "blemish" in the report, in the form of a rise in core CPI, did not allow traders to impulsively overcome the support level of 1.1000, but the bullish sentiment prevails.

The technical picture indicates that on the daily chart, the pair is between the middle and upper lines of the Bollinger Bands indicator, as well as above all the lines of the Ichimoku indicator (including above the Kumo cloud). This combination suggests that we go for long positions. The resistance level (the target of the bullish movement) is located at 1.1030 – this is the upper line of the Bollinger Bands indicator on the same chart.
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EUR/USD. "Red hue" of US inflation, dovish rhetoric from Williams, and the high of the year

On Thursday, the EUR/USD pair overcame the resistance level of 1.1030, which corresponds to the upper line of the Bollinger Bands indicator on the daily chart. The price has updated the annual high (1.1034), which was set in early February. The pair is moving towards the 1.11th figure as a result of the previous momentum, when the dollar fell across the market on Wednesday, reacting to the Consumer Price Index. Another inflation report was published in the US, which provided more support to the bulls. This is the Producer Price Index, which came out in the "red", reflecting the slowdown of US inflation.

The "red hue" of the PPI

So, the PPI disappointed the dollar bulls again. The index came out at 2.7% in annual terms, versus an estimate of a 3.0% decline. This is the weakest growth rate since January 2021. The indicator has been consistently declining for nine straight months. The core PPI, excluding food and energy prices, also fell significantly, reaching 3.4% (the weakest growth rate since March 2021). This component of the report has been declining since April last year.

It is noteworthy that, following the two inflation reports, the probability of a rate hike at the May meeting has only increased, despite the significant drop in the CPI and PPI. According to data from the CME Group FedWatch Tool, there's a 66% chance of a quarter point rate hike in May. This is because core inflation has accelerated. The core CPI, excluding food and energy prices, rose to 5.6% in annual terms. Meanwhile, the core index had been consistently declining for the last five months. This fact has led to the assumption that the Federal Reserve will be forced to raise the rate once again, possibly at the next meeting. As a reminder, the Fed's updated median forecast also assumes one more rate hike in 2023.

But all these hawkish circumstances, as they say, light up but do not fuel the dollar bulls. Despite the growth of hawkish expectations, the dollar continues to plunge across the market.

Is the Fed ready to take a step back?

In my opinion, this situation is related to the growing dovish expectations in the long term. Rumors that the Fed will lower the rate closer to the end of the current year are being circulated more and more recently. And after the recent statement by the New York Fed Chief John Williams (who has a permanent voting right in the Committee and is considered one of the most influential Fed officials), these rumors have gained practical significance.

In an interview with Reuters, Williams said that if inflation decreases, then "the Federal Reserve will have to lower rates." At the same time, he acknowledged that the central bank is likely to raise the rate again in May, as the Bank "needs to see a decrease in core inflation." However, the market focused its attention on the dovish aspects of his speech. In fact, Williams admitted the realization of such a scenario within the current year.

I would like to remind you that after the March meeting, Fed Chairman Jerome Powell also did not deny such a development of events. He diplomatically noted that this scenario "is not the base case."

Conclusions

The US dollar index continues to plunge, reacting to the decline in inflation indicators. Following the CPI, the PPI also came out in the red. Prior to this, the core PCE index also demonstrated a downtrend.

Inflation in the US is slowing down, and this is putting pressure on the greenback, even despite a slight acceleration in the core CPI index. Overall, in my opinion, the market has come to several conclusions: 1) in May, the Fed will likely go for another quarter point rate hike ; 2) this will be the last in this cycle of monetary tightening; 3) if the current pace of declining inflation indicators persists, the Fed will, in a few months, update the discussion on lowering the rate (Williams brought this up the other day, admitting the realization of a dovish scenario).

All these conclusions are on the side of the EUR/USD bulls.

The technical picture for the pair shows similar signals. On all higher charts (from H4 and above), the pair is either at the top or between the middle and top lines of the Bollinger Bands indicator. In addition, on the daily chart, the Ichimoku indicator has formed one of its strongest bullish signals - the "Parade of Lines". Therefore, it would be wise to use any corrective pullbacks to open long positions – with the first, and for now, the main price target of 1.1100.
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Euro locks in profit

When American exceptionalism turns into doom, the US dollar has nothing left to do but flee the battlefield. In Forex, there is a growing opinion that only the US will face a recession in 2023, while the eurozone will manage to avoid an economic downturn, and China will be vigorously recovering. This is in stark contrast to last year's events when, due to the armed conflict in Ukraine and the energy crisis, the currency bloc was on the verge of collapse, and EURUSD fell below parity for the first time in 20 years. Today, the market has different realities.

The release of US retail sales data only heightened investors' concerns about a significant slowdown in GDP. The indicator shrank for the second consecutive time, significantly stronger, at 1% MoM, than Bloomberg experts estimated. If consumer spending collapses following the crisis in the real estate and banking sectors, a recession will become inevitable. The Federal Reserve will have to make a dovish pivot in 2023, no matter what the central bank says otherwise. This will weaken the US dollar.

Dynamics of retail sales in the US

Markets are currently set for a 25 basis point increase in the federal funds rate in May, followed by a 75 basis point decrease in the second half of the year. Such a balance of power became possible after consumer prices slowed from 6% to 5% and the first slump in producer prices in two years on a monthly basis. US inflation is clearly slowing down, allowing investors to argue that the Fed has done its job and the monetary tightening cycle is nearing its end.

In Europe, the picture is different. There, European Central Bank officials are very aggressive amid record core inflation levels. It needs to be broken, and the short-term market predicts a further 75 basis point increase in the deposit rate, to 3.75%. At the same time, derivatives believe that at the next Governing Council meeting in May, the cost of borrowing will increase by 31 basis points. So the chances of +50 basis points still remain, which contributes to the rise in EURUSD quotes. In terms of the interest rate swap market, the euro is still undervalued compared to the USD.

Dynamics of EURUSD and interest rate swap differentials

In my opinion, the decline in the main currency pair in response to the disappointing US retail sales data is the result of speculators taking profits on long positions after a sharp EURUSD rally throughout the week leading up to April 14. When everyone is buying, there is an excellent opportunity to sell, so there is no need to be surprised by the seemingly unexpected strengthening of the US dollar. It's just the peculiarities of trading.

Technically, on the daily chart, EURUSD bounced off the upper limit of the fair value range at 1.0675-1.0975. No asset can grow indefinitely, and the correction seems like a necessary breather. At the same time, the uptrend persists, and a bounce off support levels at 1.097 and 1.09 should be used to establish long positions.
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Pension funds and hedge funds opt for gold

Despite hopes for lower inflation, the world's pension funds are still not taking risks. They are increasing their interest in gold, expanding their positions. According to the latest risk management report by Ortec Finance, published on Thursday, the company's analysts stated that they are 90% confident in a decline in inflation. Worldwide, more than half of the managers of government pension funds with a total of over $3 trillion in assets under management assume that inflation will be 3.3% or even lower this year. This assumption is already much lower than last year's survey, which predicted inflation at around 6.4%. The survey also showed that only 10% of global asset managers believe inflation will exceed 6%.

A week after the U.S. Department of Labor published data on the Consumer Price Index, which grew less than expected over the last 12 months to 5%, the survey results appeared. However, despite the optimism of fund managers that inflation will continue to decline, they are still not taking risks, increasing their positions in gold and other commodities.

According to the study, about 70% of the surveyed fund managers said their plans include increasing their participation in commodities. Specifically, 40% decided to increase their investments in gold; 42% said they increased their bond holdings.

Analysts believe that hedge funds' interest in gold should continue to support the precious metal and push prices to historical highs. Nevertheless, analysts noted that their bullish positions in gold are currently low compared to last year.

According to the latest data from the Commodity Futures Trading Commission, asset managers have long positions in gold of 104,000 contracts, about 27% of the peak in 2022 when prices exceeded $2,000 an ounce. Also, holdings in gold-backed exchange-traded products show there are fewer investors compared to the previous period. In March, gold-backed ETFs received a net inflow for the first time in 10 months.

Now, the world's largest gold ETF, SPDR Gold Shares (NYSE: GLD), contains 926.57 tons of gold. This is less than in March 2022, when it contained 1,100 tons.
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Hot forecast for GBP/USD on 26/04/2023

It was assumed that new home sales in the United States would decrease by -0.5%, but suddenly, they jumped as much as 9.6%. So, investors who were initially prepared to sell the dollar further had instead begun to open longs on the dollar. The results of the housing prices report didn't even stop them, the growth rate of which slowed from 5.3% to 4.0%. Especially since estimates were a slowdown to 3.9%. And so, US macro data turned out to be better than forecasts. And the sales data was simply delightful.

New home sales (United States):

And today, the dollar may continue rising. This time, the reason should be orders for durable goods. According to forecasts, they can grow by 0.6%. So, the dollar should continue to grow. But only if the actual data matches the forecasts. And not like yesterday, when they turned out to be completely opposite.

Orders for durable goods (United States):

The GBP/USD pair sharply switched to a decline, losing about 0.8% of its value. However, this movement did not lead to anything crucial. The quote still moves within the sideways range of 1.2350/1.2550.

During the downward cycle, on the four-hour chart, the RSI technical indicator crossed the midline 50 downwards. The RSI points to an increase in the volume of short positions for the British pound.

On the four-hour chart, the Alligator's MAs have multiple intersections with each other, which corresponds to a signal of stagnation. In the mid-term, it is directed upwards, which coincides with the trend direction.

Outlook

Traders can work within a flat because the range width is sufficient for speculative activity, as evidenced by the recent price jump. The main strategy is still focused on the outgoing momentum from the flat, which, in a technical perspective, may indicate the succeeding price movement.

In terms of the complex indicator analysis, we see that in the short-term and intraday periods, technical indicators are pointing towards different directions due to the stagnation. In this case, it points to a bearish sentiment due to the downward momentum. In the mid-term period, the indicators are reflecting an upward cycle.
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Slowing global inflation called into question. RBA raises rates, possible revision of RBNZ rate forecast. Review of USD, NZD, AUD

The US Manufacturing ISM report showed an increase in positivity, with the index rising from 46.3 to 47.1. However, at the same time as the sector's recovery, we should take note that a number of sub-indices favor higher inflation – prices jumped from 49.2 to 53.2, employment increased by 3.3 points, to 50.2, and new orders are still in contraction territory.

After a pause, which optimists declared the end of the banking crisis, another bank went bankrupt - First Republic Bank. After the purchase of FRB, JPMorgan shares rose more than 2%, as JPMorgan acquired $30 billion in assets, while losses were shared with FDIC, i.e., the state. The rescue of another bank has led to the fact that FDIC has virtually exhausted all reserves, a number of small regional banks are in line for rescue, and as the crisis escalates, it will be increasingly difficult.

US Treasury Secretary Yellen warned Congress that, by optimistic estimates, the government will not be able to fulfill its financial obligations by June 1 if Congress does not raise the debt ceiling by then. Republicans have already prepared a bill providing for a $1.5 trillion increase in the debt ceiling, with a simultaneous reduction in spending of more than $4.5 trillion.

Markets will trade with low volatility until the outcome of the Federal Reserve meeting is announced. The main intrigue lies in whether the Fed will maintain the prospect of another rate hike, as there are clear signs that inflation is ready to resume growth after a pause. Q1 PCE data clearly confirms this.

Against this backdrop, oil prices have fallen again, as have commodity currencies, as the trend towards a slowdown in global inflation is called into question.

NZDUSD

The focus is on the Q1 labor market report overnight on Wednesday, with expectations moderately positive. In February, the Reserve Bank of New Zealand forecasted an increase in the unemployment rate from 3.5% in Q1 to 4.8% by the end of the year, but at the same time, a sharp increase in wages. The RBNZ expects annual growth from 4.3% at the end of 2022 to 4.9% in Q2, which will strengthen inflation expectations.

There is also another unexpected news - from June 1, the RBNZ plans to ease lending conditions. Such a decision may require a higher rate to curb inflation growth, but so far, the market has not reacted, expectations for the RBNZ's May meeting remain stable, the bank will raise the rate by 0.25%, this outcome is already priced in and will not have a significant impact on the Kiwi rate.

The net long position in NZD decreased by $43 million for the reporting week to -$200 million, with a slight bearish bias. The calculated price goes down, signaling a strengthening of bearish sentiment.

NZDUSD did not reach the support level of 0.6079, but the upward retracement is unlikely to be strong. The nearest resistance is at 0.6240/50, where we expect the growth to end and the downward reversal to follow. The next support is the mid-channel area, coinciding with the local low of 0.6105, followed by 0.6020.

AUDUSD

The Reserve Bank of Australia surprised the markets considerably, not only did it raise the rate by a quarter point to 3.85%, but it also significantly changed the tone of the accompanying statement compared to that of April's. The statement reiterates the thesis that "some further tightening of monetary policy may be required," but emphasizes that the RBA wants to achieve this in "a reasonable timeframe," this thesis is repeated twice, unlike the previous forecast of inflation normalization in 2025. It paid more attention to wage growth.

The results of the RBA meeting are undoubtedly a bullish factor for the Aussie. Futures reacted with an increase in the probability of another 25 bps hike, and the Australian dollar became the leader in daily growth, pulling the NZD along with it.

Apparently, the RBA sees a threat of higher inflation or at least a more prolonged one, and the threat is real.

The net short position in AUD decreased by $234 million to -$2.615 billion, with bearish positioning. The calculated price lost momentum and shows signs of turning south, the forecast is neutral.

AUDUSD continues to trade in a horizontal channel, the decline expected a week ago turned out to be slightly deeper, but the subsequent bullish momentum on the background of the unexpected RBA decision quickly lost momentum. We suppose that till the end of the Fed meeting, trading will be in a narrow range, and further direction will be chosen based on the presence or absence of hawkish wording in the final statement of the Fed. By the end of the week, I expect the pair to fall to the border of the range at 0.6565.
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Markets cautious ahead of the US inflation report. Overview of USD, EUR, GBP

Markets were cautious on Wednesday morning as they await the results of talks between Biden and House Speaker McCarthy on the US debt ceiling. Both sides are not willing to consider short-term solutions that would allow raising the borrowing ceiling and are not ready for compromises. A quick solution should not be expected, and perhaps there will be a threat of a technical default while a solution is being worked out.

The US labor market report for April contained rather contradictory data. Overall, the data was stronger than forecasts - 253,000 new jobs were created (forecasted 179,000), however, the data for the past 2 months was revised downward by 185,000, which offset all the positive news. The average hourly income was 0.5% against the forecast of 0.3%, which completely nullifies expectations of a rapid decline in inflation.

The US NFIB Small Business Optimism Index fell to its lowest level since 2013, at 89 points.

The key event of Wednesday is the US Consumer Price Index. Forecasts do not imply changes - monthly inflation growth rates are expected at 0.4%, annual rates at 6%, and any deviation from the forecasts may cause a strong market reaction.

EUR/USD

The European Central Bank raised its rate by 25 basis points, which was lower than the expected 50 basis points, and decided to stop the reinvestment of the APP program from July 1, which matched the forecasts.

Inflation estimates have not changed overall, and the reasons why the ECB refrained from raising the rate by 50 basis points can be sought in recent events in the banking sector. Perhaps banks perceive the threat of a large-scale banking crisis more seriously than it seemed; the latest survey showed that lending rates have fallen sharply, and lending conditions have tightened.

Comments on the ECB's unexpected decision were numerous and often contradictory. In general, their tone boils down to the statement that "the battle with inflation is far from being won," and the slowdown in rate hikes will allow keeping rates high on a longer trajectory. Indeed, a decline in overall inflation due to falling energy prices is evident, but core inflation has a completely different trajectory.

ECB President Lagarde mentioned several times at the press conference that the tightening of credit conditions has begun to spread to the real economy. Overall, Lagarde tried to appear hawkish, but markets reacted neutrally to the ECB meeting's outcome.

The net long position in the euro increased by 0.6 billion during the reporting week, reaching 23.8 billion, with speculative positioning remaining confidently bullish. The calculated price, however, has decreased slightly, suggesting the development of a corrective bearish movement.

A week earlier, we assumed that EUR/USD would begin to decline towards support at 1.0910. There is no reason to abandon this scenario yet; support has not been reached, but the chances of a further decline remain high. In case of a confident breakthrough at 1.0910, we assume further movement towards support at 1.0875.

GBP/USD

The Bank of England will hold another monetary policy meeting on Thursday. Market expectations suggest an interest rate hike of 25 basis points to 4.5% and a cumulative increase of 50-75 basis points by the third quarter. Forecasts for inflation, the labor market, and GDP will also be published.

The UK is experiencing more robust inflationary pressure than the US or the Eurozone, with overall inflation above 10% YoY and core inflation consistently above 6% without signs of slowing down.

According to the CFTC report, the net long position in the pound decreased during the reporting week from 0.5 billion to 0.1 billion, with positioning being neutral. The calculated price, however, continues to stay above the long-term average, so chances for continued growth remain. Overall, the pound looks stronger than the euro at present.

The pound updated its local high, getting to 1.2668 the medium-term target of 1.2750 has not been reached, but it is still valid. Support at 1.2575, if GBP/USD stays above this level, restoring growth and updating the high is possible. In case the corrective decline develops, a decline to the support area 1.2430/50 is possible, where there will be an attempt to create a basis for renewal of growth. There are no grounds for stronger decrease yet.
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Hot forecast for EURUSD on 12/05/2023

Yesterday, everything revolved exclusively around the Bank of England meeting. And its results were the reason why the euro got significantly weaker. More precisely, the pound was falling, and through the dollar index, it pulled other currencies with it. And it's not so much about the BoE hiking interest rates by 25 bps, but rather about the following comments. Despite another increase in inflation, the British central bank signaled that it may pause rate hikes. It turns out that the BoE is not so much engaged in the fight against rising consumer prices, but rather follows in the wake of the larger central banks. Even though this is not in line with the emerging economic situation in the UK itself. Which has spooked investors.

So the euro's fall was not only impressive, but it also had nothing to do with the economic dynamics directly in the eurozone itself. Moreover, the single currency has gone beyond the range in which it has been for almost a whole month. Based on this, we can assume that today we will see a kind of rebound, and a return to the usual limits from 1.0950 to 1.1050.

During an intensive downward movement, the EUR/USD pair reached the 1.0900 level, which points to a change in the volume of short positions. As a result, a slowdown-pullback occurred relative to this level.

On the four-hour chart, the RSI indicator is moving in the lower area of 30/50, which corresponds to the downward cycle, as well as the touch of the 1.0900 level.

On the daily chart, two out of three of the Alligator's MAs intertwined, which could be an initial sign of a slowdown in the medium-term trend. On the 4-hour chart, it reflects a bear cycle, which corresponds to the current movement.

Outlook

In this situation, traders are considering an option of forming a pullback, which will eventually return the euro to its previous price ranges. However, if the pullback turns out to be false and the quote remains below the 1.0900 level in the daily period, then in this case, a technical signal about forming a full-scale correction through an uptrend may emerge.

The comprehensive indicator analysis in the short-term points to a pullback. In the intraday period, the bearish sentiment is still in force.
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Hot forecast for GBP/USD on 15/05/2023

The first estimate of the UK's GDP for the first quarter was supposed to show the danger of an approaching recession, as the economic growth rate could slow from 0.6% to 0.3%. But in fact, it dropped to 0.2%. So, the recession is getting closer. And naturally, this had a negative impact on the pound. Another thing is that a noticeable reaction only started at the opening of the US trading session. And the fall of the pound, and along with it the euro, largely coincided with rumors about a new package of sanctions against Russia.

Change in GDP (United Kingdom):

The discussion is about the possibility of introducing a complete ban on pipeline gas supplies. That is, a ban on gas supplies to Europe. It seems like the West has already abandoned energy supplies from Russia, when in fact, supplies are still being transported. And they are carried out precisely through pipelines. If such a ban is introduced, Europe will face an even greater energy deficit. It may well cope with this problem, as happened last year, but the cost of energy will become even higher, which will have an even more serious impact on European industry. This means that Europe will be the main victim. This is exactly what caused the fall of European currencies. Today's eurozone industrial production report, the growth rate of which is expected to slow from 2.0% to 1.1%, could confirm these fears. So, following the euro, the pound may fall even further.

The GBP/USD pair has lost about 200 points in value over the past week. This momentum has led to a full-scale correction, which is shown by the medium-term uptrend.

On the four-hour chart, the RSI indicator has fallen into the oversold zone during a sharp price change, which indicates an abundance of short positions in the English currency.

On the same time frame, the Alligator's MAs are headed downwards, which corresponds to the direction of the correctional movement.

Outlook

In this situation, a technical signal shows that the pair is oversold in the intraday period. This may indicate a slowdown and as a result, the end of the correction. However, we are dealing with a momentum and trend, in which speculators may simply ignore that technical signal. In this case, keeping the price below the value of 1.2440 may push the pair to fall towards the 1.2350 level.

The complex indicator analysis points to a downward cycle in the short-term and intraday periods. In the medium-term, the indicator is still providing a bullish signal.
Regards, ForexMart PR Manager
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