Thread: Daily Market Analysis from ForexMart

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Hot forecast for EUR/USD on July 22, 2022

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

Refinancing rate (Europe):

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

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

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

Expectations and prospects

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

We concretize the above into trading signals:

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

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

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

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

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

Details of statistical indicators:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Futures on the USD index fell 0.29% to 106.31.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Refinance rate (United States):

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

Change in GDP (United States):

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

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

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

Expectations and prospects

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

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

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

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Hot forecast for EUR/USD on 08/08/2022

The content of the report of the United States Department of Labor came as a complete surprise, and eventually led to a noticeable strengthening of the dollar. And the fact is that all the main indicators turned out to be much better than forecasts. Thus, the unemployment rate, instead of remaining unchanged, fell from 3.6% to 3.5%. Moreover, 528,000 new jobs were created outside of agriculture. Although, according to forecasts, the creation of 290,000 new jobs was expected. In fact, they were about twice as many. And do not forget that in order to maintain the stability of the labor market, a little more than 200,000 new jobs should be created outside of agriculture. And since they turned out to be more than twice as many, the unemployment rate will continue to decline. Which somewhat contradicts the idea that the US economy is sliding into recession.

Number of new non-agricultural jobs (United States):

Today the macroeconomic calendar is absolutely empty, and apparently, the market will consolidate around the values reached on Friday.

Despite everything, the EURUSD currency pair is moving within the 1.0150/1.0270 horizontal channel, consistently working out the set boundaries. Last Friday, the quote rebounded from the area of the upper border and rushed to the area of the lower one, where the volume of short positions decreased. A consistent cycle of fluctuations is essential in the market, which makes it possible for traders to work based on the natural basis of the past.

The technical instrument RSI H4, following the price rebound from the upper border of the flat, crossed the middle line 50 from top to bottom. This signal only indicates the bounce method, but not the end of the flat. In general terms, the indicator is still centered on the middle line.

The moving MA lines on the Alligator H4 have a lot of interlacing, this indicates a variable signal that corresponds to the flat stage.

Expectations and prospects

The flat stage is still relevant in the market, which is indicated by the current price rebound from the lower border. In this situation, the subsequent increase in the volume of long positions is expected after the price stays above the value of 1.0200. In this scenario, it is possible to consider movement towards 1.2150/1.2170.

The main strategy, as before, is the method of breaking through one of the control levels: 1.0300 - when considering the upward development of the market; 1.0100 - if market participants are oriented towards a hike towards the parity level.

It is worth noting that the signal must be confirmed in a four-hour period.

Complex indicator analysis has a variable signal in the short-term and intraday periods due to the current flat. At the moment, the indicators point to long positions on the euro, due to the price rebound from the lower border of the outset.

Analysis and trading tips for EUR/USD on August 9

Analysis of transactions in the EUR / USD pair

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

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

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

For long positions:

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

Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 1.0193, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0215 and 1.0248.

For short positions:

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

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0215, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0193 and 1.0161.

Analysis and trading tips for GBP/USD on August 9

Analysis of transactions in the GBP / USD pair

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

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

For long positions:

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

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

For short positions:

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

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