InvestMacro

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The major currency pair is starting the third week of May in the same position: it is obviously stuck inside a sideways channel. Fundamental background supports this movement, although here one can find something to base upon.

The US Federal Reserve Chairman Jerome Powell spoke earlier this morning and said that the country’s GDP might lose up to 20% in the second quarter of 2020, while the Unemployment Rate is expected to reach 25%. At the same time, he believes that such huge negative numbers won’t result in a protracted crisis, because the country’s economy gets a lot of support from all angles.

The US government is planning to support households and the economy for a long time, from 3 to 6 months according to Powell, to help them overcome the consequences of the Covid-19 pandemic. Actually, this support might as well continue until the end of the year.

The US economy is expected to recover slowly – no one says anything about upsurge because the country’s population will need time to regain its feet. For the American Dollar, this news is moderately negative.

In the H4 chart, after completing the correction at 1.0836, EUR/USD is forming another descending wave towards 1.0777. Possibly, the pair may break this level and then continue forming the third descending wave to reach 1.0700. Later, the market may correct to return to 1.0777 for a test from below and then resume trading inside the downtrend with the target at 1.0600. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0. Considering that the market may yet continue downtrend, the line also expected to continue moving downwards.

As we can see in the H1 chart, the pair has completed the descending impulse at 1.0803 along with the correction towards 1.0827. Possibly, today the price may fall to return to 1.0803 and break it to the downside. After that, the instrument may form a new descending structure with the target at 1.0777. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving to break 80 and may continue falling to reach 50. Later, the line may break 50 as well, thus boosting the price chart decline.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

After breaking the consolidation range to the downside and reaching 1.0774, EURUSD is forming a new consolidation range around 1.0800. If later the price breaks this range to the upside at 1.0816, the market may choose an alternative scenario and start a new correction towards 1.0840; if to the downside – resume falling to break 1.0774 and then continue trading downwards with the target at 1.0733.

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD has finished the descending wave at 1.2165; right now, it is trying to correct towards 1.2249. After that, the instrument may resume trading inside the downtrend with the target at 1.2144.

USDRUB, “US Dollar vs Russian Ruble”

USDRUB has almost completed the correctional “Flag” at 74.47. Possibly, today the pair may fall to break 73.40 and then continue trading inside the downtrend with the short-term target at 72.22.

USDJPY, “US Dollar vs Japanese Yen”

USDJPY is expected to correct towards 107.50. After that, the instrument may fall to break 107.10 and then form a new descending structure with the target at 106.60.

USDCHF, “US Dollar vs Swiss Franc”

USDCHF is consolidating around 0.9733. Today, the pair may grow to break 0.9744 and then continue trading upwards with the target at 0.9800.

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD is consolidating around 0.6444. According to the main scenario, the price may start another growth to reach 0.6488 and then resume trading downwards with the short-term target at 0.6363.

BRENT

Brent is moving upwards; it has already broken 30.70 to the upside. Possibly, the pair may continue growing to break 32.60 and then start another growth with the target at 36.10.

XAUUSD, “Gold vs US Dollar”

Gold has finished the ascending wave at 1734.50; right now, it is consolidating below this level. If later the price breaks this range to the downside at 1727.00, the market may start a new correction towards 1713.50; if to the upside at 1735.00 – resume growing with the short-term target at 1745.00.

BTCUSD, “Bitcoin vs US Dollar”

BTCUSD has completed the ascending wave at 9900.00. Possibly, today the pair may start another correction to reach 9110.00 and then resume trading upwards with the target at 10300.00.

S&P 500

The Index is consolidating around 2826.2. The main scenario implies that the price fall to break 2790.3 and then continue trading downwards with the short-term target at 2707.7.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

BTCUSD, “Bitcoin vs US Dollar”

As we can see in the daily chart, after reaching 61.8% fibo and then forming a descending correctional impulse to test the support at 8880.00, BTCUSD has started a new growth, which may be considered as an attempt to test the high. Later, the asset is expected to resume falling and forming the correction, which may be followed another ascending structure towards 76.0% fibo at 11450.00.

The H4 chart show more detailed structure of the current correction after the divergence. We can see that the first descending impulse has already reached 23.6% fibo. If the pair fails to break the local high at 10072.20, the next descending wave may reach 38.2%, 50.0%, and 61.8% fibo at 7727.00, 7002.00, and 6278.00 respectively.

ETHUSD, “Ethereum vs. US Dollar”

As we can see in the daily chart, after breaking 61.8% fibo and attempting to reach 76.0% fibo at 241.40, ETHUSD is moving downwards. The first descending wave has failed to test the support at 165.90 but the next one may succeed. After completing the pullback, the asset may form one more ascending structure to break the high at 227.46 and then continue growing towards 76.0% fibo at 241.40 and then the fractal high at 288.98.

In the H4 chart, the divergence made the pair reverse and reach 23.6% fibo but not 38.2% fibo at 174.84 yet. The latter level may be reached only after the price forms a rising impulse. After that, the asset may continue falling towards 50.0% and 61.8% fibo at 158.62 and 142.42 respectively.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.08150
• Open: 1.08034
• % chg. over the last day: -0.12
• Day’s range: 1.07933 – 1.08148
• 52 wk range: 1.0777 – 1.1494

There is an ambiguous technical pattern on the EUR/USD currency pair. A trading instrument is consolidating. Financial market participants expect additional drivers. At the moment, the local support and resistance levels are 1.0790 and 1.0825, respectively. We expect the publication of important statistics. Positions should be opened from key levels.

The Economic News Feed for 15.05.2020

• – German GDP data at 11:00 (GMT+3:00);
• – Report on retail sales in the US at 15:30 (GMT+3:00);
• – JOLTS job openings at 17:00 (GMT+3:00).

Indicators do not give accurate signals: the price is testing 50 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 1.0790, 1.0770, 1.0740
• Resistance levels: 1.0825, 1.0875, 1.0895

If the price fixes below 1.0770, a further fall in the EUR/USD currency pair is expected. The movement is tending to 1.0740-1.0720.

An alternative could be the growth of EUR/USD quotes to 1.0860-1.0880.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.22220
• Open: 1.22215
• % chg. over the last day: -0.02
• Day’s range: 1.21874 – 1.22385
• 52 wk range: 1.1466 – 1.3516

The GBP/USD currency pair has become stable. The British pound is currently consolidating. There is no defined trend. The key support and resistance levels are 1.2180 and 1.2250, respectively. The British pound is still under pressure since the Bank of England does not exclude the possibility of reducing the base rate to a negative level. GBP/USD quotes have the potential for further decline. We recommend opening positions from key levels.

The news feed on the UK economy is calm.

Indicators do not give accurate signals: the price is testing 50 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates the bullish sentiment.

Trading recommendations

• Support levels: 1.2180, 1.2140, 1.2100
• Resistance levels: 1.2250, 1.2285, 1.2335

If the price fixes below 1.2180, a further drop in GBP/USD quotes is expected. The movement is tending to 1.2140-1.2120.

An alternative could be the growth of the GBP/USD currency pair to 1.2290-1.2330.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.40986
• Open: 1.40430
• % chg. over the last day: -0.36
• Day’s range: 1.40183 – 1.40595
• 52 wk range: 1.2949 – 1.4668

USD/CAD quotes have been declining. The trading instrument has updated local lows. The loonie is currently consolidating. The key range is 1.4015-1.4065. The USD/CAD currency pair has the potential for further decline. The Canadian dollar is supported by the recovery of “black gold” prices. Positions should be opened from key levels.

The publication of important economic releases from Canada is not planned.

Indicators do not give accurate signals: the price has crossed 100 MA.

The MACD histogram is in the negative zone and continues to decline, which gives a strong signal to sell USD/CAD.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations

• Support levels: 1.4015, 1.3970
• Resistance levels: 1.4065, 1.4115, 1.4140

If the price fixes below the support level of 1.4015, a further drop in USD/CAD quotes is expected. The movement is tending to 1.3980-1.3960.

An alternative could be the growth of the USD/CAD currency pair to 1.4100-1.4120.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev Open: 107.040
• Open: 107.250
• % chg. over the last day: +0.21
• Day’s range: 107.078 – 107.434
• 52 wk range: 101.19 – 112.41

There is an ambiguous technical pattern on the USD/JPY currency pair. The trading instrument is in a sideways trend. At the moment, the key support and resistance levels are 107.00 and 107.40, respectively. USD/JPY quotes are tending to decline. We expect important economic reports from the US. Positions should be opened from key levels.

The news feed on Japan’s economy is calm.

Indicators do not give accurate signals: the price has crossed 50 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 107.00, 106.75, 106.45
• Resistance levels: 107.40, 107.75

If the price fixes below the support level of 107.00, USD/JPY quotes are expected to fall. The movement is tending to 106.75-106.50.

An alternative could be the growth of the USD/JPY currency pair to 107.60-107.90.

by JustForex

By Admiral Markets

By Admiral Markets

By Steven E. Salterio, Queen’s University, Ontario

Predictions about the effects of the coronavirus pandemic on the world’s economy arrive almost daily. How can we make sense of them in the midst of this economic storm? After all, research shows that economic forecasts made during events such as SARS are often wildly inaccurate.

To calibrate current forecasts — such as the International Monetary Fund’s prediction of a 6.2 per cent decline in Gross Domestic Product for Canada — I’ve looked at the history of similar worldwide economic shocks, studied macroeconomics models and reviewed nearly 75 studies to better understand what might happen in a post-pandemic world.

The economic effects of 1918-20 flu

The influenza outbreak of 1918-20 killed at least 40 million people, or approximately two per cent of the world’s population. In Canada alone, at least 50,000 deaths were attributed to the flu, approaching the number of Canadian deaths in the First World War. Solid data about GDP did not exist for that era, so economic historians have to recreate economic measurements based on the data that was collected.

The most thorough study focuses on how the influenza pandemic 100 years ago affected Sweden. The Swedish study took advantage of the fact that the country kept very detailed data on causes of death, as well as having a history of accurate economic record-keeping dating back to the 1800s.

Sweden was a neutral country in the First World War, so unlike other Western nations, the war had limited impact on the country’s economy. The fatality rate from the flu in Sweden was comparable to most Western nations and its economy was similar to other developed countries.

The study of Sweden’s flu experience a century ago suggests there could be permanent negative long-term economic effects from the current pandemic. There was a decline in income from capital sources such as interest, dividends and rents of five per cent that lasted at least until 1929. This was a permanent decline not recovered once the flu pandemic passed.

Swedish poor never recovered

There was also an increase in absolute poverty for those Swedes at the bottom of the economic pyramid: enrolment in government-run “poorhouses” in higher flu-incidence regions jumped 11 per cent and did not decline over the next decade. There was some good news: while employment income was reduced during the crisis, it quickly rebounded to predicted normal levels.

A recent study attempts to measure the effects of the influenza on 1918-21 GDP. Harvard economist Robert Barro and his colleagues painstakingly put together a set of economic data that attempts to recreate what GDP in 42 countries would have been.

They have found that the flu was responsible for an additional six per cent decline in global GDP. The study concludes that the effects were reversed by 1921. This estimate of the flu’s historical GDP effects is strikingly similar to the IMF’s current prediction of six per cent reduction in GDP for Western economies as a result of the coronavirus pandemic.

Modelling economic effects of a pandemic

Beyond economic history, we can look at macroeconomic models of the global, regional or national economies that run scenarios about pandemic economic shocks.

One scenario by British economists and health science academics is particularly apt in light of COVID-19.

Their scenario models virus incidence and fatality rates close to the current best estimates and includes strong and early social distancing measures such as school closures and work-from-home arrangements that we see today in many countries fighting the pandemic.

Their model estimates a 21 per cent decline in U.K. GDP in the first full quarter of the pandemic, with a 4.45 per cent decline in GDP for first year. The model also suggests the time frame to economic recovery is about two years. The current IMF projection for the U.K. is a 6.5 per cent decline in annual GDP.

There is no doubt that COVID-19 is a major shock to the global economy. Across all the studies I reviewed, the conclusion of a significant decline in GDP in the order of 4.5 to six per cent with full recovery within two years seems to be well justified.

The economic history of the influenza pandemic 100 years ago suggests early easing of social distancing measures and the inability to develop an effective vaccine contributed to second and third flu waves. These waves might have greater effects on the modern service-based economy of Western nations than they did on the more agrarian economy of 100 years ago.

Economic history serves as a potential warning that the economy could get much worse if these measures are ignored.

It’s important to remember that GDP is a marker of a nation’s overall economic health. On an individual level, the effects may be more far-reaching and painful. There are financial and professional losses that may never be recovered.

The 1918-20 flu offers an important history lesson for the world’s current economic outlook: there may be significant declines in the returns to capital in the next decade, as well as relative increases in poverty for the neediest in our society.

About the Author:

Steven E. Salterio, Stephen JR Smith Chair of Accounting and Auditng, Professor of Business, Queen’s University, Ontario

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Andrew Urquhart, University of Reading

Bitcoin, the first and leading cryptocurrency in terms of trading volume and market capitalisation, went through its third “halving” on May 11 2020. This major adjustment to how the cryptocurrency operates has only happened twice before and happens every four years. But what does this actually mean and what impact will it have?

Q: how does bitcoin work?

Bitcoin is a digital currency that makes use of blockchain technology to store and record all transactions. First proposed in a white paper published online in 2008 by a mysterious person (or group of people) called Satoshi Nakamoto. The unique features of bitcoin compared to fiat currencies like dollars or pounds are that there is no central authority or bank. Each member of the network has equal power. This decentralised network is completely transparent and all transactions can be read on the blockchain. At the same time it offers privacy in terms of who owns the cryptocurrency.

Bitcoins are created (or mined) by so-called miners who contribute computing power to securing the network, as well as processing transactions on the network by solving complex mathematical puzzles through computational power. These miners are rewarded for their work processing the transactions on the blockchain with bitcoins. But to combat inflation, Nakamoto wrote into the code that the total number of bitcoins that will ever exist will be 21 million. Right now there are 18.38 million.

The first ever block recorded on the bitcoin blockchain was on January 3 2009 where Nakamoto received 50 bitcoins. In the white paper, Nakamoto specified that after every 210,000 blocks the reward for miners will half. So the first halving took place on November 28 2012 where the miner’s reward was reduced from 50 bitcoins to 25 bitcoins. The second halving was on July 9 2016 and the miner’s reward was reduced from 25 bitcoins to 12.5 bitcoins. And the third, most recent halving on May 11 2020 means bitcoin miners now receive 6.25 bitcoins.

Q: Why does bitcoin halve?

Nakamoto has never explained explicitly the reasons behind the halving, but many, such as Michael Dubrovsky, co-founder of cryptocurrency mining firm PoWx, have speculated that the system was designed to distribute coins more quickly at the beginning to incentive people to join the network and mine new blocks. Block rewards are programmed to halve at regular intervals because the value of each coin rewarded is deemed likely to increase as the network expanded. However, this may lead to users holding bitcoin as a speculative asset rather than using it as a medium of exchange.

Q: What impact does halving have on bitcoin?

The obvious impact is that the amount of newly mined bitcoins per day will fall from about 1,800 to 900 bitcoins and the daily revenue of miners will reduce by half. This decrease in the rate of bitcoin creation tightens supply and some argue will lead to a bullish market and an increase in the price of bitcoin.

Meanwhile, the reduction of revenue for miners may squeeze out miners who are least efficient and therefore the computing power connected to the Bitcoin network may fall significantly.

The previous two halvings led to the most dramatic bull runs in Bitcoin’s history, although initially there was a brief sell-off. Marcus Swanepoel, co-founder and CEO of Luno, a cryptocurrency wallet which lets you store and carry out bitcoin transactions, believes that bitcoin may achieve a growth of 270% between this and the fourth halving in 2024.

Q: How is coronavirus affecting things?

Although bitcoin has gained more than 20% since the beginning of the year, where this halving may differ from its predecessors is the volatile and uncertain economic environment that it has taken place in. The International Monetry Fund predicted a 3% shrinking of global growth in its April forecast and this is expected to fall further. In the UK, the Bank of England has projected a decrease of 30% in the country’s GDP during the first half of 2020.

Some argue that bitcoin’s scarcity makes it a potential hedge against fiat currencies that are vulnerable to devaluation in times of economic crisis. But others believe the halving won’t necessarily boost its price as people knew the halving was going to happen so it should be already priced into the market activity.

The only certainty is that the growth of new bitcoins has halved. It remains to be seen what impact this will have on the price and interest of this cryptocurrency.

About the Author:

Andrew Urquhart, Associate Professor of Finance, ICMA Centre, Henley Business School, University of Reading

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

EURUSD is trading at 1.0806; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 1.0835 and then resume moving downwards to reach 1.0645. Another signal in favor of further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may be canceled if the price breaks the cloud’s upside border and fixes above 1.0915. In this case, the pair may continue growing towards 1.0995. To confirm further decline, the asset must break the rising channel’s downside border and fix below 1.0765.

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD is trading at 1.2196; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 1.2445 and then resume moving downwards to reach 1.2095. Another signal in favor of further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 1.2335. In this case, the pair may continue growing towards 1.2405.

USDCHF, “US Dollar vs Swiss Franc”

USDCHF is trading at 0.9730; the instrument is moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s downside border at 0.9695 and then resume moving upwards to reach 0.9815. Another signal in favor of further uptrend will be a rebound from the rising channel’s downside border. However, the bullish scenario may no longer be valid if the price breaks the cloud’s downside border and fixes below 0.9655. In this case, the pair may continue falling towards 0.9545. To confirm further growth and completion of an Inverted Head & Shoulders reversal pattern, the asset must break 0.9745.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

As we can see in the H4 chart, the ascending tendency continues. By now, USDCAD has formed a Shooting Star pattern not far from the resistance level. However, the pair is not expected to reverse. Probably, the price may correct for a while and then resume growing towards 1.4141. Later, after testing 1.4141, the market may form a reversal pattern and rebound from the above-mentioned level.

AUDUSD, “Australian Dollar vs US Dollar”

As we can see in the H4 chart, the descending tendency continues. After breaking the channel’s downside border, AUDUSD continues falling. The downside target is the support level at 0.6377. Later, the pair may rebound from this level and resume trading upwards. In this case, the upside target may be at 0.6550.

USDCHF, “US Dollar vs Swiss Franc”

As we can see in the H4 chart, after finishing the descending impulse and forming several reversal patterns close to the support level at 0.9677, USDCHF has rebounded from it. At the moment, the price is moving upwards. The upside target is the resistance level at 0.9768. After reaching it, the market may rebound from this level again.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

by JustForex

The US dollar has strengthened again relative to a basket of currency majors. The US dollar index (#DX) closed in the negative zone (+0.34%). The US currency has been growing after a speech by Fed Chairman Jerome Powell. The official said that the interest rate is unlikely to be transferred to the negative zone. Powell also said that a pandemic would cause long-term damage to the economy, and the prospects for recovery remain uncertain.

UK published ambiguous GDP data yesterday. The Office for National Statistics reported that the country’s GDP fell by 2.0% (q/q) in the first quarter. At the same time, experts forecasted a 2.5% drop (q/q). Aussie came under pressure after the release of a weak report on the Australian labor market.

The “black gold” prices are rising. Currently, futures for the WTI crude oil are testing the $26.40 mark per barrel.

Market indicators

Yesterday, there was the bearish sentiment in the US stock market: #SPY (-1.77%), #DIA (-2.21%), #QQQ (-1.25%).

The 10-year US government bonds yield has fallen again. At the moment, the indicator is at the level of 0.61-0.62%.

• – Initial jobless claims in the US at 15:30 (GMT+03:00).

by JustForex