Yesterday was a holiday in the US in celebration of President's Day. Due to this, there was a stagnation in the currency market. Nevertheless, there was an important American event this weekend that will have widespread consequences – the Senate rejected the congressional initiative to impeach Donald Trump. The fact is that the endless attempts of the Democratic Party to impeach Trump, even after he left the White House, somehow resemble the persecution of political opponents. In addition, this does not really contribute to improving the investment climate. More precisely, such actions completely destroy it, since investors constantly need to take into account the political component of their investments. Otherwise, there are extremely high risks that the investment will be recognized as politically harmful, and they can be very easily lost. This is exactly what happens in those countries where such persecution is practiced. So, the Senate's decision clearly allows a lot of people to relax. And there is no reason to deny that recently, the whole impeachment story has had a negative impact on the US dollar. To confirm this, one should look at the pound, which continues to gradually rise. Another thing is that the pound is clearly overbought, and it is only a matter of time before a correction occurs. But given how much the pound has grown, we are not waiting for a correction, but a usual collapse. Moreover, its steady growth is not supported by anything. This is because the economic situation in the UK is significantly worse than in the European Union or the United States.
However, the situation in the European economy is also only getting worse. Here, the rate of decline in industrial production accelerated from -0.6% to -0.8%. And this despite the fact that even according to the worst forecasts, the decline was predicted to slow down to -0.3%. In any case, Europe's industrial decline has continued since October 2018, which means it lasts for twenty-five months in a row. We can see that this is really bad. Most importantly, the decline began long before the COVID-19 pandemic. So, attributing all economic problems to the coronavirus is nothing more than a substitution of concepts and an attempt to get away from real problems.
Industrial production (Europe):
Today, market participants will be warned again about the strengthening of the economic slowdown in the Eurozone. Well, at least the second estimate of GDP for the fourth quarter coincided with the first. This means that the rate of decline in GDP accelerated from -4.3% to -5.1%. On the one hand, this news is not surprising. However, given the clear overbought status of the European currency, this may lead to a slight, but still weakening of the national currency.
GDP growth rates (Europe):
The EUR/USD currency pair found a resistance again in the 1.2150 area, where a natural stop occurred, leading in a pullback. We can assume that if this scenario repeats, euro's quote may pull back towards the level of 1.2100.
Despite everything, the GBP/USD pair continues to move in an upward trend, updating the high of the medium-term trend. Considering its high level of overbought and being near the psychological level of 1.4000, we can assume that a correction in the market is still very likely, despite the speculative mood status.
