4-hour timeframe
Average volatility over the past five days: 87p (high).
The EUR/USD pair recovered to the critical Kijun-sen line, rebounded from it and tried to resume moving down on Thursday, April 16. However, the movement stopped near the previous day's low, and the pair itself went into a very narrow side channel with a high amplitude of 25 points. Thus, it is possible that the euro/dollar pair has moved to the final consolidation stage, which we mentioned in the "correction versus correction" scenario. We assumed that the future fate of the euro currency will be decided within the 1,0900–1,1000 channel. In fact, the pair's quotes went to the 1.0850 level and are now traded in the 1.0850-1.0900 channel. The volatility slightly jumped yesterday, but today it has dropped again. The pair passed only 59 points during the penultimate trading day of the week. However, the day has not ended; nevertheless, it is obvious that volatility will not grow too much.
We absolutely cannot go past the macroeconomic background today. If two macroeconomic reports were published yesterday, on industrial production and retail sales, which traders could really ignore based on the low level of significance of these data. The most important indicator of applications for unemployment benefits in the United States was published today. And this figure again reached more than five million applications for the week. This means that a total of almost 22 million people lost their jobs in the United States in just four weeks. Recall that the economically active population in the United States is about 160 million. The unemployment rate was about 3.5% before the outbreak. Thus, at the moment, about 25-30 million people are out of work. And it's not just Americans who are temporarily out of work. These are Americans who need to pay unemployment benefits. Every month. This is an additional burden on the budget, which, of course, is not experiencing the best of times. Moreover, these 25-30 million people do not bring any benefit to the country at this time. That is, they do not contribute to the economy's development and to GDP. Moreover, even if quarantine is completed tomorrow, this does not mean that everyone will simply return to their previous places of work. We have repeatedly said that the economy cannot be paused for several months. The economy either works or collapses, and then recovers for a much longer time. Recent indicators of the state of the US economy show that industrial production declined by 5.5% in March, while retail sales fell by almost 9%. And this is only the month of March. In April, the coronavirus pandemic continues to rage, the number of sick Americans, compared with March, has increased several times. Thus, macroeconomic statistics can be even worse for April. Well, the International Monetary Fund's forecasts are not far from the truth. It is difficult to name the specific figures for the fall of the US and world economies, too many factors must be taken into account when forecasting, but one thing can be said with certainty - the decline will be strong. Indeed, the largest since the Great Depression.
Well, traders today simply ignored an important report on applications for unemployment benefits. Yesterday, on the basis of failed macroeconomic statistics from overseas, the us dollar managed to rise in price, although it had been falling against the Euro for a week. Today – did not respond to another failed report. Thus, we still believe that macroeconomic statistics currently have no impact on the movement of the EUR/USD currency pair. Even if the fed cuts the rate by another couple of percent tomorrow, nothing will change. Traders continue to trade based on their own considerations, so there is no such thing as "majority opinion" in the market right now. You can only follow the trend by using technical indicators and trying to predict the behavior of large market participants.
Reports on inflation in Germany and industrial production in the European Union were also published today. The first indicator fully met the forecasts of experts and reached 1.4% in annual terms. Industrial production in the EU decreased by 1.9% yoy in February. Please note that the value is February. It is likely that there will be a stronger drop in production by the end of March.
4-hour timeframe
Average volatility over the past five days: 120p (high).
The GBP/USD currency pair moved almost exactly the same way as the EUR/USD pair on April 16. Today, it has corrected the same way to the critical Kijun-sen line as part of a possible new downward trend and is currently trying to resume the downward movement that has started. The fact that macroeconomic statistics were ignored by market participants also applies to the pound/dollar pair. Moreover, the pair shows a desire to continue moving down in the US trading session. That is, the greenback is getting more expensive, despite an additional 5.5 million unemployed in the United States. In fairness, it should be noted that it is impossible to get a complete picture of things from overseas according to statistics alone. For example, no economic reports were received from Great Britain this week. Thus, we cannot judge the specific extent of the collapse of the British economy and compare them with the US. If we talk about forecasts of the IMF, then the British economy should suffer more than the US. Although due to the fact that before the pandemic and quarantine crisis, there were quite serious problems. However, under current conditions, this is still more of a hypothesis than a fact. Since the key rates of the Federal Reserve and the Bank of England are now almost the same, the dollar has lost one of the most important support factors in the long run. However, in times of crisis and panic in international markets, it is the dollar, not the pound, that is often bought on the basis of confidence in it.
From a technical point of view, the pound has every chance of continuing to fall. A new signal from Ichimoku Dead Cross has formed, which is still weak. Today's volatility is less than 100 points at the moment, but it can grow above this mark by the end of the day. In total, the pound/dollar pair has "plowed" up around 1200 points since March 20, so now we can witness the "correction against correction" in the GBP/USD pair.
Recommendations for EUR/USD:
For short positions:
The EUR/USD pair continues a new downward movement on the 4-hour timeframe. Thus, sell orders now remain relevant with the first targets of 1.0833 and 1.0818, which can be held until the MACD indicator turns up.
For long positions:
It is recommended to return to purchases of the currency pair only when the price has been re-consolidated above the critical Kijun-sen line with the first resistance level target of 1.1003.
Recommendations for GBP/USD:
For short positions:
The pound/dollar is also continuing its downward movement. Thus, it is now recommended to sell the British currency with the target Senkou Span B line and the first support level of 1.2246.
For long positions:
It is recommended to consider new purchases of the GBP/USD pair before consolidating the price above the Kijun-sen line with the targets at resistance levels 1.2567 and 1.2662.
