Financial markets, unlike the physical world, cannot remain in a state of free fall forever, and sooner or later there is a rebound or stagnation, followed by an upward movement. However, this very rebound can only be a harbinger of further decline. In any case, what we see in the currency market during the last days of the previous week, in many ways resembles the same stagnation. Although the volatility is still very high, and it is difficult to call it all stagnation. But this is really a stagnation against the background of the decline of the previous days.
At the same time, if you look at the European statistics, it becomes clear that we are really talking about the local exhaustion of the dollar's forces for further growth. After all, macroeconomic statistics in Europe only continues to disappoint. In particular, the growth rate of producer prices in Germany was replaced by a decline from 0.2% to -0.1%, which calls into question the very possibility of an increase in inflation throughout Europe. Moreover, we are not just talking about a decline, but a resumption of the decline in producer prices, since their growth in January was preceded by a decline that lasted as much as four consecutive months. The European balance of payments surplus was 8.7 billion euros in January, which looks ridiculous against the background of the December surplus of 51.2 billion euros. Italy's balance of payments was in deficit by 0.2 billion euros in January. Moreover, its surplus was 5.1 billion euros in December. In addition, if the trade deficit in Spain was -2.1 billion euros in December, then it increased to -3.5 billion euros in January. Simply put, there was no positive news from Europe on Friday.
Producer price index (Germany):
But, on the contrary, the US data were very pleasing. Home sales in the secondary market increased by as much as 6.5%. From 5,420,000 to 5,770,000, we are waiting for growth, but only by a modest 0.5%.
Home sales in the secondary market (United States):
No macroeconomic indicators will be released today, so the only thing that market participants can rely on is the next information about the spread of the coronavirus. To some extent, the suspension of the dollar's growth could be due to this, since there has been an explosive surge in the number of cases of this terrible virus in the United States in recent days. Although, the situation is not better in Europe, since the number of deaths from coronavirus in Italy is only growing and has already exceeded the number of deaths in China.
From the point of view of technical analysis, we see another update of local lows, where the quote went down to the 1.0636 area and then turned around, as it was the period before-March 20, 2020. In fact, we see a kind of lateral movement with a high oscillation amplitude. Relative to the average daily activity, we have stable indicators above 200 points.
In terms of the general review of the trading schedule, we see an inertial downward move in the structure of the global trend, where there are less than 500 points left before the record lows are updated.
We can assume a temporary movement towards the 1.0775 level, where a slowdown could occur in its area, followed by a return of the price to the lowest levels of the previous period.
We will concretize all of the above into trading signals:
- Long positions are considered towards the 1.0775 level (+15/25 points).
- Short positions are considered in the event of a slowdown at the level of 1.0775, followed by a return of the price below it. Perspective in this case is in the area of 1.0700 is -1,650.
From the point of view of a comprehensive indicator analysis, we see that the hourly and daily periods continue to show downward interest due to the general background of the market . At the same time, minute intervals work in a local rebound, signaling purchases.
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