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March 9, 2019

First, a review of last week’s events:

  • EUR/USD. The pair collapsed on Thursday, March 7, after the ECB announced that it was not worth waiting for the increase in interest rates this autumn. The earliest when this can happen is 2020. In addition, it became known that the European regulator plans to launch LTRO (Long Term Refinancing Operation) in September - a program to refinance European banks at low interest rates. If we add the reduction in forecasts for GDP and inflation to this, as well as statistics on foreign trade of China that are not the best for the Eurozone, the picture for the European currency is rather sad.
    As a result, by mid-Friday, the pair slipped to the values of summer 2017 (1.1175), literally jumping out of the medium-term corridor 1.1215-1.1570. However, data on the US labor market published on March 8 (NFP) allowed the bulls to turn the trend up. After the number of new jobs amounted to 311K in January, it was expected that in February this figure would be equal to 180K. In reality, the result turned out to be many times worse, only 20K, which made it possible to once again talk about stagnation in the US economy and to return the pair to the level of 1.1235;
  • GBP/USD. As expected by most analysts (60%), on the eve of the re-vote in the UK Parliament on the EU deal, which should occur on March 12, the pound continued its decline, losing about 200 points in a week and reaching values in the 1.3000 zone;
  • USD/JPY. Recall that last week about 20% of the oscillators on H4 and D1 already gave signals this pair was overbought, which allowed us to expect a fairly strong downward correction. This is what happened in reality, the yen almost won back the losses of the last week of February and ended the five-day period at the level of 111.15;

As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

The week March 11 to 15 will literally be filled with events, each of which can not only cause an increase in volatility, but also lead to a change in the trends’ direction.

So, on Monday, March 11, a meeting of eurozone finance ministers will be held in Brussels. And on the same day in the evening, the data on the US “retail sales control group” will become known, which, according to forecasts, may slightly strengthen the dollar.

Tuesday will also see the publication of economic statistics from the United States, this time it will be the consumer price index. Attention should be paid to the speech of the head of the Federal Reserve, J. Powell on monetary policy. On Wednesday, we are expecting a report on the UK budget, as well as statistics on retail sales and industrial production in China. On Thursday, we will learn what is happening with consumer prices in Germany, and on Friday we will hear Haruhiko Kuroda’s comment on the prospects for the monetary policy of the Bank of Japan.

But all these rather important events fade before what should happen on Tuesday, March 12, in the capital of the United Kingdom. It is on this day that a second vote will be held in the British Parliament on the terms of Brexit, and, in the event of another failure of Prime Minister May, lawmakers will be able to vote on March 13 to postpone the negotiations and postpone Brexit to a later date. Theoretically, even a second referendum on the exit of the UK from the EU is not excluded.

These votes can affect not only the quotes of the major world currencies, but also the future of the world economy as a whole. In the meantime, analysts' opinions are as follows:

  • EUR/USD. 60% of experts, supported by almost 90% of oscillators and trend indicators, expect the euro to further fall to the 1.1100-1.1125 zone. It should be noted that in the transition to the forecast for the second half of March, 60% of analysts are already siding with the bulls, waiting for the pair to return to level 1.1400-1.1500;
  • GBP/USD. 65% of the experts have now voted for the decline of the pair to the level of 1.2850-1.2900. However, in the transition to longer-term forecasts, as well as in the case of the euro, the majority (60%) expects the British currency to strengthen and rise to the maximum of February (1.3350) and then 200 points higher;
  • USD/JPY. Despite the fall of the pair last week, it remains within the ascending channel, which began at the very beginning of January 2019. That is why 60% of analysts, supported by graphical analysis on D1, believe that the pair will overcome the bar at 112.00, after which it is expected to move in the side channel 112.25-113.70, as it was last November-December.
    The alternative point of view is supported by 40% of experts, who believe that the pair has not yet reached its local bottom, which is in the zone of 109.70-110.10;

NordFX EU


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