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April 18, 2020

First, a review of last week’s events:

  • EUR/USD. The number of applications for unemployment benefits in the United States has amounted to 22 million over the past four weeks. For comparison, this figure remained at the level of about 930 thousand in the previous few years. In other words, the unemployment has increased 23 times! The number of employed in the US was just over 150 million, so the losses caused by the COVID-19 crisis approached 15% of all jobs.
    Major banks, such as Morgan Stanley and JP Morgan, have updated their forecasts and expect that the collapse of the US economy could reach a catastrophic 40%. And the head of the St. Louis Federal Reserve Bank, James Boulard, said that every third American will be left without work soon.
    But things are not better in Europe, and this keeps the EUR/USD pair from sharp fluctuations. The actions of the Administration and the U.S. Federal Reserve to stimulate the U.S. economy also help the dollar. As a result, the maximum volatility last week was less than 180 points, which at present time can be considered flat. As for the final changes in quotes, the figure is even lower: the pair lost only 70 points in five days, ending the session at 1.0870;
  • GBP/USD. The British currency also shows “Olympic calm”, even though both the IMF and domestic forecasts predict that Britain's economy may be among the most affected by the pandemic, and the decline in the GDP in the second quarter could reach 35 per cent.$ For the third week in a row, the GBP/USD pair returns to 1.2500 again and again. According to some experts, now, while the attention of investors is focused on S&P500 and the dollar, the pound received a respite after the collapse in the second decade of March and the subsequent correction.
    As the graphical analysis on H4 predicted, the pound went up at the beginning of the week, reached a height of 1.2650, then turned around and sank to the horizon of 1.2400. The final chord sounded around the three-week Pivot Point, at 1.2500;
  • USD/JPY. 60% of experts voted last week for further weakening of the dollar and decrease of the pair to marks around 107.00. This forecast turned out to be 100% correct: the pair reached its target on Wednesday, April 15, after which it rebounded and moved sideways in the narrow channel 107.15-108.05, completing the five-day period in its central part, at the level of 107.60;

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

  • EUR/USDIf in the medium-term market expectations look rather gloomy, in the short term the plans to resuscitate the U.S. economy, announced by President Trump, have had a positive impact. The decline in the rate of coronavirus infection in the United States also helped. Some investors, having rejected macroeconomic data and forecasts, looked at the future with optimism, citing China as an example, where 100% of large companies and about 80% of small ones have already returned to normal operation.
    At the moment, 60% of the experts, supported by 65% of the indicators on H4 and D1, expect the dollar to strengthen and the pair to fall to the level of 1.0750. The next target is a low of 1.0635. The remaining 40% of analysts still doubt the dollar, expecting the pair to grow at least to the height of 1.1000, and then, perhaps, 100 points higher.
    Business activity in Germany and the Eurozone, as well as applications for unemployment benefits in the United States, are among the events of the upcoming week. All this data will be published on Thursday, April 23. The dynamics of orders for durable goods in the USA, which we will see on Friday, April 24, can also influence the formation of local trends;
  • GBP/USD. On Thursday, April 23, business activity indicators will become known not only in Germany and the Eurozone, but also in the UK. In addition, unemployment data will be published on Tuesday, April 21, and the UK consumer price index on Wednesday, April 22.
    As mentioned above, according to forecasts, this country may be among the most affected by the coronavirus, and unemployment can reach values comparable to the United States. The political and economic risks associated with Brexit have not been canceled either, there remains a lot of unresolved issues. However, investors hope that the final divorce from the EU will be postponed for a longer period or, at least in the current situation, the islanders will be able to trade better terms from Europe.
    In this situation of uncertainty, the analysts' forecasts for the next week and month look equally uncertain: 15% of them vote for the growth of the pair, 25% - for its fall, and 60% simply shrugged. Indicator readings on H4 are also neutral, while on D1 75% of oscillators and 60% of trend indicators are colored green.
    As for the graphical analysis, the picture here is somewhat different: on H4 and D1, it first draws a decline in the pair to supports 1.2335 and 1.2200, respectively, and then its return to the levels of 1.2500 and 1.2650;
  • USD/JPY. The 107.00 zone has been a significant level of support/resistance for the yen for months and even years. It is close to it that the pair has been moving for the past few days. The vast majority of analysts (70%) predict that the pair will again try to break this level from top to bottom and, if successful, will drop to the 105.80 horizon. The next targets are 105.00 and 104.40.
    Opponents of this development (they are 30%) believe that after the dramatic events of February-March, the yen has returned to the 107.60-110.00 corridor, where it will stay for the next few weeks. The nearest resistance is 108.40.
    Indicators on both timeframes recommend opening short positions, but 15% of oscillators already signal that the pair is oversold;


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