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March 20, 2021

First, a review of last week’s events:

  • EUR/USD. It has become clear following the meeting of the Open Market Committee (FOMC) that the US Federal Reserve does not intend to raise interest rates until at least 2023. The Fed is not going to change other parameters of the quantitative easing (QE) program either, as long as inflation in the United States is growing, the manufacturing sector is recovering, and is pulling up the service sector. The bill signed by US President Joe Biden on a new $1.9 trillion package, according to the Fed, is quite a sufficient measure to stimulate the economy at this stage.
    This position of the American regulator satisfied (or upset) both bulls and bears on the EUR/USD pair to the same extent, and as a result the pair spent the whole week in a narrow sideways channel with an amplitude of only 110 points, 1.1875-1.1985, and ended the trading session near the 1.1900 level;
  • GBP/USD. As mentioned above, the US Fed refused to adjust its monetary policy. But the management of the Bank of England refused to do the same unanimously at its meeting on Thursday March 18. According to their statement, the bank "does not intend to tighten monetary policy at least until there is clear evidence of the use of untapped potential and the achievement of the 2 percent inflation target." So, one should not expect a rise in interest rates on the pound.
    As a result of the identical decisions of both regulators, the GBP/USD pair continued to move sideways. Recall that last week, a third of experts voted for the growth of the pair, a third - for its fall, and the remaining third made a Solomon decision, announcing that the pair would move eastward, limiting the growth by the resistance at 1.4000, and the fall by the support at 1.3775. And this forecast turned out to be almost perfect. The fluctuations of the pair were limited to the range of 1.3800-1.4000. The last chord sounded at 1.3865;
  • USD/JPY. The Japanese regulator also performed in a chorus with the US Federal Reserve and the Bank of England. The Bank of Japan left the interest rate at the same negative level, minus 0.1%, on Friday, March 19. At the same time, it will continue to buy back long-term bonds in order to maintain the yield on its 10-year securities at near zero. The statements of the Bank's management regarding the prospects for monetary policy were also consonant vague with the statements of their colleagues from the USA and Great Britain: “we are ready for changes as needed”. It is not specified what the criteria for such "necessity" are.
    The result of such a “sluggish” week was the consolidation of the USD/JPY pair in an even narrower range than EUR/USD and GBP/USD. After holding in the channel 108.60-109.35 for all the five days, it finished at 108.87;

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/USD. In general, both experts and indicators have a bearish mood. Despite the US Federal Reserve's refusal to raise interest rates until 2023, investors are still guided by a favorable economic scenario. Mass vaccinations and direct payments to US citizens should support the dollar, even though some of that $380 bn will be invested in riskier assets.
    Most analysts (65%) expect the dollar to strengthen in the coming week. In their opinion, the EUR/USD pair should retest the support of 1.1835. The bearish forecast is also supported by 65% of oscillators and 85% of trend indicators on time frames H4 and D1. Recall that, from the point of view of technical analysis, the support level here is still the 200-day SMA at 1.1825. In case of its breakthrough, the next targets will be 1.1800 and 1.1745. The ultimate target is the lows of September-November 2020 around 1.1600.
    As for the bulls, the resistance levels here are 1.1980, 1.2025, 1.2060 and 1.2100. And if the bullish forecast is supported by only 35% of experts now, the balance of forces changes in a mirror-like manner when switching to the forecast for April: it is already 65% who support the growth of the pair and only 35% are for its fall.
    Graphic analysis also points to the pair falling. And also, not immediately. At first, according to its readings, having fought off the zone 1.1880-1.1900, the pair should rise to the level of 1.1980, and only then go south.
    As for the events of the coming week, Jerome Powell's numerous speeches on March 22, 23 and 24 could be noted. However, the head of the FRS is unlikely to say anything new: everything important was already said last week. Therefore, we advise you to pay attention to the data on business activity of Markit of Germany and the Eurozone, which will be announced on Wednesday March 24. As for the American statistics, data on orders for durable goods will be published on the same day, and annual data on GDP of the United States the next day.
  • GBP/USD. The head of the Bank of England Andrew Bailey is also scheduled to speak on March 23 and 25. And just like in the case of his colleague from overseas, Jerome Powell, no surprises from his speeches should be expected. Of interest may be: data on the UK labour market March 23, and data on business activity and consumer market of this country on March 25.
    It is clear that the technical indicators on the GBP/USD pair on H4 are looking to the south. However, they reflect the trend of only the last two days of the past week. As for the indicators on D1, there is complete discord: the two-week sideways trend is getting visible. Graphical analysis on both time frames also indicates a sideways trend in the trading range of a week ago - 1.3775-1.4000. There is no serious preponderance in the forecasts of experts: 45% side with the bulls, 55% side with the bears. The targets are 1.4240 and 1.3600, respectively;
  • USD/JPY. The further strengthening of the dollar and the growth of the pair is indicated by graphical analysis at both time intervals, H4 and D1. 85% of trend indicators and 65% of oscillators on D1 agree with it. The rest of the oscillators are either in the overbought zone or are already colored red.
    As for the experts, 55% of them expect a correction to the south, although they agree that it may be short-term. However, with the transition to monthly and quarterly forecasts, the number of supporters of the fall of the pair increases to 75%.
    The nearest target of the bulls is 109.50-110.00. Support levels in case the pair falls are 108.35, 106.65, 106.10 and 105.70;

NordFX EU


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