Fx trading Review: This time the US dollar is not easy! Seven Fed officials have spoken this week, and inflation data from various countries is coming!
2020-02-17 10:39 from：CAPSTONE author：Jack
Capstone Forex Trading Review last week:
In the past week, the U.S. dollar rose like a rainbow, breaking through the 99 mark for the first time during the year; the non-US currency was severely differentiated due to different fundamentals. The euro again experienced a five-day losing streak this week, closing at the 1.08 mark to 33 The new low since the month; the pound was affected by the "resignation tide", the Japanese line for five consecutive days, once again stood at the 1.3 mark. Let's review together to see the detailed reasons!
Why does the dollar keep rising? Since the beginning of the year, the US dollar has been rising all the way to the 96 range, and there is still no sign of a correction. First of all, in terms of repurchases last month, Powell stated: Treasury purchases and repurchase operations have succeeded in providing sufficient reserves for the banking system, but the Fed will tend to gradually abandon the active use of repurchase measures. Secondly, due to the current epidemic situation, the need for the USD to return to hedge has become prominent, which will also cause the US index to continue to rise in the short term. Finally, Powell attended the testimony of Congress twice this week. Powell's reiteration of "the current interest rate range is suitable" also aroused Trump's dissatisfaction, and Powell said that he would not implement a negative interest rate policy in the future, effectively supporting the continued upward movement of the dollar .
Why has the euro been falling? Since the beginning of the year, Europe and the United States have continued to fall from above the 1.12 mark. As of last week, they have hit a low of nearly three years, and one step forward will be par with the US dollar. First of all, there is an increase in fundamental uncertainty. German Chancellor Angela Merkel is about to retire, and her successor suddenly announced his withdrawal from the election last week. The political outlook is unknown, or it will increase downward pressure on the economy. Secondly, it is still the current epidemic. The manufacturing of the three largest economies in the euro area-Germany, France and Italy-has slowed sharply by the end of 2019. As Europe's trade with China has deepened in recent years, such as Germany's Exports are now slightly higher than the United States, and the outbreak of the new crown epidemic in 2020 will also pose a new threat to economic growth in the euro area. Finally, talks with the EU after Brexit were not smooth. There are reports that the EU plans to impose punitive measures on the UK, and various concerns continue to weigh on the euro.
Why is the pound "contrarian"? Following the announcement that British Foreign Secretary Raab will continue to serve as Foreign Minister, the pound has risen by 30 points in the short-term, breaking the 1.30 mark to a new high since February 6. The market interpreted the news as British Prime Minister Johnson hopes advisors will be more willing to support radical fiscal stimulus. As far as the current EU-Europe trade talks are concerned, the composition of the cabinet will influence the UK's final position. According to experience, if most of the cabinet supports Brexit, then Britain is more likely to adopt a tough and uncompromising stance in negotiations. If this happens, the British pound may face unfavorable factors at the end of this year. However, if the number of "remainers" in the cabinet increases, this will soften the British stance, which will increase the possibility of Britain accepting the EU's request to maintain free trade, and the pound is expected to continue to rise.
Capstone Forex Trading Today's analysis:
(Europe and the United States M30)
Europe and America:
In terms of fundamentals, the euro against the US dollar performed the worst in the G10 currency last week. The currency pair continued its downward trend that began on February 3 and has fallen to its lowest point in nearly three years. Concerns over economic growth in the euro zone have led to speculation that the European Central Bank may loosen monetary policy again in the future. Technically, the euro weekly MACD has again formed a dead fork below week 0, and the downward trend has been further confirmed. If the 1.08 mark is broken this week, it will further open up the downward space and is expected to test the 1.0578 support level in the future. This week, the pressure levels are 1.0862 and 1.0905, and the support levels are below 1.0790 and 1.0740.
EUR / USD trading strategy:
Strategy 1: Go short on rallies (23 points)
Entry: 1.0837 Stop Loss: 1.0860 Take Profit: 1.0814
Strategy 2: Go long and go long (23 points)
Entry: 1.0860 Stop Loss: 1.0837 Take Profit: 1.0883
In terms of fundamentals, the logic of gold's rise is mainly due to investors buying safe-haven assets to buy gold as a hedge against the economic impact of the coronavirus epidemic. The sharp increase in confirmed single-day cases in Hubei last Thursday caused concern among all parties, The risk aversion sentiment in the market has heated up significantly, boosting the price of gold by more than $ 10 on the day, reaching a maximum of 1578, the highest since February 5. At the close, gold once returned above the $ 1,580 mark. In terms of technology, in the short term, it is still in a weak correction trend. In the future, bulls are expected to further test the pressure at the 1600 mark. If the market's hedging demand declines, there are not many reasons to support gold up. All long long time still needs to wait. This week the upper pressure levels are 1592, 1598, and the lower support levels are 1580, 1578, 1572.
Capstone Forex Trading Focus on the data today:
U.S. President's Day Closed
[Capstone Forex Trading Disclaimer]:
This analysis and trading strategy is an objective description of the current market trend. Investors need to strictly follow the trend, light positions, and stop losses! Orders cannot be completely based on trading strategies, only for reference!
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