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1 EUR/USD. "Green" Nonfarms and bad news from Capitol Hill
Data published today on the growth of the US labor market provided support to the dollar. But the growth of the...
The US dollar ends the current trading week on a major note: despite the ongoing political battles in the US Congress, the greenback strengthened across the market, thanks to strong macroeconomic reports. The EUR/USD pair collapsed by more than 100 points. Other currency pairs of the so-called "major group" showed similar dynamics, reflecting the demand for the dollar. However, it is too early to talk about a trend reversal – even in the medium term. The American won today's round, but...

The US dollar ends the current trading week on a major note: despite the ongoing political battles in the US Congress, the greenback strengthened across the market, thanks to strong macroeconomic reports.

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The EUR/USD pair collapsed by more than 100 points. Other currency pairs of the so-called "major group" showed similar dynamics, reflecting the demand for the dollar. However, it is too early to talk about a trend reversal – even in the medium term. The American won today's round, but the complete victory is still far away – at least, to break the situation, you need good news from Capitol Hill (which is not). Therefore, at the moment, we can only talk about a correction. A large-scale, fairly comprehensive, but still correction. The next trading week will put everything in its place – but in the meantime, dollar bulls can "uncork the champagne": Non-Farms have become a kind of lifeline for the US currency.

What happened?

Key data on the labor market for July were published today. Non-Pharmaceuticals themselves play an important role for traders, but this release had a special significance for the market. First, in July, an outbreak of coronavirus was recorded in the United States. The daily increase in the number of cases did not fall below the 60-thousand mark, and on some days it remained above the 70-thousand target. The epicenter of the epidemic shifted to the south of the country – in California, Florida, and Texas, record rates of morbidity and mortality were recorded (and are still being recorded). Although the quarantine restrictions were not tightened at the national level, local authorities took appropriate decisions (for example, in Miami). This circumstance could negatively affect the dynamics of the recovery of the American labor market.

Secondly, on the eve of the release of July Nonfarms, the market received quite ambiguous signals. For example, the increase in the number of initial applications for unemployment benefits in mid-July paused its decline (which lasted for 12 weeks) and began to show a slight pullback, reflecting worrying trends in the labor market. Also, just two days before today's release, an extremely weak report was published from the ADP agency, whose experts also monitor the situation in the US labor market. According to their data, in July, the increase in the number of people employed in the private sector was only 167 (experts predicted to see an increase of up to 1.5 million).

In other words, the intrigue around the July Nonfarms persisted until the last minute, so the reaction to today's release was very volatile. The pendulum could swing one way or the other. As a result, Nonfarm were on the side of the dollar: almost all components of the release came out in the "green zone", exceeding the forecasts of experts. Thus, the unemployment rate fell to 10.2% (the forecast was at 10.5%), and the number of people employed in the non-agricultural sector increased by 1 million 763 thousand (with forecast growth of 1.5 million). Only the manufacturing sector of the economy "pumped up" – the increase in the number of people employed in this area was only 26 thousand, although analysts expected to see this figure much higher, at the level of 250 thousand. But salaries – pleased. The average hourly wage rose by 0.2% every month (the indicator came out of the negative territory for the first time since May), and rose to 4.8% on an annual basis (with a growth forecast of 4.2%). The growth of this indicator has a positive impact on the level of consumer activity of Americans, and therefore on inflationary processes.

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Thus, the dollar is reasonably growing today, demonstrating a corrective recovery. The published data reduced market concerns about the prospects for recovery of the US economy in the second half of the year. But for a more confident growth, dollar bulls lack the last puzzle, "worth" one trillion dollars. We are talking about the Republican party's bill on additional assistance to the US economy. Republicans still cannot agree with the Democrats, although both sides assure reporters that "some progress has been made". But the de facto situation is hanging in the air: congressmen from different political camps do not want to make serious concessions in the run-up to the presidential election. Moreover, as White House economic adviser Larry Kudlow said today, negotiations on the stimulus package "have reached an impasse to date". This fact did not allow the dollar bulls to fully manifest themselves: the growth of the dollar index and the decline of the euro/dollar pair was limited.

How to trade?

At the moment, the first reaction to the publication of Nonfarm has already subsided. The dollar index began to gradually slide down again, and the eur/usd pair floated in the 17th figure. This is largely because traders began to fix profits en masse, without risking leaving open positions for the weekend. Especially since the negotiations between Republicans and Democrats will take place on Saturday and Sunday. If they announce a compromise by Monday, the dollar will continue its ascent. Otherwise, the greenback will return to the same positions as it was before Nonfarming. In the context of the eur / usd pair, this means that the pair will return to the area of the 18th figure and again try to test the 19th price level. Thus, it is too late to open trading positions now – traders have already "played" the macroeconomic release. On the weekend, it is necessary to monitor American news feeds: if the congressmen still find a common denominator, the downward movement of EUR/USD will resume with a new force. The main support level (the goal of the southern movement) is located at 1.1650 – this is the lower line of the Bollinger Bands indicator on the daily chart.

Forex analysis 7 Aug 2020, 16:20 UTC+00
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2 Financial market to face fluctuations throughout coronavirus crisis
Analysts at Goldman Sachs gave a very mixed forecast regarding the prospects for the S&P 500 index. It all...
Experts at investment bank Goldman Sachs warned of serious fluctuations in financial markets, which could potentially provoke both the emergence of the coronavirus vaccine and the failure of its trials. In the first case, GS analysts note, the S&P 500 index is capable of rising to 3700, and in the second, it can fall to 2200 points. This forecast made experts feel wary. Index growth factors In its report, Goldman Sachs writes that investors are paying insufficient attention to the...

Experts at investment bank Goldman Sachs warned of serious fluctuations in financial markets, which could potentially provoke both the emergence of the coronavirus vaccine and the failure of its trials.

In the first case, GS analysts note, the S&P 500 index is capable of rising to 3700, and in the second, it can fall to 2200 points. This forecast made experts feel wary.

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Index growth factors

In its report, Goldman Sachs writes that investors are paying insufficient attention to the potential for successful vaccine trials. If this does happen, then market trends will change faster than expected. Bonds will be the first to suffer and will be disposed of. Then funds will accumulate in the shares of traditional cyclical companies and banks, leaving the technology sector. The latter is likely to lose its leadership.

A factor such as the US presidential election will have an additional impact, according to Goldman Sachs. The potential loss of the incumbent White House along with the good news about the vaccine will push up emerging market stocks.

Analysts say that under such circumstances, the S&P 500 index could rise to 3700 points.

Index decline factors

If all of the above circumstances do not add up to a single picture, and in addition to everything, the second wave of coronavirus will rage stronger than expected, then Goldman Sachs does not exclude a potential drop in the S&P 500 index to 2,200 points.

Morgan Stanley, represented by analyst Michael Wilson, warned about the possibility of negative developments even earlier, the very one who correctly predicted the market situation in March this year. Earlier this month, he talked about the possibility of reducing the S&P 500 by 10%. True, he focused on the fact that after such a correction, growth can resume, while demonstrating a healthier and broader character. The prerequisites for the resumption of growth, as per Wilson, is the economic recovery and the growth of corporate profits.

However, it is not known how the so-called "August curse" will affect all the forecasts made above. Recall that over a decade and a half, the S&P 500 has always declined in the last month of the summer. The average decline over the years was 0.4%. But the uniqueness of this year's situation, some analysts believe, could break the traditional "August trend". Experts are already saying that the market volatility is lower than that which usually accompanies the corporate reporting season.

Influence of the virus

The corona crisis is exerting tremendous pressure on the global economy. However, the S&P 500 index specifically did not always meet the expectations of experts monitoring the impact of the pandemic on the financial market. The first news about COVID-19 recorded a growth of about 3%, which then fell sharply in February-March by 34%, and from March 23 it gradually increased, which it continues to do to this day, by 42%.

The coronavirus has had a direct impact on Goldman Sachs as well. Investbank in the second quarter of this year showed 41% in revenue over the same period last year of more than $ 13 billion. This is the second largest quarterly income of the bank in history.

News 7 Aug 2020, 16:03 UTC+00
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3 Ichimoku cloud indicator analysis of EURUSD
For a consecutive week price managed to move above 1.19 but week closed below 1.18. Trend might still be bullish but...
For a consecutive week price managed to move above 1.19 but week closed below 1.18. Trend might still be bullish but the weakness of bulls to recapture 1.19 implies that a deeper pull back might be in store for us for next week. As can be seen in the weekly chart above this weekly candle has same long upper tail as last week's candlestick. This candlestick formation confirms the importance of resistance at 1.19-1.18 area. On a daily basis, Friday's candlestick has closed below the...

For a consecutive week price managed to move above 1.19 but week closed below 1.18. Trend might still be bullish but the weakness of bulls to recapture 1.19 implies that a deeper pull back might be in store for us for next week.

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As can be seen in the weekly chart above this weekly candle has same long upper tail as last week's candlestick. This candlestick formation confirms the importance of resistance at 1.19-1.18 area.

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On a daily basis, Friday's candlestick has closed below the tenkan-sen (red line indicator). This is a weak sell signal or better a warning signal of more downside to come. Technically support is now found at 1.17. Staying below the tenkan-sen will push price towards the kijun-sen at 1.1565. So this is our next downside target if price breaks below 1.17.
Forex analysis 7 Aug 2020, 20:53 UTC+00
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4 Trend line analysis on EURUSD
EURUSD is showing signs of weakness. EURUSD justifies a pull back towards the medium-term upward sloping trend line...
EURUSD is showing signs of weakness. EURUSD justifies a pull back towards the medium-term upward sloping trend line support, specially if price breaks below the horizontal support at 1.1720-1.17. Blue rectangle- support Green line - medium-term trend line support Red rectangle -target if support fails to hold I expect EURUSD to move towards the red rectangle on top of the green support trend line if and after price breaks below the blue rectangle support area at 1.17. The failure to...

EURUSD is showing signs of weakness. EURUSD justifies a pull back towards the medium-term upward sloping trend line support, specially if price breaks below the horizontal support at 1.1720-1.17.

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Blue rectangle- support

Green line - medium-term trend line support

Red rectangle -target if support fails to hold

I expect EURUSD to move towards the red rectangle on top of the green support trend line if and after price breaks below the blue rectangle support area at 1.17. The failure to make a higher high increases the chances of making a deeper pull back. That is why breaking below 1.17 would a be fast short-term sell signal with 1.16-1.1570 as target.

Forex analysis 7 Aug 2020, 21:01 UTC+00
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5 BTC analysis for August 07,.2020 - Watch for potential long entries on the dips with the target at $12.160
Watch for buying opportunities
As I discussed in the previous review, the BTC is trading in the up cycle and with the breakout of the ascending triangle. Further Development Analyzing the current trading chart, I found that buyers are in control and there is potential for the test of $12,160. The Bollinger bands are in expansion, which is sign that there is good volatility on the BTC. Wait for the pullback for the long entry towards the $12,160 Key Levels:
As I discussed in the previous review, the BTC is trading in the up cycle and with the breakout of the ascending triangle.

Further Development

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Analyzing the current trading chart, I found that buyers are in control and there is potential for the test of $12,160.

The Bollinger bands are in expansion, which is sign that there is good volatility on the BTC.

Wait for the pullback for the long entry towards the $12,160

Key Levels:

Forex analysis 7 Aug 2020, 11:38 UTC+00
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6 Comprehensive analysis of movement options for #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on August 10, 2020
Are the peaks conquered? Correction? Options for the development of the movement #USDX vs EUR/USD & GBP/USD &...
Minor operational scale (Daily) Are the peaks conquered? Correction? Options for the development of the movement #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on August 10, 2020. ____________________ US dollar index From August 10, 2020, the movement of the dollar index #USDX will continue depending on the direction of the breakout of the range: resistance level of 93.35 - the lower limit of the channel 1/2 Median Line of the Minute operational scale fork; support level of...

Minor operational scale (Daily)

Are the peaks conquered? Correction? Options for the development of the movement #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on August 10, 2020.

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US dollar index

From August 10, 2020, the movement of the dollar index #USDX will continue depending on the direction of the breakout of the range:

  • resistance level of 93.35 - the lower limit of the channel 1/2 Median Line of the Minute operational scale fork;
  • support level of 93.05 - upper bound of ISL38.2 balance zone of the Minor operational scale fork.

In case of a breakdown of the resistance level of 93.35, the movement of the dollar index will continue in the 1/2 Median Line Minute channel (93.35 - 93.65 - 94.00) with the possibility of continuing the development of the movement already in the equilibrium zone (94.25 - 94.80 - 95.30) of the Minute pitchfork with the prospect of reaching the initial SSL lines (96.25) of the Minor operational scale forks and the FSL Minute end lines (97.10).

If the support level of 93.05 breaks at ISL38.2 Minor, the #USDX movement will continue its development in the equilibrium zone (93.05 - 91.90 - 90.80) of the Minor operational scale fork.

The markup of the #USDX movement options from August 10, 2020 is shown on an animated chart.

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Euro vs US dollar

The single European currency EUR/USD from August 10, 2020 will be determined by the development and direction of the breakdown of the range:

  • resistance level of 1.1835 - the lower border of ISL38.2 equilibrium zone of the Minute operational scale fork;
  • support level of 1.1735 - the upper border of the channel 1/2 Median Line Minute.

In case of a breakdown of the support level of 1.1735, the movement of the single European currency will continue in the channel 1/2 Median Line (1.1735 - 1.1685 - 1.1645) of the Minute operational scale fork, and in the event of a breakdown of the lower boundary (1.1645) of this channel, the downward movement of this instrument can continue to the control line LTL Minute (1.1510) and the boundaries of the equilibrium zone (1.1345 - 1.1245 - 1.1135) of the Minor operational scale fork.

A breakdown of the resistance level of 1.1835 at ISL38.2 and Minute will return the development of the EUR/USD movement to the boundaries of the equilibrium zone (1.1835 - 1.1940 - 1.2010) of the Minute operational scale fork with the prospect of reaching the control line UTL (1.2120) of the Minor operational scale fork.

The EUR/USD movement options from August 10, 2020 are shown on the animated chart.

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Great Britain pound vs US dollar

The development of the movement of Her Majesty's currency GBP/USD from August 10, 2020 will also be due to the development and direction of the breakdown of the range:

  • resistance level of 1.3150 - the lower border of ISL38.2 equilibrium zone of the Minute operational scale fork;
  • support level of 1.3070 - the final Shiff Line Minute.

The breakdown of the final Shiff Line Minute - support level of 1.3070 - will determine the continuation of the downward movement of the currency of Her Majesty to the goals:

  • initial SSL line (1.2880) of the Minute operational scale fork;
  • channel 1/2 Median Line Minute (1.2845 - 1.2775 - 1.2695);
  • with the prospect of reaching the control lines - UTL Minor (1.2550) and LTL Minute (1.2460).

A breakdown of the 1.3150 resistance level at ISL38.2 Minute will make the development of the GBP/USD movement in the equilibrium zone relevant (1.3150 - 1.3300 - 1.3400) of the Minute operational scale fork.

Options for the movement of GBP/USD from August 10, 2020 are shown on the animated chart.

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US dollar vs Japanese yen

The development of the movement of the currency of the "Land of the Rising Sun" USD/JPY from August 10, 2020 will be determined by the development and direction of the breakdown of the boundaries of the equilibrium zone (104.80 - 105.45 - 105.90) of the Minute operational scale fork - details of movement within this zone are shown on the animated chart of the Minute operational scale fork.

The breakdown of the resistance level of 105.90 at the upper boundary ISL38.2 zone equilibrium of the Minute operational scale fork will be relevant in the development of the upward movement of the currency "Land of the Rising Sun" to the ultimate Shiff Line Minute (106.65), the lower boundary ISL38.2 (107.35) fork operational scale Minor, and the borders of the channel 1/2 Median Line Minute (108.10 - 108.50 - 109.00).

A breakout of the lower border ISL61.8 zone equilibrium of the Minute operational scale fork - support level 104.80 - confirm the further development of the movement of USD/JPY in the channel 1/2 Median Line (105.20 - 103.90 - 102.50) of the Minor operational scale fork.

The markup of USD/JPY movement options from August 10, 2020 is shown on an animated chart.

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The review is compiled without taking into account the news background, the opening of trading sessions of the main financial centers and is not a guide to action (placing "sell" or "buy"orders).

Formula for calculating the dollar index:

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

Where the power coefficients correspond to the weights of currencies in the basket:

Euro — 57.6 %;

Yen — 13.6 %;

Pound sterling — 11.9 %;

Canadian dollar — 9.1 %;

Swedish Krona — 4.2 V %;

Swiss franc — 3.6 %.

The first coefficient in the formula brings the index value to 100 on the starting date-March 1973, when the main currencies began to be freely quoted relative to each other.

Forex analysis 7 Aug 2020, 16:20 UTC+00
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7 Underestimated US economy startles EUR
Despite the resurgence in the coronavirus rates, experts have spotted the green shoots of recovery
Sometimes, it happens that the market is moving in the direction opposite to expectations. This is exactly what is going on now. The S&P 500 had been on track to historic highs before the publication of the ADP National Employment Report. The ADP payroll processor released downbeat data on the private sector employment. It seemed to crush resistance of the EUR/USD bears. Nevertheless, the US Labor Department posted better-than-expected data on initial unemployment claims. On Friday,...

Sometimes, it happens that the market is moving in the direction opposite to expectations. This is exactly what is going on now. The S&P 500 had been on track to historic highs before the publication of the ADP National Employment Report. The ADP payroll processor released downbeat data on the private sector employment. It seemed to crush resistance of the EUR/USD bears. Nevertheless, the US Labor Department posted better-than-expected data on initial unemployment claims. On Friday, the US nonfarm payrolls revealed similar data on employment in the public and private sectors like in the ADP report. This assured EUR bulls to take profit. Now they are thinking about a downward correction.

The milestone event for EUR is the EU-backed recovery fund which provides a long-term support to the single European currency. In addition, EUR found support from the move of central banks towards diversification of their gold and forex reserves as well as investors' revision of their portfolios in favor of the euro-denominated assets. Another argument for investors in favor of EUR is different prospects of the EU and US economies. On the one hand, the eurozone plunged into a deeper recession in Q2 than the US. On the other hand, the better coronavirus picture, more efficient social programs on the labor market, and coordinated efforts of the EU leaders suggest a more rapid GDP recovery to the pre-crisis level than in the US.

US and eurozone GDP

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No wonder EUR is shining now with prospects for sustaining strength in the long term. Nevertheless, it would be a good idea to take notice of two important points. First, US stock indexes have been advancing higher than European ones. Why? The US stock market owes its steady rally to unexpectedly strong financial reports from large US companies for Q2. Second, the assumption about a growing EUR share in central banks' gold and forex reserves has not been confirmed yet. Apparently, central banks will rush pumping up their reserves with EUR in case Washington decides to resume its trade war with China.

It makes sense to stay sober amid the EUR stunning rally. Indeed, the second COVID-19 wave in Spain and lower virus rates in the US assure some EUR/USD bulls to take profit. Remarkably, the US economy released unexpectedly upbeat metrics which come as a surprise. This prompts investors to make a conclusion that the downturn in the US economy is not as dismal as believed. For instance, the US outpaces the eurozone and Japan in terms of business activity.

Manufacturing PMI

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Meanwhile, some EUR fans are willing to exit long positions for several reasons such as uncertainty around the new stimulus package in the US, escalating jitters in the US – China relations, and the presidential elections. Hardly anyone doubts that the White House and Congress will eventually come to the common denominator and pass the bill until the first week of August. So, the second stimulus package will be good news for the US dollar. The meeting between Washington and Beijing is scheduled for August 15. The parties are due to discuss to what extent they have fulfilled their commitments under the first phase trade deal made in January. Citing well-informed sources, Bloomberg reported that China intends to revise the trade deal due to the pandemic. However, if something goes wrong for Donald Trump, the trade war is likely to spark off again.

Back to the chart. The overall trend of EUR/USD is quite steady but the time is ripe for a downward correction. It would be a nice idea to enter the market with long deals on retracements to 1.1755, 1.169, and 1.1635.

EUR/USD, daily chart

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Forex analysis 7 Aug 2020, 13:42 UTC+00
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8 Analysis of EUR/USD and GBP/USD for August 7. Markets are starting to believe in the US currency, which is linked to strong Non-farm in the US
Important economic reports will be released in America in the coming minutes, which will reflect the state of the...
EUR / USD On August 6, the EUR/USD pair gained about 20 pips, but still presumably completed the construction of a 5 in 5 in C in B. Today, August 7, a new departure of quotes from the reached highs began. The current wave markup looks completely complete. Thus, I expect the completion of the construction of the uptrend section and the transition to a new downward set of waves, which may stretch for several months in the time aspect. Fundamental component: Yesterday was...

EUR / USD

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On August 6, the EUR/USD pair gained about 20 pips, but still presumably completed the construction of a 5 in 5 in C in B. Today, August 7, a new departure of quotes from the reached highs began. The current wave markup looks completely complete. Thus, I expect the completion of the construction of the uptrend section and the transition to a new downward set of waves, which may stretch for several months in the time aspect.

Fundamental component:

Yesterday was fairly neutral in terms of information. There was only one report on claims for unemployment benefits in America, which turned out to be somewhat more optimistic than forecasts. Nevertheless, the demand for the US currency did not change during the past day, that is, it remained rather low. It should be noted once again that the wave counting implies a long rise in the US currency. However, will the markets only have enough wave counting as reasons? The hopes of the US currency are mainly associated with the Nonfarm Payrolls report today, which reflects the number of jobs created outside the agricultural sector. If the value of the report is higher than the forecast (+1.6 million), then the demand for the dollar may grow significantly in instruments with the European and the British currencies. There is nothing more to hope for the dollar. On the other hand, the epidemiological situation in America remains quite difficult, with no significant improvement observed. Moreover, Donald Trump continues to discourage Americans almost every day with his "misleading" statements regarding the coronavirus. It is so discouraging that his posts have already begun to be deleted by social networks Twitter and Facebook. For a second: American social networks are deleting messages from the president of the country, as they are "knowingly false." Nonsense, but this is the American reality now. The situation in the economy is no better than the situation with the epidemic. Economists are predicting a serious recession for America, from which the country will take a very long time, perhaps several years, in contrast to Trump's promises to "lift the economy almost by 2021." We have already seen the GDP report for the second quarter.

General conclusions and recommendations:

The euro/dollar pair has presumably completed the construction of the upward wave C in B. Thus, at this time, I do not recommend new purchases of the instrument, but I recommend closing the old ones. I also recommend starting to look closely at sales with the first targets, which are around 15 and 16 figures, since the instrument can now move on to building a global wave C.

GBP / USD

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On August 6, the GBP/USD pair gained about 20 pips, however, an unsuccessful attempt to break through the 127.2% Fibonacci mark indicates that the markets are not ready for new purchases of the pound, and the current wave counting implies the construction of a new downtrend section, as wave 5 took a fully completed view. Thus, before a successful breakout of the 127.2% Fibonacci mark, I believe that the instrument will try to start building a downward set of waves.

Fundamental component:

The demand for the US currency declined yesterday, paired with the pound, although the results of the meeting of the Bank of England and the subsequent speech of its governor Andrew Bailey cannot be called too optimistic for the British currency. Nevertheless, the current wave counting implies the beginning of a decline in the instrument, respectively, the dollar should start to grow, unless the American reports that will be released in the next few minutes spoil everything. The main thing is that if the Nonfarm report is strong, then you can really expect a strong increase in the dollar. No news is expected from the UK today.

General conclusions and recommendations:

The pound/dollar instrument is expected to have completed an upward wave 5 around 1.3183. Therefore, I recommend at this time to close all purchases at least until a successful attempt to break through the 127.2% Fibonacci level and tune in to a possible long-term decline in quotes within a new downward trend section with the first targets around 27 and 28 figures.

Forex analysis 7 Aug 2020, 12:38 UTC+00
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9 End of US dollar hegemony
American dollar dominance is over
The US dollar has long been a dominant reserve currency and a symbol of reliability and economic prosperity. However, this is already in the past. The era of the US dollar is over. Due to the coronavirus pandemic, household incomes have plummeted and the US national debt has risen. Moreover, now China claims to be the leading economy in the world. It is not surprising since it was China that first emerged from quarantine and resumed the work of its economy. In this regard, many economists...

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The US dollar has long been a dominant reserve currency and a symbol of reliability and economic prosperity. However, this is already in the past. The era of the US dollar is over. Due to the coronavirus pandemic, household incomes have plummeted and the US national debt has risen. Moreover, now China claims to be the leading economy in the world. It is not surprising since it was China that first emerged from quarantine and resumed the work of its economy. In this regard, many economists predict a collapse of the US dollar. For example, the eminent economist Stephen Roach is confident that the American currency will collapse by 30-35% very soon.

For a very long time, the dollar was the world's leading currency. Its dominant position strengthened after the First World War thanks to US military superiority. However, in the early 2000s, there was a long-term tendency towards a weakening of the American currency, which is still observed today.

Indeed, July 2020 was the worst month for the US dollar in the past 10 years. It collapsed to multi-year lows. In just a month, the greenback lost six percent against the pound, five percent against the euro, and four percent against the Swiss franc and the Australian dollar.

The COVID-19 pandemic has clearly exposed the long-standing problems of the United States which have been accumulating for many years. So, the crisis became a catalyst for their development. The US economy is now facing a growing budget deficit, recession, and the risk of deflation.

Since there were no personal savings in the country for a "rainy day", and the economy had to be rescued, the American resorted to investments from outside, which led to a record national debt. Market participants have actively invested in the US dollar because of its special role in the global economy. However, now investors do not trust the US dollar due to the growing government deficit.

The US government spends trillions of dollars to support businesses and the population, but this is not enough. According to some reports, the US GDP fell by 32.9% compared to the same period last year.

Also the dollar is under pressure due to Donald Trump's policy. The American leader does not support globalization and seeks to distance from the other countries. America may soon lose its status as the world's leading economy and financial center.

This process has already begun as traders are actively investing in gold for fear of a military conflict between the United States and China. The founder and director of APS Asset Management Pte Kok Hoi Wong believes that it is time to withdraw money from American securities. The expert thinks that during the US presidential elections, political tensions may peak.

The US dollar is now losing ground against its main competitor, the Chinese yuan. While the pandemic is raging through the United States and the number of infected people is rapidly rising, China's economy has quickly recovered from the virus. In addition, the Chinese economy, according to the experts, is undergoing a stage of transformation from industrial to post-industrial. This means that China will focus on the domestic market and will be less dependent on exports. This, in turn, will push the yuan to a new level of a reserve currency.

Mr. Roach has also noted that the increase in oil demand will strengthen the Mexican peso and the Canadian dollar. Moreover, the euro, which has survived all the economic shocks over the past 10 years, has good prospects for further growth. This is enough to crash the US dollar.

At the same time, Charles Biderman, founder of the analytical company TrimTabs Investment Research, sees another danger. At the moment, unemployment in the US is rising, while savings are falling. However, new car sales are increasing, as well as the real estate prices. This signals that instead of saving money, Americans spend it instantly. If the world faces the second wave of coronavirus, the country will face a sharp decline in consumption.

Yet, this is not the worst thing. Stephen Roach noted that the US economy is recovering very slowly, and there are more and more unemployed people in the country. This will lead America into a deep hole of debt as the population has nothing to pay off its loans. The authorities will have no choice but to continue stimulating the economy by investing the next trillions of dollars. Therefore, the budget deficit and dollar depreciation are inevitable.

Former US Secretary of the Treasury Henry Paulson is also confident that the dollar's dominance is coming to an end. The role of the yuan will increase due to the integration of the China's economy into global processes. Indeed, the American currency has faced the most difficult situations in the entire post-war era.

News 7 Aug 2020, 12:46 UTC+00
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10 Ichimoku cloud indicator analysis of Gold
Gold price ended the week higher making new weekly all time highs and closed above $2,030. Trend remains bullish. The...
Gold price ended the week higher making new weekly all time highs and closed above $2,030. Trend remains bullish. The precious metal was under pressure on Friday as most probably profit taking by bulls took place. Gold price today made a new higher high but price closed below yesterday's lows. This is a warning sign of a short-term top. I do not expect price to form a major top. My first pull back target is at $1,990 and my second target is at $1,922. As we said in previous analysis, Gold...

Gold price ended the week higher making new weekly all time highs and closed above $2,030. Trend remains bullish. The precious metal was under pressure on Friday as most probably profit taking by bulls took place.

analytics5f2dbf9ddcfcf.jpg

Gold price today made a new higher high but price closed below yesterday's lows. This is a warning sign of a short-term top. I do not expect price to form a major top. My first pull back target is at $1,990 and my second target is at $1,922. As we said in previous analysis, Gold price justifies a pull back. Any pull back is seen as buying opportunity. We expect Gold price to continue higher over the coming months.
Forex analysis 7 Aug 2020, 20:57 UTC+00
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