4-hour timeframe
Average volatility over the past five days: 116p (high).
The third trading day of the week for the EUR/USD pair is held in the same manner with Monday's activity. Yesterday there was an inexplicable surge in the volatility of the euro/dollar pair, but today there are calm movements in the market that do not cause any concern. The macroeconomic background in the first three trading days of the week is still completely empty. There are no important and interesting publications in the United States or in the European Union. Thus, traders, by and large, have nothing to react to. Moreover, market participants are now ignoring almost all macroeconomic reports, even events of fundamental importance. The pair fell to the critical Kijun-sen line in the morning, however, it resumed its upward movement in the afternoon, according to our hypothesis of a correction against correction. Thus, at the moment, the upward movement continues, although not at a very high pace. The pair has gone no more than 70-80 points during the day, so chances that the market will calm down are growing again. We still expect the euro to move to the level of $1.10. In the future, the fate of the euro will be decided in the range of $1.09-1.10.
However, one event is still planned for today, which may affect the movement of the currency pair and arouse interest among market participants. We are talking about the minutes of the Federal Reserve's recent meetings, during which it was decided to ease monetary policy in an unprecedented volume in the form of a rate cut to the levels of 0-0.25%, as well as in the form of expanding the quantitative easing program. Now it is the minutes' turn. Usually, the minutes of the Fed do not contain any important information, since all the necessary details are already announced by representatives of the Monetary Committee and its head Jerome Powell immediately after the meeting. Also, Powell answers all questions during the press conference. Thus, no new information is usually contained in the minutes, so they almost never cause any reaction from market participants. However, this time the situation is not ordinary. First, we are talking about the minutes of emergency meetings. There were two of them, and the Fed trims the interest rate on each of them. Second, this is a very turbulent time - for the US central bank, the government, and the world - because of the coronavirus. Thus, it is possible that this time the final communique will contain really important information. In fact, we, traders and analysts, are only interested in information about the mood of the Fed representatives. That is, what else is the Fed's Monetary Committee ready to do in countering the coronavirus? After all, it is no secret that the epidemic continues to spread in the United States, respectively, the American economy continues to contract and slow down. The longer it is in pause mode, the longer the quarantine measures are maintained, the longer the epidemic will rage and the more human losses, the more additional incentives, monetary easing and monetary injections will be needed. Hence the question to the minutes: what measures will the Fed be ready to take if necessary? This information is potentially important and significant. If the Fed makes it clear to the markets that it will be ready to go for new monetary incentives or, for good measure, implement Donald Trump's long-standing dream by lowering the key rate to negative values, then these are negative factors for the US currency. Recall that rates in the European Union have long been negative, but the closer the Fed's monetary policy approaches the ECB's monetary policy in terms of weakness, the less advantage the US currency has. We believe that the US dollar has nearly no advantage due to the fall of the Fed's key rate to 0.25%. This means that if we remove the factors of panic, crisis and economic shock, we would no longer bet on the long-term appreciation of the US currency.
Traders will also be interested to know what economic forecasts the Fed representatives will provide. In other words, will the Fed officials be optimistic or pessimistic in the future? After all, again, it is no secret that the decline due to the COVID-19 epidemic can be much more serious than it was during the Great Depression. In such a situation, will the Fed take a real position and admit that everything is bad, or will it consider it necessary to calm the markets with overly optimistic forecasts and assurances?
4-hour timeframe
Average volatility over the past five days: 155p (high).
The GBP/USD currency pair continues to move inside the side channel on April 8, limited by the levels of 1.2200 and 1.2450 (approximately). At the moment, movement continues to the upper boundary of this channel, to which, in fact, no more than 50 points remain. A rebound of the pound/dollar pair from this level can trigger a downward movement with the goal of the lower line of the side channel - 1.2200. Bollinger bands are directed sideways, which also signals a flat. Thus, in order for the British currency to resume growth, it is necessary to overcome the area of 1.2450-1.2470, from which the pair has already rebounded three times. The volatility of today does not currently exceed 110 points, but the day is not over yet, so the pair could still reach an average of 150-160 points.
Meanwhile, the British continue to use their legal right to go out once a day for sports, Boris Johnson, who is the initiator of such a "soft" quarantine, remains in the intensive care ward. His condition is assessed as "good", but, in our humble opinion, those in "good" condition do not go to the intensive care unit and also do not stay in it for more than two days. Representatives of Boris Johnson assure that the prime minister does not work and fully follows the advice of doctors, who forbid him to be involved in the business process.
No important publications from the UK are planned for today, so there is also no macroeconomic background for the pound/dollar pair.
Recommendations for EUR/USD:
For short positions:
The EUR/USD pair continues to not move up too much on the 4-hour timeframe, a weak Golden Cross has formed. Consolidating the price below the critical line will allow you to consider short positions with the first goal of the volatility level of 1.0792, but this requires a confident overcoming of the Kijun-sen line.
For long positions:
It is recommended to buy the EUR/USD pair if the price rebounds from the Kijun-sen line, which indicates a possible resumption of the upward trend, but in small lots. The first goal in this case is the volatility level of 1.1024.
Recommendations for GBP/USD:
For short positions:
The pound/dollar pair is now inside the side channel, limited by levels of 1.2200 and 1.2450. Thus, it is recommended to trade either on the rebound from the upper or lower border of the channel, or wait for a flat to be completed. Short positions can be considered after breaking the level of 1.2200 with the aim of the Senkou Span B line. Or, when the price rebounds from the 1.2450 level while aiming for 1.2200.
For long positions:
It will be possible to buy the GBP/USD pair no earlier than consolidating the price above the 1.2450-1.2470 area with targets at levels 1.2509 and 1.2584.
