Daily Market Analysis from ForexMart

[KostiaForexMart]

EUR/USD. March 27, 2020 – Correction to the average

The currency pair EUR/USD dollar at yesterday's auction rose by more than 1,500 points, closing at 1.1025.
 
The price of EUR/USD reached a key resistance level of 1.1000, located at the convergence of the lines of exponential moving averages for 21 and 60 days - EMA 21 and EMA 60.
 
Strong growth of the pair was promoted by the report on unemployment in the USA published yesterday, which had a strong negative impact on the dollar against all major world currencies. At the same time, Fed Chairman Jerome Powell managed to calm the markets and US stock indices, including the industrial Dow Jones showed daily growth.
 
Despite the strong influence of fundamental factors, in the medium term I still expect the correction to complete and the downward trend to continue, as the European economy also suffers large losses, and investors traditionally prefer to hide from risks in the dollar.

[KostiaForexMart]

EUR/USD. March 30, 2020 – The level of 1.1160 stopped the growth of the European currency

At the end of last week, trading on the EUR/USD pair ended with an increase to the level of 1.1160. The dollar remains under pressure due to a sharp increase in dollar liquidity by the central banks of developed countries.

However, today the pair quotes began to decline to the level of 1.1050. The dollar was again in demand amid reports that the quarantine regime in the United States was not expected to end early. The US President said that the authorities extend the restrictive measures until the end of April.

Today, attention should be paid to inflation data in Germany, the consumer confidence index in the eurozone, as well as to the change in the volume of pending home sales in February in the United States.

[KostiaForexMart]

Fundamental analysis for Brent, March 31

Brent crude oil remains under pressure, although quotes today are showing some recovery to $27.70 per barrel. However, this growth does not seem to be lasting, since the external background remains extremely negative for the recovery of the oil market.

The pressure on oil is exerted by significant restrictions on business activity in most countries of the world, as well as the threat of increased production in Saudi Arabia and Russia. On the previous day the Saudis announced their intention to increase oil exports by 600 thousand barrels per day since May. This suggests that Moscow and Riyadh do not intend to return to their previous agreements regarding oil production.

According to analysts, the global demand for oil in the II quarter of the year may fall by 12 million barrels per day, which will be the strongest decline for all time.

Thus, all current factors signal that in the coming months the situation in the oil market may worsen, and the price of «black gold» risks fixing itself below $20 per barrel.

[KostiaForexMart]

EUR/USD. April 1, 2020 – Euro continues downtrend

Yesterday, trading on the pair EUR/USD ended in a slight minus, and today the downward trend of the euro continues. The pair is moderately declining to the level of 1.09. Pressure on the European currency has had the publication of economic reports from the eurozone. According to preliminary data, inflation in March slowed down from 1.2% to 0.7% year on year, while experts expected a decrease to 0.8%. The base consumer price index was 1% versus 1.2% a month earlier.

The dollar was supported by the decision of the US Federal Reserve to expand the ability of dozens of foreign central banks to access dollars during a pandemic. Some support was also provided by data on consumer confidence in March. The country recorded a drop in the consumer confidence index to 120 points, which is the minimum since July 2017. However, market participants expected a decline to 110 points.

Today, you should pay attention to the unemployment data in the eurozone for February (the indicator fell to 7.3%). Data from the USA will also be of interest: a change in the number of employees from ADP for March, the index of business activity in the manufacturing sector for March and the ISM manufacturing index for March.

[KostiaForexMart]

EUR/USD. April 06, 2020 – The euro began to strengthen from the level of 1.0770

The euro suspended its decline at 1.0770 and rebounded to 1.08. Today the news background for the pair is quite calm, only data on the volume of industrial orders in Germany for February and the Sentix investor confidence index for April in the eurozone will be of interest. The first indicator decreased by 1.4% m/m against the previous growth of 4.8% m/m. Regarding the second indicator: analysts expect it to fall to -30.5 points from the previous value of -17.1.

At the end of last week, the United States provided data on unemployment in March: the indicator rose to 4.4% from 3.5% earlier, although it was predicted to rise only to 3.8%. The number of jobs outside the agricultural sector decreased by 701 thousand against the expectation of a decrease of 100 thousand. These data put pressure on the dollar, stopping its strengthening.

Today, the EUR/USD pair will not show strong price fluctuations: it is expected to move within the range of 1.0750-1.0850.

[KostiaForexMart]

Fundamental Brent analysis for April 7, 2020

Brent quotes continue to grow, despite the uncertainty about the upcoming OPEC+ video conference. The current Brent quote is $ 33.75 per barrel.

Prices continue to stay above $30 per barrel, receiving support from reports that Russia is ready to discuss a serious reduction in oil production. However, many countries, including Saudi Arabia, cannot come to any formal agreement on quotas and terms, so the situation around the deal remains uncertain.

It is worth noting that the United States and Canada will not take part in the OPEC+ virtual meeting on April 9, which put some pressure on the market.

[KostiaForexMart]

EUR/USD. April 08, 2020 – Euro consolidated at 1.09

The euro has stabilized in the range of 1.0830-1.0900. Market participants remain neutral in the absence of important macroeconomic publications. Today, one should pay attention only to the publication of the minutes of the previous meeting of the US Federal Reserve System, according to which it will be possible to understand whether all members of the monetary committee agree to sharp cuts in the Fed rate.

Also, this publication will allow to get acquainted with the Fed estimates regarding the extent of the recession in the US economy.

Yesterday, a videoconference of finance ministers of the eurozone member countries took place, which culminated in the failure of the participants to agree on cooperative measures to overcome the economic crisis caused by the coronavirus pandemic.

[KostiaForexMart]

Fundamental Brent analysis for April 9, 2020

Today may be crucial for the global oil market. In the evening, the OPEC online-meeting starts, at which the ministers of the participating countries will discuss the adoption of coordinated measures to neutralize excess supply and maintain prices for «black gold».

In anticipation of this important event, Brent quotes are showing growth to the level of $34 per barrel. The new deal could include the United States, Mexico, Norway, Canada and other countries with a total production of 70 million barrels per day. Russia noted that it was ready to reduce production by 1.6 million barrels per day, if the United States also joined the leading countries of the deal (Russia and Saudi Arabia).

However, the States are not confident in their participation in either today's videoconference or a future deal, noting that oil production in the country is already declining for natural reasons. Thus, America’s position may again hinder the conclusion of a global deal.

Today, pressure on Brent may have yesterday's report from the US Department of Energy on US crude oil inventories. The data reflected an unexpected increase in stocks of 15 million barrels per week, while analysts predicted growth of 9 million.

[KostiaForexMart]

USD/CAD. April 10, 2020 – Canadian dollar is stable despite weak statistics

The USD/CAD pair continues to decline slightly, almost close to 1.3900. The Canadian currency is showing a strengthening, even despite the decline in oil quotes from the level of $35.40 to the area of $31.70 per barrel. Moreover, weak data on the labor market in Canada also did not have the proper negative impact on the «loonie».

According to statistics from the National Bureau of Statistics Canada, the number of jobs in March fell by 1.011 million, which significantly exceeded the previous record monthly drop of 125 thousand jobs in 2009. Unemployment in the country rose to 7.8% compared to 5.6% in previous months.

Business activity data also showed a significant decline. The Ivey Business Index fell from 54.1 in February to 26.0 in March.

Experts predict that in April the situation will only worsen, so the further strengthening of the Canadian dollar is in question. Today during the day the pair USD/CAD will consolidate near the level of 1.39.

[KostiaForexMart]

Brent. April 13, 2020 – Oil declines despite new OPEC deal

At the beginning of the week, oil shows a decline to the area of $31 per barrel. This weekend, OPEC, Russia, the United States and other oil-producing countries nevertheless came to an agreement on the main conditions of the new deal and agreed to reduce production by 9.7 million barrels per day during May-June. Such volumes account for about 10% of global supplies.

Experts note that this decline in oil production has become the largest in history. Previously, the pact participants intended to reduce production by 10 million barrels per day, but Mexico refused to reduce its share by 400 thousand. The United States agreed to take on part of the Mexican share, thereby reducing it to 100 thousand barrels.

Despite the success of the negotiations, traders are in no hurry to open «long» positions. The problem is that the actual reduction is still not enough to eliminate the imbalance in the oil market (in the amount of 20-25 million barrels). Moreover, the new deal will end in June, so the issue of additional reduction will again become relevant in the second half of the year.

[KostiaForexMart]

Fundamental Review for April 14: China, Risk Assets, USA

Investor sentiment on global markets remains moderately optimistic after the release of statistics on China's trade. According to the PRC General Directorate of Customs, exports in March fell by 6.6% YoY after falling by 17% in February. Imports were down 0.9% after falling 4%.

Such dynamics indicate that business activity in the country began to recover after quarantine, which supported the appetite for risky assets in global financial markets. Additional support to risk is provided by a visible slowdown in the spread of coronavirus in the world. According to official sources, only 70 thousand new cases of the disease were detected yesterday.

However, investor sentiment may already worsen after the International Monetary Fund (IMF) conference, at which representatives of the organization will present a revised forecast for the dynamics of the global economy in 2020. New data is not expected to please markets.

As for the United States, the banking reporting season is starting today: Wells Fargo and JP Morgan are expected to publish financial results. The US stock market may be under visible pressure if financial indicators do not meet the expectations of analysts.

[KostiaForexMart]

Brent. April 15, 2020 – Oil resumed to decline

Today, Brent quotes continue to decline after yesterday's fall. The current quote of the asset is $28.35 per barrel. As expected, the new OPEC+ agreement to reduce oil production did not bring positive results, because it was adopted too late. Moreover, market participants believe that a reduction of 9.7 million barrels per day will not be enough to stabilize supply and demand in the oil market.

Also yesterday it became known that the Texas oil regulator discussed the possibility of a coordinated limitation of oil production in the state, but it was not possible to reach a consensus. The US Department of Energy noted that production in the country will decline naturally in the face of low commodity prices.

An additional source of negativity for Brent was a report from the American Petroleum Institute (API), which reflected a 13 million barrels increase in crude stocks in the country. If today's statistics from the Ministry of Energy confirm an increase, Brent quotes will continue to decline to an area below $28.
 

[KostiaForexMart]

EUR/USD. April 16, 2020 – Euro is declining, the dollar is gaining strength across the entire spectrum of the market

On Thursday, the euro continues to decline amid a general strengthening of the US dollar across the entire spectrum of the market and the flight from risky assets. Investor sentiment worsened after the publication of the IMF forecast on the dynamics of the global economy in 2020. The Fund noted that the decline in global GDP this year could reach 3% and become the most significant since the Great Depression in the 30-s of the last century.

The dollar is growing, even despite weak retail sales data and a sharp drop in US industrial production. According to official figures, the decline in industrial production amounted to 5.5% y/y, and the decrease in retail sales – 8.7%. Today, you should pay attention to the statistics on initial applications for unemployment benefits in the United States.

Thus, under current conditions, the EUR/USD pair is trading at 1.0850. During the day, the euro is likely to maintain its weak position.

[KostiaForexMart]

EUR/USD. April 17, 2020 – Euro remains weak, approaching 1.08

At the end of the week, the euro remains under pressure: the current quotation of the EUR/USD pair is 1.0820. The US dollar has received support from published labor market statistics. According to current data, the number of applications for unemployment benefits for the week amounted to 5.245 million against the forecast of 5.350 million and the previous figure of 6.615 million.

The number of permits issued in March for new construction in the United States amounted to 1.35 million compared with February 1.45 million and a forecast of 1.30 million.

Today, the final calculation of inflation in March, which was previously 0.7% in annual terms, will act as a determining factor for further dynamics of the euro. Experts predict that the basic consumer price index will remain at 1% y/y, which will put some pressure on the European currency.

[KostiaForexMart]

Economic review for April 20, 2020

At the beginning of the week, mainly negative moods are observed on global exchanges: the US dollar is growing moderately, futures for the S&P 500 index are trading at a slight minus, and Asian indices are also declining.

The focus of markets remains the gradual abolition of quarantine measures in the United States and some European countries. However, this partial return to normal economic activity was announced last week, so it is unlikely that new reports of quarantine cancellation will be received with due optimism.
   
At the same time, the spread of infection in the world remains stable. Over the weekend, the increase in cases amounted to 80-85 thousand people per day. Worldwide, there are about 2.5 million cases of the disease.

Today is not rich in macroeconomic publications; only data on inflation in New Zealand and the trade balance in Japan can attract attention. The first indicator rose 0.8% in March and reach 2,5%. This country became the only one where inflation showed growth. Japan’s exports declined by 11.7% in March and trade surplus sinks by 90%. 

It should also be taken into consideration the reduction in the base rate by the People's Bank of China from 4.05% to 3.85%.

[KostiaForexMart]

USD/CAD. April 21, 2020 – Canadian dollar suffers losses

The fall in the oil market triggered a decline in the Canadian dollar, which is in direct correlation with Brent prices. Oil collapsed to a minimum of two decades (to the level of $18.10 per barrel) amid the collapse of global demand and a price war between Saudi Arabia and Russia.

Oil companies in Canada have already been hit hard by low oil prices, and yesterday's collapse in prices will inevitably lead to the bankruptcy of many industry players.

The current quotation of the USD/CAD pair is 1.4270. Today, you should pay attention to the data on retail sales in Canada for February. The indicator fell from 0.4% to 0.3%, better than forecast. Analysts had expected a decline to 0.2%. Tomorrow is expected to publish a consumer price index: experts predict a decline from 0.4% to -0.4%.

[KostiaForexMart]

Brent. April 22, 2020 – Oil shows new lows

On Wednesday, Brent oil quotes again updated the local minimum and reached $16 per barrel. However, today oil managed to recover to the level of $19.80.

Such a sharp drop was caused by fears of market participants about the extent of decline in demand for raw materials in the conditions of maximum filling of oil storage facilities. The data from the American Petroleum Institute (API) added fuel to the fire, according to which US crude oil inventories grew by 13 million barrels last week, while gasoline and distillate inventories increased by 11 million barrels in total.

Today you should pay attention to a similar report from the US Department of Energy. Experts predict an increase in reserves of 15 million barrels.

At the same time, news that the countries of the new OPEC+ deal will begin to cut production without waiting for May does not bring support to the oil market. Thus, under current conditions, a significant recovery of a commodity asset is unlikely.

[KostiaForexMart]

EUR/USD. April 23, 2020 – Euro broke down the level of 1.08

On Thursday, the euro declines, following yesterday's trend. The current quotation of the EUR/USD pair is 1.0780.

Today, two important events will be of interest. First, in the United States, the US House of Representatives will vote on a new fiscal package of measures to support the US economy worth $500 billion. And in Europe, an EU summit will take place, during which countries will discuss the creation of a pan-European fund that will support the economy for several years. The amount of the fund may be 1.5-2 trillion euros.

As for macroeconomic statistics, today business activity indices in the manufacturing and services sectors for April in France, Germany, the eurozone and the UK will be released. The United States will provide data on changes in the number of initial applications for unemployment benefits. Experts predict an increase in the number of applications by 4 million.

The RSI indicator is pointing down, which signals a continued decline in the European currency. However, the listed events and publications can significantly change the direction vector of the pair. So, follow the news.

[KostiaForexMart]

EUR/USD. April 23, 2020 – Euro broke down the level of 1.08

On Thursday, the euro declines, following yesterday's trend. The current quotation of the EUR/USD pair is 1.0780.

Today, two important events will be of interest. First, in the United States, the US House of Representatives will vote on a new fiscal package of measures to support the US economy worth $500 billion. And in Europe, an EU summit will take place, during which countries will discuss the creation of a pan-European fund that will support the economy for several years. The amount of the fund may be 1.5-2 trillion euros.

As for macroeconomic statistics, today business activity indices in the manufacturing and services sectors for April in France, Germany, the eurozone and the UK will be released. The United States will provide data on changes in the number of initial applications for unemployment benefits. Experts predict an increase in the number of applications by 4 million.

The RSI indicator is pointing down, which signals a continued decline in the European currency. However, the listed events and publications can significantly change the direction vector of the pair. So, follow the news.

[KostiaForexMart]

EUR/USD. April 24, 2020 – Euro in the range of 1.07-1.08

At the end of the week, the EUR/USD pair continues to decline, having reached 1.0725. The euro came under pressure after the publication of weak PMI indexes of business activity. According to recent data, the composite index in the EU fell to 13 points, which was the strongest drop in the history of observations since 1998.

Experts note that quarantine measures have a negative impact on the European services and manufacturing sector. Moreover, analysts expect European GDP to fall by 7% in 2020.

Yesterday, EU heads of state held a summit to discuss the need to create a new fund for economic recovery. However, despite the criticality of the economic situation, no decision was made on the size of the fund and the sources of its financing. The following negotiations have been postponed to May 6.

Yesterday, the US provided unemployment data, according to which the number of benefits increased by another 4.5 million people. The total number of unemployed Americans rose to 26 million. These data put pressure on the dollar today, which allowed the EUR/USD pair to recover to 1.0775.

[KostiaForexMart]

EUR/USD. April 27, 2020 – Euro strengthens on positive news from Europe

At the beginning of the week, the euro is showing growth, approaching 1.09. Support for the currency was provided by news that EU leaders agreed to create an emergency fund to restore the European economy with a total size of about 1.5 trillion euros.

In the US, President Donald Trump also signed into law to allocate $484 billion to accelerate the pace of economic recovery, but the news did not provide adequate support to the dollar. The fact is that the States presented data on consumer sentiment in the country: the indicator showed a decline for the third month in a row.

It is also worth noting that the United States and Europe intend to gradually lift quarantine restrictions from the beginning of May. Experts predict that economic recovery in all countries will occur extremely slowly, which does not add optimism to market participants.

Today is not rich in macroeconomic news; the EUR/USD pair will fluctuate around 1.0850. This week we should pay attention to two important events – the US Federal Reserve meeting (29.04) and the ECB (30.04).

[KostiaForexMart]

EUR/USD. April 28, 2020 – Euro is moderately growing to 1.09

The euro continues to grow on Tuesday, approaching 1.09. The fact is that the US dollar fell across the entire spectrum of the market after the growth of futures for US stock indices. Moreover, the appetite for risky assets increased after many countries presented plans to ease quarantine restrictions for many enterprises.

Today is not rich in macroeconomic publications. Attention may be drawn only by data on home sales in the US secondary market for March (a decrease of 9.7% is expected), as well as an indicator of consumer confidence and the Richmond Fed manufacturing index for April.

Market participants remain neutral in anticipation of tomorrow's meeting of the US Federal Reserve. And although analysts do not expect the introduction of any additional incentive measures, the regulator will have to provide relevant estimates of the economic consequences of the virus.
 

[KostiaForexMart]

EUR/USD. April 29, 2020 – The dollar is weakening in anticipation of the US Federal Reserve meeting

On Wednesday, the euro continues to grow moderately in anticipation of the results of the upcoming meeting of the US Federal Reserve. Most likely, the regulator will keep the rate and monetary policy at the same level, but it is worth paying attention to the press conference of the Fed head Jerome Powell. The politician must report on the future purchase of government bonds.

Yesterday's data on the index of industrial activity from the Federal Reserve Bank of Richmond put pressure on the dollar – the figure in April fell from the level of 2 points to -53. This was the strongest index drop in history. In addition, the foreign trade balance deficit in March amounted to $64.22 billion, compared with a deficit of $59.89 billion a month earlier.

Today, attention should be paid to the publication of preliminary US GDP. Analysts forecast a decrease of 4%. In the euro area will be published consumer confidence index for April. Experts expect the figure to be -22.7 points. The current quotation of the EUR/USD pair is 1.0865.

[KostiaForexMart]

Brent. April 30, 2020 – Oil started to grow, receiving the support of several factors

On Thursday, Brent crude quotes rose to $26.60 per barrel, receiving support from data on crude oil reserves in the US from the country's Ministry of Energy. According to the recent report, stocks of raw materials in US storage facilities grew less than forecast – by only 9 million barrels. The forecast assumed an increase of 10.6 million barrels.

Additional support for oil prices was provided by a general improvement in market sentiment amidst the fact that some countries are considering mitigating the restrictions associated with coronavirus.

Experts also note that from May 1, the terms of the new OPEC+ agreement to reduce global oil production will come into force. Norway also joined the deal, saying that in June the country intends to reduce production by 250 thousand barrels per day, and in the second half of the year – by 130 million barrels.

[KostiaForexMart]

EUR/USD. May 1, 2020 – Euro rose to 1.0980 after the announcement of the ECB meeting results

The EUR/USD pair rose to two-week highs, reaching 1.0980. Yesterday, the results of the ECB meeting were announced, at which the regulator kept the interest rate at 0%, and the deposit rate at -0.5% per annum.

The Central Bank also announced the launch of a new program for long-term lending to eurozone banks and stated its readiness to increase the scale of the Pandemic Emergency Purchase Program (PEPP) announced in March, currently amounting to 750 billion euros. These measures supported the European currency.

The US dollar was under pressure from weak statistics. In particular, the weekly report on the number of applications for unemployment benefits recorded an increase of up to 3.839 million against a forecast of growth of up to 3.500 million. Data on expenditures and incomes of the population in March also fell below expectations: the first indicator fell by 7.5%, and the second – on 2%. Analysts had forecast values at 4.8% and 1.6%, respectively.

Today the news background is calm, in a number of European countries it is a day off. Only data on the April index of business activity in the USA can attract attention: experts expect a decrease to 36.7 points against the previous value of 49.1.