Tuesday, 12 March 2019
Overview of 4-hour charts GBP/USD, USD/JPY
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EUR / USD
The news on reaching additional agreements between the UK and the EU, on Brexit issues, provided strong support for the EUR / USD pair.
These messages were unexpected for investors. On Monday afternoon, many traders expected parliament to reject the Teresa May draft. Now market expectations have changed. Investors believe that additions to the November draft agreement may change the balance of power in parliament and the Brexit bill may be ratified. This is quite a significant support factor for the European currency, because solving the Brexit problem will help reduce risks and uncertainty for the European economy, which is now experiencing serious difficulties in maintaining current growth rates.
In general, despite the growth of quotations, the market situation remains very uncertain. Firstly, the fact that the UK and the EU have signed additional documents does not guarantee the ratification of the Brexit agreement. Failed voting results can drastically change the vector of market movement. Secondly, important inflation data will be published in the US today, which can also make serious adjustments to the future course of trading. Insufficient inflationary pressure is one of the reasons why the Fed decided to suspend the rate hike cycle. Accordingly, stronger data may change the position of the regulator, leading to a stronger US dollar.
A correction is developing on the chart. After the breakdown of resistance at 1.1250, the next target for the price movement is the level of 1.1300. Since at the moment there are no reversal signals on the chart, the scenario with the growth of quotations remains a priority. At the same time, we should not forget that the bear trend is still dominant globally in the market, so the downward movement can be resumed today.
Our recommendations: off the market.
GBP / USD
A pair of GBP / USD for the day showed growth of more than 300 points, after the news that the UK and the EU managed to reach certain agreements that can help ratify the deal on Brexit. Now most investors believe that the parliament will either approve the agreement or reject it, with a small margin, which leaves good opportunities for finalizing the document and its subsequent ratification before March 29. These expectations are pushing the pair GBP / USD up.
In addition to important political news, today in the UK, domestic statistics on GDP, industrial production, etc. were published. According to the report, UK GDP growth (m / m) was 0.5%. The volume of industrial production grew by 0.6%, while the forecast was + 0.2%. The volume of production in the manufacturing industry grew by 0.8% against the forecast of + 0.2%. The market reaction to this data was restrained.
On the chart, we note a strong growth of the currency pair, which buyers continue to hold above the level of 1.3200. This creates good opportunities for the further development of the bullish movement, in the direction of the level of 1.3300. But, in cases of price reduction below 1.3200, the scenario with the development of the bearish wave, with target level 1.3150, will come to the fore. In the worst case scenario, we can expect a return to 1.3000.
Our recommendations: off the market
USD / JPY
The pair USD / JPY continues to grow moderately, despite the decline in the value of the dollar index. A report on the labor market published on Friday, as well as a significant strengthening of other currencies, primarily the pound sterling and the euro, put significant pressure on the dollar. At the moment, its index is trading with a decrease of 0.25%.
The pair USD / JPY receives support from the stock market, since the main world indices are trading in the green zone, which is always a negative factor for the Japanese yen. Investors positively perceived the news of new agreements reached by the EU and the UK, and are actively buying risky assets. With this background, the demand for the yen, which is the main funding currency, is falling, contributing to the growth of the USD / JPY pair on the chart.
The bull wave continues on the chart. As the nearest support level, from which you can consider buying the pair, you should mark the level 111.20. The main target is the level 111.60.
Our recommendations: longs from 111.20
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