Wednesday, 20 March 2019
Overview of 4-hour charts GBP/USD, USD/JPY
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EUR / USD
The new trading day the EUR / USD pair began with a moderate decline, being under pressure from the dollar, whose index is now trading in positive territory. According to most experts, local news related to the course of the US-Chinese trade negotiations, as well as reports of new nuclear tests in North Korea, supported locally the American currency, due to the increased investor’s interest in safer assets.
The data on the producer price index in Germany could have put some pressure on the pair, the indicator was -0.1% with the forecast of + 0.2%.
An ECB meeting is to take place today, which will not have discussions regarding the bank’s monetary policy issues, but some possible comments from the meeting participants may have a moderate impact on trading.
The central event of the day will be the FOMC meeting and the final press conference of the Fed Chairman Mario Draghi. On the eve of this meeting, the dollar was under serious pressure, as investors fear a significant softening of the regulator’s position on the further implementation of monetary policy, as well as lower forecasts for the main economic indicators. Therefore, during the trading day, despite the local growth, the dollar is likely to be traded under pressure, contributing to the development of the bullish movement in EUR / USD. The further vector of the market will depend on the FOMC decisions and Powell’s comments.
The price met a rather strong resistance at the level of 1.1360, which limited the further course of the price movement upwards. Nevertheless, buyers still manage to keep the price within the ascending price channel, which preserves high chances for the breakdown of the level of 1.1360 and the growth of quotations in the direction of the mark 1.11400.
Our recommendations: longs from 1.1345.
GBP / USD
The pair GBP / USD on Wednesday is trading with a decline waiting for the start of the EU summit and the meeting of the Bank of England, which will be held tomorrow. Earlier it was planned that on Wednesday a regular parliamentary vote would be held on the Brexit issue, but at the beginning of the week the Speaker of the House of Representatives canceled this vote due to the absence of significant changes in the Brexit agreement terms in the document submitted to vote.
Now the market is waiting for the EU decision to postpone Brexit. On the eve the representatives of the European Union announced that they expect from the UK specific proposals on the terms of the postponement of Brexit and, most importantly, the reasons why the British side wants to do this. Any postponement of the Brexit date increases the risks for the EU and UK economies, and officials fear that at the end of the new negotiation period, the British side will not be able to decide on the conditions for leaving the EU. On the eve the press secretary of the British government announced that in a letter to the EU, the Prime Minister may ask for a postponement of Brexit for at least 3 months.
In addition to news related to Brexit today, data on the consumer price index in the UK can affect trading.
On the chart, after another unsuccessful price attempt to overcome the level of 1.3300, a rollback movement develops. This situation retains as a priority scenario with the development of lateral movement in the channel 1.3200-1.3300. In the framework of this side movements, you can consider short-term longs of a currency pair in the lower range, which can be designated as 1.3200-1.3220
Our recommendations: purchases from 1.3200
USD / JPY
The USD / JPY pair this morning showed a rather strong growth, against the background of statements by the head of the Japanese bank Kurodo about possible strengthening of mitigating measures during the implementation of monetary policy, in case of the price increase in the country weakens. These statements have put strong pressure on the yen, since the softer policies of the central bank of any country always reduce the demand for national currency.
But, in our opinion, sellers can very quickly regain lost positions, because in the future the situation on stock exchanges, where major indices are trading in the red zone, can support the yen, increasing the demand for risky assets. Negative market expectations from today's FOMC meeting can also limit opportunities for strengthening the dollar.
On the chart, the currency pair is now testing a rather strong intermediate resistance level of 111.60, at which we can expect the formation of a reversal and the resumption of the price movement down. This scenario is now considered as the main one and it will lose its relevance only after the price is fixed above 111.60.
Our recommendations: shorts from 111.60
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