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AdmiralMarkets
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DAX30 CFD being pushed below 13,000 out of US-Iran war fears?

The DAX30 CFD had a prosperous start for the new year, but gave surrendered all its gains and more last Friday.

The main driver for this bearish action came from recent developments in the Middle East last Friday, when the Pentagon launched an airstrike that killed Iranian commander Soleimani, sparking fears that a war between the US and Iran could be about to start, increasing chances of a broad risk-off mode and break below 13,000 points on the table.

In addition to that, White House advisor Peter Navarro mentioned during his CNBC interview that the US is “going to try to get something going with Great Britain, Vietnam, Europe and anybody else who wants to fairly trade with the United States of America”.

If, based on these comments, speculation among market participants infer that Europe could be attacked with tariff announcement from the US in the near future, the German index could quickly see further selling pressure.

On the other hand; as the Fed to continues to flood markets with liquidity in the hopes of avoiding avoid a funding crisis, particularly in the repo market, (and will thus extend the Fed balance sheet to new record highs by mid-January) the downside should be limited and only a drop below 13,080/100 points would significantly darken the technical picture on H1.

The main focus on the upside stays on 13,480/500 points, and a break higher should be considered clearly bullish, making a test of the current all-time highs around 13,600 points likely:

 

Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the DAX30 CFD increased by 9.56%, in 2016, it increased by 6.87%, in 2017, it increased by 12.51%, in 2018, it fell by 18.26%, in 2019, it increased by 26.44% meaning that after five years, it was up by 34.2%.

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AdmiralMarkets
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Gold with a very bullish start into 2020 – 1,650/700 USD as target activated

Driven by the recent developments in the Middle East last beginning last Friday and continuing through to today, as fears rise that a war between the US and Iran could be about to start, Gold profited from the resulting risk-off mode.

As 10-year US-Treasury yields drop, Gold took on momentum, driven also by the bullish seasonal window from Mid-December through Mid-January (displayed in orange).

While the mode looks a little extended on the upside, the yield-sensitive precious metal is also known for its trend stability, meaning that we could see a direct push up to the next potential target region of around 1,650/700 USD.

Technically, the break above the 2019 yearly highs around 1,557 USD is a clear bullish sign, with 1,557 USD and below 1,520/525 USD acting as a potential long trigger.

On a daily time-frame Gold stays bullish as long as we trade above 1,440/450 USD:

Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.

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AdmiralMarkets
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DAX30 CFD bulls still in control – new all-time highs still possible

 

With a light economic calendar – and no further geopolitical tensions, relevant to the markets, between the US and Iran over the weekend – and the upcoming sign off the Phase 1 trade deal between the US and China coming this Wednesday, volatility in the DAX30 CFD should stay subdued.

In fact, this market environment seems very favourable for a bullish push higher, and we could potentially see the German index once again attack its current all-time highs of around 13,600 points.

In our opinion, such an upwards move seems very likely, and the region around 13,600 points acts as stop-over up to the next target, which will be around 13,800 points.

The region around 13,800 points is of higher interest, with focus on the expiration of DAX options at the EUREX next Friday, and the elevated Open Interest at the strike price of 13,800 points.

Still, bulls should be at least aware of the forming bearish divergence in the RSI(14) on H1 which points from a purely technical perspective to diminishing bullish momentum and could trigger, if bears gain at least short-term control, a bearish stint down to 13,380/400 points:

In 2015, the value of the DAX30 CFD increased by 9.56%, in 2016, it increased by 6.87%, in 2017, it increased by 12.51%, in 2018, it fell by 18.26%, in 2019, it increased by 26.44% meaning that after five years, it was up by 34.2%.

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AdmiralMarkets
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U.S. dollar appreciated in the face of political uncertainty

The first week of the year began with the rise of U.S. dollar, fueled by uncertainty in the global political arena over the U.S.-Iran conflict. Iran’s response to the U.S. decision to blow up the country’s senior military officer’s car, was to fire rockets at several U.S. military bases in the region, calling it a response to U.S. action. Following the attack, both sides abstained from sharp comments and political tensions eased in the second half of the week.

USD

Economic data in the U.S. has been mixed. The country’s labor market results of December were the main focus: 145 thousand new jobs were created, less than the expected 160 thousand. The private services sector created the largest number of jobs, while the number of employees in the industrial segment decreased by -12 thousand, which confirms the negative trend prevailing in the last half-year. Likewise, the average hourly earnings change was observed, falling to 2.9% per year, which was the lowest level in the last 17 months. Overall, unemployment remained stable at 3.5%. The number of new unemployment applications reached 214,000 and continued to move towards the low end of the cycle.

Investors’ optimism about the U.S. dollar has also been fueled by public comments by members of the Federal Reserve on the U.S. economic outlook for 2020. James Bullard, head of the Saint Louis department, said he expects a soft landing this year, Charles Evans of the Chicago Department described the economy as in good shape, and Robert Kaplan, head of Dallas, said the U.S. could grow by 2.0-2.5% a year, if uncertainty and difficulties would decrease.

Euro

The main currency pair EUR/USD reflected U.S. dollar trends and depreciated. Old continent economic data included retail sales, which were up 2.2% year-over-year and preliminary December inflation of 1.3% yoy. In Germany, the largest economy, retail sales grew 2.8% year-over-year but the industry showed no positive signs – in 2019, car production reached 4.7 million units, dropping to its lowest point since 1997. EUR/USD ended the week depreciating -0.4%.

JPY

The most important Asian pair USD/JPY appreciated significantly, reflecting investors’ return to U.S. dollar positions. Japan’s economic performance included the manufacturing PMI index, which stood at 48.4 points and was at its lowest level in the past 3 years. Household consumption declined by -2.0% per year, which until now has been positive and contributed to economic performance. The USD/JPY has ended the week appreciating +1.3%.

GBP

The British pound has reflected the market trends. Considering Brexit, the House of Commons on Thursday approved a plan to exit the European Union proposed by Prime Minister Boris Johnson, paving the way for a withdrawal on January 31 this year. It will then be followed by trade talks with 11 months until December 31, 2020, during which Britain will need to agree trade terms with the European Union. No important economic data was published in the country. GBP/USD has ended the week depreciating -0.1%.

Economic Events

This week will start with British economic data on the growth and industry output. Chinese international trade results are expected early on Tuesday, followed by U.S. inflation figures. On Wednesday, investors will be watching Britain’s inflation and European industry data. U.S. retail results are expected on Thursday, with a speech by Christine Lagarde, head of the European Central Bank. On Friday, Chinese indicators on economic growth, industrial production and retail sales, will be in spotlight.

According to Admiral Markets market sentiment data, 59% of investors have long positions in EUR/USD pair (increased +25 percentage points compared to last week). In the main Asian pair USD/JPY, 23% of investors have long positions (down 42 percentage points). In the GBP/USD pair, 49% of participants expect a rise (decreased -3 percentage points). Such market data are interpreted as contraindicative, suggesting appreciation in GBP/USD and USD/JPY pairs and depreciation in EUR/USD pair. Analysis of positioning data should always be accompanied with fundamental projections and technical analysis.

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AdmiralMarkets
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The U.S. dollar has adjusted

The sentiment in the currency markets was volatile last week. At the beginning of the week, the U.S. dollar market was dominated by buyers, but as of Thursday, the balance shifted and sellers gained momentum, prompting a -0.5% depreciation of the U.S. dollar index in one trading session on Friday.

USD

There were no big surprises among U.S. economic indicators. Industrial orders declined -3.7% per year. Transport and aviation, mainly due to Boeing’s problems with the 737, were the biggest contributors. Interestingly, last week Boeing posted annual results which indicated first yearly loss since 1997, caused by problems with the 737 model. The consumer confidence index in the country rose moderately to 131.6 points, but has not yet returned to the cyclical heights. The number of new unemployed applications reached 216 thousand and was relatively stable compared to last week.

Last week, the U.S. Federal Reserve held a meeting, during which interest rates remained unchanged as members thought the sentiment in the economy remained fairly good. Members expect no interest cuts this year.

Euro

The main currency pair EUR/USD reflected changes in the U.S. dollar. Among the economic data in the Old Continent were the German Ifo index, which stood at 95.9 points, slightly adjusted, and German retail data, which showed a 0.8% year-on-year rise. In general, sentiment in Europe remains rather pessimistic. EUR/USD closed at 0.6% over the course of the week.

JPY

The most important Asian pair, USD/JPY, continued to fall to a level of 108.4 level and a 200-day moving average. Demand for the yen has remained strong, with anxiety about the Corona virus continuing as the number of infected people continues to rise. Among economic news, there was a preliminary change in industrial output, which stood at -3.0% per annum. Retail sales also declined by -2.6% year-over-year, suggesting that the country’s negative sentiment among industrial companies is gradually being passed on to consumers who are becoming more cautious about consumption. USD/JPY has closed the trading week depreciating -0.8%.

GBP

The British pound rose against the U.S. dollar to 1.32 level. Among the political news was the decision of the European Parliament to approve England’s withdrawal project, which means that Britain is no longer part of the European Union. Nevertheless, nothing has changed so far, as agreements on international trade and further cooperation must be reached this year. The Bank of England also held a monetary policy meeting but decided to keep interest rates at its current level, with 7 members voting in favor of stable levels and 2 members in favor of a reduction. There was no major economic news. GBP/USD finished trading up 0.5%.

Economic Events

This week will begin with industry sector managers index actual data. No major news is scheduled for Tuesday, and Wednesday will see results from the service PMI index. There will be not much information published on Thursday, with China and Germany’s international trade results and U.S. labor market data expected on Friday.

According to Admiral Markets market sentiment data, 37% of investors have long positions in the EUR/USD pair (down -42 percentage points from last week). In the main Asian pair USD/JPY, 72% of investors have long positions (increased +20 percentage points). In the GBP/USD pair, 30% of participants expect a rise (down 17 percentage points). Such market data is interpreted as contraindicative, suggesting appreciation in EUR/USD and GBP/USD pairs and depreciation in USD/JPY pair. Analysis of positioning data should always be combined with fundamental projections and technical analysis.

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AdmiralMarkets
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USD/JPY stable around 110.00 – a re-test of the yearly highs by the weekly close?

Dollar-Euro- Stock market

Economic Events

While volatility in forex markets and US yields remained elevated over the last few days, USD/JPY traders still favoured the upside with the currency pair recapturing, at least for a short while, 111.00.

This is an interesting development, given the next massive monetary stimulus from the Fed coming, and the announcement to buy an unlimited amount of US Treasuries and Mortgage-Backed-Securities (MBS) last Monday, and while 10-year US-Treasury yields dropped back below 1.00%.

In fact, this development does not necessarily indicate that market participants are becoming more and more optimistic, the bias might switch back to “risk-on” again.

Current developments in the USD/JPY underline even more our short-term cautiousness towards USD short engagements since markets still have a USD shortage, and thus the usage of the re-installed swap lines of the Fed from the BoJ could result in an ongoing squeeze higher and either a test or even a break of the region around 112.00/30.

In addition to that, for the weekly close, the upcoming US economic projection in regards to Personal Spending is of high interest, as well. If the data does not come in as bad as markets may anticipate due to the Corona-shutdown, US yields could gain bullish short-term momentum and push the USD/JPY already towards its current yearly highs around 112.30:

Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between February 1, 2019, to March 26, 2020). Accessed: March 26, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the USD/JPY increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, in 2019, it fell by 0.85%, meaning that after five years, it was down by 9.2%.

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AdmiralMarkets
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U.S. dollar corrected to a 1-month low

Last week, investors in the foreign exchange market withdrew from the U.S. dollar segment and the reserve world currency adjusted to a 1-month low. This position was fueled by both poor U.S. economic data and the very mild tone of the country’s central bank due to further monetary policy.

USD

The Federal Reserve held a members meeting on Wednesday, during which it was decided to keep interest rates close to 0% for at least a year and until full employment is reached again. Also FED decided to maintain an unlimited quantitative stimulus program, to purchase domestic and corporate debt securities and provide liquidity to financial markets.

Among the country’s economic indicators, the number of new jobless claims was tracked, reaching 3.8 million, down from 4.4 million last week. Although the trend of lay-offs in recent weeks has been recording a slowdown, the overall scale is the highest in history. About 30 million jobs have been lost in the country since the virus began. The press mentions that the country’s system is unable to process all the applications submitted and there are still a number of people who have lost their jobs but have still not received unemployment benefits. It is also important to note that workers are being laid off or are considering to by even the largest companies in the country, including Hertz or Boeing. Other economic indicators included the results of the first quarter of the country’s economy, which showed a decrease of as much as -4.8% compared to the fourth quarter of 2019. The result of the ISM manufacturing PMI Index was also published, which was at 41.5 points. Meanwhile, consumer confidence index fell from 118.8 to 86.9 points, the lowest level since 2014.

The news about the coronavirus did not change significantly. Volumes in Europe continued to shrink, leaving only UK where growth was still recorded. Meanwhile, the situation in the U.S. did not improve and an average of about 30,000 new cases was recorded daily, and mortality also remained high at 2,000 per day.

Euro

The main currency pair EUR/USD appreciated to 1.10-point level and almost reached the 200-day moving average. Among the important and interesting economic indicators was the situation on the German labour market – 373 thousand workers were laid off in the country, and the unemployment rate rose from 5.0% to 5.8%. The European economy contracted -3.8% in the first quarter compared to the last quarter of 2019. EUR/USD has ended the week appreciating +1.5%.

JPY

The main Asian pair USD/JPY changed only marginally and traded at the 107-point level. The country’s central bank did not change interest rates, but announced an unlimited quantitative stimulus program as expected. The employment rate rose slightly from 2.4% to 2.5%. Industrial production fell -5.2% year-on-year. The Industrial Managers Purchase Index stood at 41.9 points. USD/JPY ended the week dropping -0.5%.

GBP

The British pound appreciated against the U.S. dollar and had briefly reached the level of 1.26 points. There was little economic news, with the manufacturing PMI Index among the most important, falling to 32.6 points. GBP/USD ended the week appreciating +1.1%.

Economic Events

This week, on Monday, actual European manufacturing PMI Indices will be released, since a holiday took place last Friday. U.S. international trade data will be expected on Tuesday. No important news is planned on Wednesday. On Thursday, Bank of England meeting will be held, German industrial production in March will be released and U.S. unemployment applications data will be announced. German international trade results and U.S. labour market data, including unemployment, are expected on Friday.

According to Admiral Markets market sentiment data, 38% of investors have long positions in the EUR USD pair (down -6 percentage points from last week’s data). In the main Asian pair USD/JPY, 58% of investors have long positions (increased +9 percentage points). In the GBP/USD pair, 63% of participants expect a rise (up 13 percentage points). Such market data is interpreted as contraindicative, so EUR/USD is expected to rise and USD/JPY and GBP/USD to drop. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.

Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com

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AdmiralMarkets
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Is the EUR/USD to re-test 1.1000 if NFP’s are solid?

June 05, 2020 10:00

 

 

While the EUR/USD kept its bullish momentum after the sustainable break above 1.1000, which has laid the path up to 1.1200 as an initial target, so today could be the starting point of a corrective move back towards 1.1000.

This could be driven by today’s Non-Farm Payrolls report. While the data is expected to come in at -8 million, Wednesday’s ADP employment report leaves some room for optimism: while private businesses in the US fired 2.76 million workers in May, figures nevertheless beat the market forecasts of a 9 million drop.

Still, the EU commission’s proposal of a 750 Billion-Euro fiscal stimulus package with 500 billion Euro in grants and 250 billion in loans can be considered a first step toward a transfer union, leaving the Euro with an overall bullish tendency. That might be especially true, after the ECB boosted the size of its PEPP program yesterday to 1.35 trillion Euros with being set to run through at least the end of June 2021.

That said, a corrective move in the EUR/USD finds a solid support and potential Long-trigger around 1.1000, the breakout region, with the overall target above 1.1200/30 around 1.1400/50 staying active.

 

In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%.

 

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