Wave Analysis from InstaForex

GBP/USD Forecast for 29 October 2018

GBP/USD

On Friday, the British pound grew by 13 points. The growth was stopped by the downward embedded line in the price channel. At the moment, the price is still testing this line with the support of the upward convergence on the chart of the lower timeframe. If the price manages to overcome this resistance, then a corrective price growth to the level of 1.2936 is possible - this is the low on October 23, and the Krusenstern line converges to this point both on the four-hour chart and on the daily chart.

The low of yesterday (1.2776) becomes the control level. Its overcoming will lead to a further decline in the price to the lower border of the channel in the area of 1.2618.


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EUR and GBP: The political career of German Chancellor Angela Merkel comes to an end

The euro continues to trade in the side channel paired with the US dollar on Monday, October 29. In the first half of the day, the pair fell after the results of the elections for The Christian Democratic Union of Angela Merkel in the land of Hesse, where the financial sector of Germany is mainly concentrated, was announced. Following the elections, the current government received the weakest support in its history.

As a result, German Chancellor Angela Merkel said that she would not be re-elected to the post of Chairman of the Christian Democratic Union. Let me remind you that Merkel has been heading this Union for 18 years. It is worth noting that the position of the head of the Christian Democratic Union in recent years significantly fell, as evidenced by the regional elections in various lands in Germany.

As for the support of the euro, Friday's decision of the S&P ratings agency is still fresh in the memory of traders, as well as statements made by the European Commission.

At the end of last week, S&P left Italy's credit rating unchanged, only downgrading the outlook for the rating to negative.

The European Commission's reaction to Italy's violation of budget rules also contributes to the demand for the European currency. As I noted in my morning review, the European Commission does not intend to respond with hostility to the statements of the Italian authorities, which were addressed to the EU at the beginning of last week. This will smooth out volatility in the financial markets, as well as maintain a strong position in Brussels.

Despite this, a number of investors and traders continue to be cautious, which is reflected in the EUR/USD quotes.

As for the technical picture of the EUR/USD pair, traders are currently focused on the level of 1.1430, the breakthrough of which will move the pair to a wide side channel with a larger resistance of 1.1480. Buyers also managed to hold the level of 1.1365, thus allowing the lower boundary of the rising channel, but this will only be possible after breaking the resistance at 1.1430.

The British pound continues to trade in a narrow side channel paired with the US dollar. Today's data that British consumers took less unsecured loans in September this year, led to a slight decline in the pound. However, the bears failed to resume a major downward trend.

The decline in demand for loans indicates that British households will be more careful about their spending in the future, which may affect the prospects for economic growth.

According to the Bank of England, in September of this year, unsecured consumer loans were issued in the amount of 785 million pounds against 1.2 billion pounds in August. The growth in unsecured consumer lending was 7.7%. The total amount of consumer lending, including mortgage loans, rose to 4.7 billion pounds in September against 4.3 billion pounds in August.

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EUR and GBP: US consumer spending will support GDP. A new bank tax was introduced in the UK

The European currency and the British pound continued to trade in a narrow sideways range on Monday. The euro's rising potential was limited by news that German Chancellor Angela Merkel has announced the end of her political career. The pound also did not show much activity, gradually falling to monthly lows, as traders expect the decision of the Bank of England on interest rates and news on Brexit. The presentation of the budget plan in Parliament by the UK finance minister also did not lead to changes in the GBP/USD pair.

In the afternoon of Monday, data was released, which indicated that Americans had increased their spending in September due to income growth.

According to the report of the US Department of Commerce, personal expenses of Americans increased by 0.4% in September this year compared to the previous month, while personal income of Americans during the reporting period increased by only 0.2% compared to the previous month. Economists had expected growth of expenses at 0,4% and income growth of 0.3%.

Given the current indicators, we can safely talk about maintaining a positive momentum in the US economy. As noted in the report, most of the expenses were related to durable goods, especially the purchase of cars. Medical expenses have also increased.

The share of savings of American households in September was 6.2% against 6.4% in August, which also indicates the belief of Americans in the economy of their country. At the beginning of the year, this figure is at the level of 7.0%.

The issue of US government bonds this year may exceed $1 trillion.

According to the report of the US Treasury Department, the volume of debt securities issued in the 4th quarter of 2018 will be $425 billion, and in total for this year the issue will be equal to $1.338 trillion. This sharp increase is associated with a sharp increase in the budget deficit due to high public spending in the absence of growth in tax revenues. As you can see, the tax reform, which was proposed by the White House administration, has its negative sides.

According to the Federal Reserve Bank of Dallas, the index of business activity amounted to 29.4 points in October this year, while economists expected that the index will be 27 points. The production index fell to 17.6 points in October.

As for the technical picture of the EUR/USD pair, the pressure on the euro may increase significantly after the support breaks at 1.1370. Movement under this level will lead to the demolition of a number of stop orders of euro buyers, who gained long positions last Friday, and to update the lows of 1.1335 and 1.1300. The main goal of the bears will be to achieve support in the range of 1.1250 by the end of the month.

The UK and a new bank tax

Yesterday, the budget plan was presented to the British Parliament. British Finance Minister Hammond said that the era of austerity is coming to an end. UK GDP is expected to grow 1.6% in 2019 and 1.4% in 2020. By 2021, the growth will be 1.4%. Thus, the estimate was revised upwards.

Hammond also noted that public borrowing in the period from 2019 to 2020 will amount to 31.8 billion pounds, the budget deficit for the same period will be at around 1.4% of GDP.

As for the risks, according to the minister of finance, the agreement on Brexit can provide double support to the British economy and will increase public spending.

Hammond also announced changes in taxes. As it became known, the introduction of a tax on remote banking services is expected, which will come into force in April 2020. It is expected that this tax will add to the budget more than 400 million pounds per year.

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Technical analysis: Intraday Level For EUR/USD, Nov 07, 2018

When the European market opens, some Economic Data will be released such as German 10-y Bond Auction, Retail Sales m/m, Italian Retail Sales m/m, and German Industrial Production m/m. The US will also release the Economic Data such as Consumer Credit m/m, 30-y Bond Auction, Crude Oil Inventories, and Mortgage Delinquencies, so amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.1524.
Strong Resistance:1.1517.
Original Resistance: 1.1506.
Inner Sell Area: 1.1495.
Target Inner Area: 1.1467.
Inner Buy Area: 1.1439.
Original Support: 1.1428.
Strong Support: 1.1417.
Breakout SELL Level: 1.1410.

Disclaimer:
Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Analysis are provided by InstaForex
 
EURUSD: lack of retail sales growth is a bad sign for the eurozone economy

The European currency continued its gradual growth against the US dollar, as well as the British pound, after today the division of the US Congress became known. As I noted in the morning review, Democrats gained a majority in the House of Representatives, and Republicans retained a majority in the Senate, which creates a number of problems for US President Donald Trump, who will find it increasingly difficult to implement his political ambitions and plans. We are talking about further tax reform, as well as a trade war with China.

It is possible that the division of Congress could critically interfere with the US president's plans for a further active trade war with China by introducing new duties on Chinese goods.

On the other hand, the risks of impeachment to the current US president have seriously decreased. Even if the Democratic party is able to obtain a majority of votes, further hearings should be held in the Senate, where the advantage is on the side of the Republicans. And impeachment requires the votes of two-thirds of senators.

Fundamental data

The data on the German economy released in the first half of the day and forecasts on its growth rates supported the European currency.

According to the report, industrial production in Germany in September this year increased by 0.2% compared to August, while a number of economists expected that production, on the contrary, will decrease by 0.2%. Let me remind you that industrial production showed an increase of only 0.1% in August. Economists had expected production to remain unchanged. As for the manufacturing industry, the production did not show any change, but the construction sector grew by 2.2%.

Compared to the same period in 2017, industrial production in Germany increased by 0.8% in September this year. Gradually, the increase will have a positive impact on the overall economic growth for the 3rd quarter of this year.

Today, a report from the Council of Economic Experts was published, in which Germany's GDP growth in 2018 was revised in a positive direction. The economy is expected to grow 1.6% in 2018 and 1.5% in 2019. As for the main risks for Germany, they are focused around the escalation of the trade conflict, the hard Brexit and the resumption of the crisis in the eurozone. The Council also believes that the problems can create a late turn of monetary policy by the European Central Bank.

Data on retail sales in the eurozone, which came out in the first half of the day, were ignored by the market. According to a report from the statistics agency, retail sales in the eurozone in September this year remained unchanged compared to August, while economists had expected an increase of 0.1%. Compared to the same period in 2017, retail sales increased by 0.8%. Data for August were revised. The growth was 0.3% compared to July.

The weak report once again shows that the eurozone economy is beginning to show signs of a slowdown in the 3rd quarter of this year, which may seriously affect the plans of the European Central Bank, which is going to resort to significant changes in monetary policy next year. This is a bad sign for the growth of the European currency in the medium term.

Analysis are provided by InstaForex
 
The Fed's November meeting: waiting for hints about the December hike

After the announcement of the first results of the elections to the US Congress, the dollar was under considerable pressure, as the lower and upper houses of the legislature were divided between Democrats and Republicans. The dollar index slipped to 95.55 points, reflecting the weakening of the currency in all dollar pairs. The possible imbalance of the American political system has frightened traders - especially against the background of loud statements of Democrats concerning new investigations concerning the president, as its results could even lead to impeachment.

However, during the US session, the situation was unexpectedly smoothed by Donald Trump himself. He expressed readiness to cooperate with the Democratic party, expecting relevant legislative proposals on the development of health care and infrastructure from their representatives. The main message of yesterday's speech was that the White House (as well as the Republican party as a whole) is ready for constructive negotiations and effective cooperation.

In other words, on the one hand, he admitted the defeat of the Republicans in the House of Representatives, but on the other hand, hinted that now the Democrats have legislative levers that should be used not for their political purposes ("digging" for the Republican President), but "for the benefit of the American people." The willingness of Trump to dialogue pleased the traders, after which the dollar regained its position - in particular, the EUR/USD pair moved away from daily highs (1,1500) and ended the trading day at 1.1425.

In my opinion, Trump's speech from yesterday has the character of a political prop. He was forced to curtsy to the Democrats and "pass the ball" on their field, shifting the responsibility for the further actions of the Lower House of Congress. However, such a broad gesture is unlikely to reduce the intensity of the confrontation between the Democratic party and the White House – especially after the "donkeys" took control of the house of representatives from the "elephants". Of course, the Democrats will not be able to block absolutely all of Trump's legislative initiatives (because in the end it can play against them), but this fact does not prevent them from conducting new investigations against the American president, thereby reducing the likelihood of his re-election for a second term.

Having come to this conclusion, traders again reduced interest in the dollar, after which its growth has been suspended throughout the market. The greenback remained under the background pressure in anticipation of the main event of today - the November meeting of the US Federal Reserve. Although this meeting is considered to be a "walkthrough", its results can cause quite strong volatility among dollar pairs. The fact is that the market is beginning to gradually focus its attention on the future prospects of monetary policy, as the probability of a December rate hike is already at 76%. The slowdown in September inflation and weak wage growth are unlikely to affect the determination of Fed members to raise in December, but at the same time may affect the tone of their rhetoric.

Let me remind you that after today's meeting, there is no press conference for Jerome Powell, so traders will have to "settle for" only an accompanying statement. However, the text of this statement can give answers to many questions – for example, how high is the probability of a rate hike at the spring meeting, taking into account the latest trends in the US economy. And it's not just the slowdown in consumer prices. There are other reasons for concern, which the regulator can turn its attention to (but again – only in the context of future prospects).

In particular, we are talking about the weak dynamics of consumer spending, as well as the decline in the US housing market: in September, the pace of housing construction in the US significantly decreased, and the corresponding figures fell to three-year lows in the southern states. Activity in the country's manufacturing sector also decreased: the number of new orders fell to 1-a-year lows. Thus, in October, the ISM index fell to 57.7 points, while in September this indicator came out at the level of 59.8. Strong Nonfarm, on the one hand, speak about the strengthening of the labor market, but, on the other hand, there is its own "fly in the ointment". An analysis of the Fed's recently published Beige Book suggests that there is a shortage of labor (especially skilled labor) in many regions of the country. Although this nuance is secondary, it can still be taken into account by Fed members.

Thus, the results of the November meeting of the Federal Reserve should: a) confirm the intention of the members of the regulator to raise the interest rate in December; b) outline the future prospects of monetary policy. And if the first point is indicated more or less clearly in the accompanying statement, then the outlines of the long-term prospects will have to be "deciphered" by the traders themselves on the basis of the general tone of the text.

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Technical analysis: Intraday level for USD/JPY, Nov 12, 2018

In Asia, Japan will release the Prelim Machine Tool Orders y/y and PPI y/y, and the US will not release any Economic Data today. So there is a probability that the USD/JPY pair will move with a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Resistance. 3: 114.55.
Resistance. 2: 114.32.
Resistance. 1: 114.10.
Support. 1: 113.83.
Support. 2: 113.60.
Support. 3: 113.38.

Disclaimer:
Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all Traders or Investors.The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Analysis are provided by InstaForex
 
EUR/USD. The euro is under pressure, but Brexit could be an unexpected ally

The euro/dollar pair touched the 1.1240 mark today - the last time the price was at such lows was in the summer of the previous year, within the upward trend from the area of historical lows (when the pair was in the area of the third-fourth figure).

The combination of fundamental factors puts pressure on the EUR/USD: the dollar is growing against the background of the hawkish Fed meeting, the euro falls amid panic fears of chaotic Brexit. The Italian question and the soft comments of the ECB representatives only aggravate the gloomy picture. In other words, such a powerful price decline is quite justified – the past weekend did not bring any detente, but, on the contrary, in many respects complicated the situation in many issues.

Let's start with Italy. Last Friday it became known that the Italians will not revise the state budget for the next year and, accordingly, will not reduce the level of its deficit. In fact, Rome ignored the demands of the European Commission, after which Brussels is forced to respond to such a demarche. Tomorrow is the three-week deadline, during which the Italians had to significantly revise the main financial document of the country, while fulfilling the requirements of the EC. The decision of the Italians is already known, so tomorrow the ball will be on the side of Brussels. There is no doubt that the EU leadership will react to the current situation. Otherwise, other European countries may follow the Italian example, thus undermining the financial and political stability of the eurozone.

Therefore, with a high degree of probability we can say that on November 21, members of the European Commission will launch a disciplinary procedure against Italy. The first step in this process will be the publication of a report on the financial condition of the country – this document is necessary for the codification of violations committed by Italian authorities. After that, Brussels will have grounds for the application of financial sanctions: experts believe that the amount of the fine will be about 1.7 billion euros (i.e. 0.2% of GDP). However, this amount may double if the Italians continue to "resist". The implementation of the disciplinary procedure will last for months, so the European currency will remain under the background pressure of this factor for a long time - if, of course, Rome does not make concessions.

However, so far Italy has demonstrated not only a principled, but also a very belligerent attitude. So, the head of the Italian Foreign Ministry said today that Rome can block the adoption of the EU budget, "if European bureaucrats will continue to fool around." Similar threats had previously been expressed by the deputy prime minister. It is worth noting that such intentions are not voiced by Italian leaders in the context of a budget conflict, but because of the failure to provide assistance from Brussels on the issue of illegal migrants. But this fact all the same indicates that the parties are in a state of political clinch, the release of which is not yet in sight.

Thus, the European currency has no power to oppose the dollar, being trapped in the European conflicts - Brussels with London and Brussels with Rome. Today, the greenback is growing throughout the market by inertia, as American trading floors are closed - Veterans Day is celebrated in the United States. The producer price index published on Friday was better than expected: on a monthly basis, it updated the annual high, increasing to 0.6% (with a forecast of 0.2%), and in annual terms increased to 2.9% with a forecast of 2.5%.

This indicator is an early inflation indicator, so such figures caused a considerable resonance among dollar bulls. After the disappointing release of the consumer price index for September, inflation indicators are mainly in the "green zone", increasing the likelihood of tightening monetary policy at the December Fed meeting. Optimistic expectations overshadowed the negative impressions of the elections to the US Congress, especially against the background of Trump's readiness to cooperate with Democrats in the field of the legislative process.

So, the euro-dollar pair has updated the annual low against the background of the "black and white" fundamental background: almost all factors speak in favor of the growth of the US currency and almost all - against the recovery of the European one. In this situation, the potential for the pair's further decline is obvious, and from a technical point of view, the path is open up to the 10th figure (the lower line of the Bollinger Bands indicator on the monthly chart). But there is one "but" that should alert traders, which is the current dynamics of the pound. The GBP/USD pair is trading in the range of one hundred points - the low was marked at 1.2826, the high - at 1.2946.

The British currency reacts to the contradictory news background, which then plunges traders into a state of panic, then returns them to hope for a "soft" Brexit. If London and Brussels will still be able to find a common denominator, then there will be a "squeezed spring effect" on the market: a rising pound will help the EUR/USD pair to recover against general optimism. Therefore, when opening short positions, you should always remember that an unexpected and quite sharp jump may follow – stop loss can be placed at 1.1324, this is the opening price of today's trading day.

Analysis are provided by InstaForex
 
Intraday Level For EUR/USD for November 14, 2018

When the European market opens, some economic data will be released such as German 30-y Bond Auction, Industrial Production m/m, Flash GDP q/q, French Final CPI m/m, and German Prelim GDP q/q. The US will also publish the economic data such as Core CPI m/m, and CPI m/m, so amid the reports, the EUR/USD pair will move in a low to a medium volatility during this day.

TODAY'S TECHNICAL LEVEL:
Breakout BUY Level: 1.1361.
Strong Resistance:1.1354.
Original Resistance: 1.1343.
Inner Sell Area: 1.1332.
Target Inner Area: 1.1305.
Inner Buy Area: 1.1278.
Original Support: 1.1267.
Strong Support: 1.1256.
Breakout SELL Level: 1.1249.

Analysis are provided by InstaForex
 
Gold is betting on inflation

Gold marked the worst weekly dynamics in the last three months after the US dollar withstood the test of the midterm elections in the United States, the Federal Reserve confirmed its intention to continue the cycle of normalizing monetary policy, and producer prices in fact were better than expectations from Bloomberg experts. Acceleration of inflation is an important argument in favor of bringing the federal funds rate to a neutral level, which should be considered as a "bearish" factor for XAU/USD. That is why the futures quotes on the precious metal continue to be in the middle of the consolidation range of $1185-1215 per ounce, despite a number of positive news. Gold is anxiously waiting for the release of data on consumer prices, which is able to inspire fans of the USD index for new feats.

The beginning of negotiations between Beijing and Washington is regarded by investors as a de-escalation of the trade conflict. The breakthrough, according to BofA Merrill Lynch, can lead to selling the US dollar. This currency will lose the status of a safe-haven, which faithfully served it in April-October. The precious metal is supported by the next round of correction of American stock indices and the reluctance of fans of products of specialized exchange-based funds to get rid of them. Despite falling prices, stocks of the largest ETF SPDR Gold Shares rose from 730 tons to 755 tons in the last month. Let me remind you that the pullback of the S&P 500 in October allowed gold to grow in parallel with the US dollar. In November, this does not happen, but the weakness of American inflation will return to the "bulls" on XAU/ USD faith in themselves. Dynamics of gold and Dow Jones index

Controversial news from the eurozone contributes to the stabilization of the USD index. Irish tabloids argue that the deal between Brussels and London has already been concluded, it remains only to ratify it in Parliament. At the same time, Italy stated that it was not going to rewrite the draft budget submitted earlier by the EU with a 2.4% deficit of GDP. The pound and the euro have recently moved synchronously: investors understand that the disorderly Brexit will put pressure not only on Britain, but also on the eurozone. The presence of positive from the first and negative from the second makes them stay away from the market.

Thus, the short-term prospects for XAU/USD will depend on the release of data on US inflation. Strong statistics will allow the dollar to resume the attack, which is fraught with the continuation of the peak of gold. According to TD Securities, the breakthrough of support at $1190 per ounce will be the catalyst for further large-scale sales. On the contrary, the unimpressive growth in consumer prices will allow the precious metal to recall its trump cards in the form of high demand for ETF, de-escalation of the trade conflict and correction of US stock indices.

Technically, the return of gold futures quotations to the middle of the previous consolidation range of $1185-1215 per ounce indicates the activation of the "Cheating-out" pattern. On the other hand, the retreat from support near the target by 88.6% on "bat" pattern will return the initiative to the "bulls". Gold, daily chart

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Jerome Powell: get used to the smooth growth of interest rates

The turmoil with Brexit overshadowed the dynamics of the US currency, which, by chance, continues to increase its positions on the sly. The dollar index continues to be around one and a half year highs, reflecting the steady demand for the greenback. However, not all pairs are dominated by the dollar – for example, in the pair with the yen and the New Zealand dollar, the situation is mirrored, and the GBP/USD pair is completely at the mercy of Brexit, completely ignoring American events.

But in general, the greenback did not fall off its peak after the elections to Congress, as predicted by many experts. As a result of the elections, the most predictable result was realized (although very unpleasant for the dollar), therefore the weakening of the national currency was temporary. This was followed by quite positive signals that returned confidence to dollar bulls. First, the head of the White House extended a hand of friendship to the Democrats, offering cooperation in terms of the legislative process. And although this curtsey will not save him from a wave of new investigations, nonetheless Trump was able to neutralize nervousness about the possible imbalance of the American political system. Secondly, the US has recently pleased dollar bulls with strong macroeconomic reports. In particular, the labor market traditionally supported the greenback.

Thus, unemployment remained at a record low of 3.7% (the lowest since December 1969), and the unemployment rate of U-6 (that is, taking into account part-time employees) fell to 7.4% last month (in September it was at 7.5%). The number of employed in the non-agricultural sector increased by 250,000 people in October, and the share of the economically active population in the United States rose to 62.9%, showing a positive trend. What is especially important – the growth of salaries accelerated in October. This indicator is closely monitored by the members of the US central bank as its growth or decline demonstrates the level of demand in the labor market and indirectly affects the dynamics of inflationary pressure. According to most economists, for inflation to move to its target level, wage growth in annual terms should be above three percent.

So, in October, this indicator exceeded the key target and amounted to 3.1%, confirming the forecasts of experts. But in order for the puzzle of inflation growth to be fully formed, it was necessary to neutralize the September slowdown in the consumer price index. Then the numbers were frankly disappointing, causing some anxiety in the ranks of dollar bulls. However, the data published this week reassured investors, despite the fact that the release did not exceed the forecast values.

However, experts expected the growth of the CPI, and their expectations were fully justified: on a monthly basis, it reached three-tenths of a percent, and in annual terms, the indicator also came out at the level of forecasts, being at the level of 2.5%. Excluding food and electricity prices, the indicator similarly showed the dynamics of growth. On a monthly basis, it rose to two-tenths of a percent, and on an annual basis to 2.1 percent. However, the core inflation did not reach the forecast level, but it is not critical against the background of the general dynamics.

If we talk about the dynamics of US economic growth, we can not fail to say about today's release. Retail sales also showed a significant breakthrough after a rather weak dynamics in August and September. But in October, the figure came out better than forecasts - both with and without car sales. Consumer activity of Americans also plays an important role for the Fed, as the indicator reflects the growth rate of the country's economy.

All this allows Fed Chairman Jerome Powell to keep the course for further tightening of monetary policy. During the last 24 hours, he gave a speech twice at various events in the United States, answering questions from the audience. After the first speech, the dollar index fell slightly, because Powell, according to the market, took a rather cautious position regarding future prospects. But during the second speech, he "rehabilitated" - in particular, he said that market participants should get used to the idea that the Federal Reserve will gradually but steadily increase the base interest rate. In addition, he recalled that next year he will hold press conferences on the results of each of the eight meetings of the Fed, hinting that the rate can be raised at any of them (now the decisions of the regulator are expected only at extended meetings).

Summarizing the above, we can conclude that the general fundamental background allows the Federal Reserve to further tighten monetary policy: the probability of a rate hike at the December meeting is estimated at 70%, at the first spring meeting next year – at 45%. Recent macroeconomic reports and comments of the Fed's heads once again convinced the market of the regulator's "hawkish" intentions.

Analysis are provided by InstaForex
 
Indicator analysis. Daily review for November 19, 2018 for the pair GBP / USD

The price on Friday rally down worked out the top. Bears were fixing profits, and the market broke off the support line 1.1248 (red thick line). On Monday, there is no strong calendar news. Most likely, the bears once again try to resume movement down.

Trend analysis (Fig. 1).

On Monday, the price will move downward with the first target 1.2751 - the support line (red thick line).
Fig. 1 (daily schedule).
Comprehensive analysis:
- indicator analysis - down;
- Fibonacci levels - neutral;
- volumes - down;
- candlestick analysis is neutral; - trend analysis - up;
- Bollinger lines - up;
- weekly schedule - up.
General conclusion:
On Monday, the price will move downward with the first target 1.2751 - the support line (red thick line).

Analysis are provided by InstaForex
 
Calm before the storm: the pound in anticipation of Parliamentary battles

British Prime Minister Theresa May, and with it the pound, were able to contain a huge onslaught without succumbing to a barrage of criticism during the previous week. The head of government did not resign, and the British currency remained within the limits of the 27-28 figures.

The "house of cards" did not crumble, despite the resignations – moreover, the minister of environment, who also planned to leave his post, suddenly changed his mind, saying that he supports the actions of the prime minister. The post of Dominic Raab - chief negotiator from Britain - was vacant for just a day and a half: last Thursday, as May appointed former Deputy Minister of Health and Social Care Stephen Barkley to this position. He is a consistent supporter of Brexit, in particular, two years ago, by his own admission, he voted for the country's exit from the EU.

In other words, the design of the current government was able to show its resilience, which means that hopes for a "soft" Brexit remain. Although there are still some political risks: today the Lower House of the British Parliament received a petition for a vote of no confidence in the Prime Minister. "Hawks" among the Conservatives began to collect signatures last week – and it is still unknown whether they managed to find 48 supporters or not (that's how many signatures are needed to start the procedure). In her Sunday interview, Theresa May said that, according to her information, there is no necessary amount. Insider sources of the British press indirectly confirm May's information – according to them, her opponents were able to collect only 42 signatures. By and large, the case is only in six deputies, so the intrigue in this matter remains.

However, the very fact that the procedure is being launched will play an emotional role rather than a "practical" one. To declare a vote of no confidence in the prime minister, the Tories need to enlist the support of the majority of the 316 deputies from the Conservative party. According to experts, the internal party opposition simply does not have such a large number of supporters, so this is a losing initiative. But if conservatives can't even run the corresponding procedure, it will speak about the support of May from the deputies. Although this support is rather forced, it is not so important in the context of the foreign exchange market. The approval of the transaction by the Parliament is at stake, a few traders are interested in what way the prime minister will convince the deputies to support it. The result is important.

As Theresa May herself admitted, the next seven days will be especially difficult for the country. By and large, this is a key stage of Brexit – if the deputies still approve the agreement, the probability of a deal will increase as much as possible, given the volume of concessions to Brussels from London. According to the majority of experts, the approved deal is based mainly on EU conditions – therefore, if it is approved by the British parliamentarians, there should be no delays on the part of the Alliance.

All this means that the pound in the coming days will again live in the information hype about the presence/absence of the required number of votes. All other fundamental factors will play a secondary role, although important events are expected this week.

In particular, the Bank of England's parliamentary hearings on inflation will be held tomorrow. I would like to remind you that the British central bank must report to the Parliament every three months on inflation and the prospects of monetary policy. These hearings are attended not only by the head of the British central bank, but also by other members of the monetary committee. For example, the participation of five officials for tomorrow was announced, in addition to Mark Carney and his deputies.

As a rule, traders closely monitor this event, as it allows you to get a kind of insider perspective on the further actions of the regulator. The inflation report includes not only an overview of the current situation, but also a forecast for a certain time period – medium and long-term. A positive assessment of inflation prospects could increase the likelihood of tightening monetary policy, given the dynamics of the consumer price index this year. But in this case we have to speak in a subjunctive mood, because at the moment the prospects of monetary policy depend mainly not on the dynamics of inflation, but on the fate of Brexit. If a deal is concluded, the interest rate will probably be increased in the first half of next year – the market has little doubt about this. Otherwise, the mirror option is not excluded: Mark Carney recently admitted the probability of a rate reduction in the case of a chaotic Brexit.

Thus, it is not necessary to build illusions about the impact of macroeconomic factors or comments of members of the English regulator. In the near future, all the attention of traders will be focused on the parliamentary battles, the results of which will allow is to build long-term plans for the prospects of the British currency.

Analysis are provided by InstaForex
 
EUR/USD. The European Commission will announce the verdict to the Italians on Tomorrow

On November 21, the European Commission will announce its verdict on the draft budget of Italy. By and large, there is no intrigue here: representatives of the EC have repeatedly stated that the nominal budget deficit is three times higher than the figure provided for by earlier commitments of the Italians. In addition, the submitted document contradicts the Stability and Growth Pact, which defines the tax and budget policy of the European Union. Rome, in turn, refused to change the parameters of the budget – last week it was presented it was in fact presented in the same form. Therefore, it is easy to predict the "verdict" of the European Commission – Brussels will certainly announce the above theses, thereby, launching a disciplinary procedure against Italy.

This scenario is already partially embedded in the current prices, because the further algorithm of mutual actions was obvious even when the Italians refused to revise the budget rejected by the European Commission. Therefore, on Tuesday, the EC members will only state this fact, after which there are two possible scenarios: either Brussels will resort to penalties (having previously prepared a report codifying the violations committed by the Italian authorities), or the European Commission will agree to postpone the introduction of such measures. The second option, though unlikely, but still not excluded – according to some experts, the EC can wait until December – so that the Italians could once again "think about their behavior."

Of course, such a turn of events will be a positive signal for the euro – this will speak about the potential negotiability of Brussels and Rome. But the "sanctions path" certainly will not bring down the position of the single currency. The euro will be under background pressure, but one can hardly expect a downward impulse of several figures. First, the most likely scenario is already taken prices into account – the market is ready for further confrontation between the EU and Italy.

Secondly, the implementation of the disciplinary procedure will last for months, so the European currency will remain only under background pressure, while other, more "live" fundamental factors will set the tone for trade. Third, the outcome of the disciplinary procedure is also predictable: experts believe that the amount of the fine will be about 1.7 billion euros (i.e. 0.2% of GDP). This amount may double if the Italians continue to "resist". But the doubled amount of the fine is unlikely to affect the euro radically against the background of other events of a fundamental nature.

Thus, the question of the Italian budget has already outlived itself somewhat: traders are not so emotional to react to mutual verbal "injections" of politicians and are ready for their further battles. Moreover, some ECB representatives urge not to exaggerate the importance of this problem. For example, the representative of the European central bank Ewald Nowotny said that the increase in the yield of Italian government bonds has a "very limited impact" on the broad stock market. In addition, the budget confrontation itself has a limited impact on other, larger-scale processes.

In my opinion, the cause for concern will appear when the issue of the Italian budget turns into a political crisis in Italy: for example, early re-elections can strengthen anti-European rhetoric among politicians - and this fact will put strong pressure on the euro.

The economic calendar for the EUR/USD pair this week is almost empty - only the report of the last ECB meeting is of interest, the release of which is scheduled for Thursday. Therefore, traders will focus their attention on the events of the external fundamental background: Brexit and prospects of the US-China trade negotiations. Also interesting is the position of Fed members on the prospects of monetary policy in the light of the "correspondence confrontation" of the head of the Federal Reserve Jerome Powell and his Deputy Richard Clarida.

Let me remind you that Powell quite positively assessed the growth dynamics of the American economy and announced a further gradual increase in the rate. Clarida, in turn, noted that the slowdown in the global economy will have a negative impact on the key indicators of the US economy, and the interest rate has already approached its neutral level. Such discord surprised the market, then the dollar index slid to the limits of the 95 points. The rhetoric of the other Fed members will help traders navigate the situation in the context of the regulator's future prospects.

From the technical point of view, the situation for the EUR/USD pair has not changed since yesterday: the price has overcome two resistance levels on the daily chart – the average Bollinger Bands line and the Kijun-sen line. The next price target is the upper line of the Bollinger Bands indicator on D1, which corresponds to the level of 1.1485. If the pair overcomes this target, the Ichimoku Kinko Hyo indicator will form a "Golden cross" signal, which warns of a change in the bearish market to the bullish one. In this case, the price may jump to the middle of the 15th figure. The support level is the middle line of Bollinger Bands and the price of 1.1370.


Analysis are provided by InstaForex
 
EU and Britain reached an agreement on Brexit

The latest news: the European Union and Britain signed a joint declaration on relations after Brexit.

This is an important step to resolve the main problem for Britain and the EU at the moment.

This is an important victory for Theresa May in the fight against opponents in Britain.

On this news, the pound rose sharply by almost 1%.

News are provided by InstaForex
 
GBP/USD. Will Brexit trip over Gibraltar?

The pound is again under pressure because of the vague prospects of Brexit. The forced pause in this matter created an informational vacuum, but yesterday alarming signals were received regarding further approval algorithm for the deal. And it's not just the obstinacy of the British deputies: some representatives of Europe also expressed their dissatisfaction with the draft "divorce" agreement.

Another stumbling block was the British overseas territory – Gibraltar. A few centuries ago, the British won this strategically important piece of territory from the Spaniards, and since then disputes over its ownership have not subsided between countries. However, the discussion of this issue was conducted in a sluggish mode for many years: just now Madrid found a reason to intensify this process, in other words - took advantage of the situation.

Although a few months ago, Theresa May held talks with the Spanish side regarding Gibraltar, and this point was considered a resolved matter. In particular, in the spring of this year, Brussels proposed to give the Spaniards the veto over Gibraltar's future trade relations with the EU. After months of negotiations, the parties reached a compromise – at least, this was stated by the official representatives of Spain after the October EU summit.

The Spanish foreign minister then stressed that Gibraltar would not be a problem for signing the Brexit deal, despite the fact that some key aspects of future relations had not yet been resolved. The parties refused to disclose the details of the agreements, but according to insider leaks, London and Madrid agreed on the rights of citizens – primarily those citizens who are not British citizens, but live in Spain and work in Gibraltar. Here it is important to emphasize one point: the compromise on Gibraltar was agreed in the form of a protocol, which should be added to the common deal on the withdrawal between Britain and the European Union. The same protocols will be issued in respect of Northern Ireland, as well as the British military base in Cyprus.

This aspect is extremely important in the context of today's requirements of the Spaniards. The fact is that the agreement approved by the British ministers assumes that negotiations on further relations between Britain and the EU (which are not covered by the points of the deal) will continue after March 29, 2019, that is, after the official withdrawal of the country from the European Union. Madrid, in turn, requires that a separate clause be written in the agreement that would oblige London to negotiate with Spain on sovereignty over Gibraltar.

According to rumors, the Spaniards suspect the British of "diplomatic tricks" -after all, the above 184th article of the agreement does not clearly oblige London to return to this issue, and its provisions can be interpreted in different ways. The Spaniards fear (and I think it is justified) that once the draft deal becomes an official document, the Gibraltar issue will be shelved again. That is why Madrid is actively insisting that this issue be included as a separate paragraph in the draft agreement. Moreover, Spain threatened to vote against the draft if its demands were not met.

The British, in turn, reasonably appeal to the fact that, first of all, the draft deal was agreed upon by the negotiators, and the negotiating group includes representatives of the EU, which are responsible for defending the interests of the eurozone countries (including Spain). Secondly, this project has already been agreed upon by the British ministers – any amendments to the document will entail a "domino effect", because there are a lot of claims to this agreement. Third, London reminded Madrid of the results of the October meeting at the EU summit, where the parties agreed to formalize their relations in a separate protocol, which will be an integral part of the overall deal.

In other words, the British flatly refused to make changes to the "body" of the agreement itself, while they can sign other documents regulating the relations of countries with respect to Gibraltar. It is worth noting that Angela Merkel and some other representatives of European countries recently said that the key EU summit on Brexit, which is scheduled for November 25, will not take place unless an agreement is reached on the remaining part of the agreement. It is this fact that brought down the pound to the 27th figure yesterday - uncertainty again prevailed over optimism.

However, according to the Spanish press, this morning London and Madrid signed four memorandums of understanding, as well as a tax treaty. If today Spain will remove its demands (or rather,an ultimatum) about the change in the text of the draft deal, then the British currency will play its position in the context of corrective growth. But a steady and large-scale growth of the GBP/USD is still not expected. At least until November 25, that is, until next Sunday, the pound will be under background pressure in anticipation of the next stage of the "divorce process".

Analysis are provided by InstaForex
 
GBP / USD Forecast for November 26, 2018

GBP / USD

The trading volume on the British pound on Friday was the smallest in the last 3 months. Under the general pressure of the dollar (USDH 0.46%) and in anticipation of the decision of the EU emergency meeting on Brexit, the pound lost 64 points.

On Sunday, the EU countries unanimously adopted the Brexit plan. In England, the opposition,in particular the Labor Party, spoke out against voting on this draft in Parliament and suggested either changing the text of the treaty or holding a second Brexit referendum. On the other hand, EU representatives replied that there would be no second agreement on the UK leaving the EU, that is, under the most extreme scenario, England would leave the EU without a deal. It seems to us that the treaty will still be ratified until December 25 as required. But we do not expect significant growth of the pound in this case, since in fact, the United Kingdom will still acquire small restrictions. Probably, there will be no growth at all - as the working out of the exchange phenomenon of selling on the facts.

In the current situation, we are waiting for the price to overcome the support of the price channel line on the daily timeframe at about 1.2777. After that, we are waiting for the further decline of the pound to the underlying line in the 1.2560 area.

Analysis are provided by InstaForex
 
Elliott wave analysis of EUR/NZD for November 27 - 2018

We are still looking for a firm break above minor resistance at 1.6767 for a continuation higher to at least 1.6915 and likely even closer to resistance near 1.7023,

Short-term support is seen 1.6698, which ideally will protect the downside for the expected break above 1.6767, but it will take an unexpected break below support at 1.6638 to cause concern and indicate that wave iv/ could have completed prematurely.

R3: 1.6879
R2: 1.6836
R1: 1.6832
Pivot: 1.6767
S1: 1.16731
S2: 1.6706
S3: 1.6642

Trading recommendation:
We are long EUR from 1.6706 with our stop placed at 1.6555. We will raise our stop to break-even upon a break above 1.6767.

Analysis are provided by InstaForex
 
GBP / USD. Pound does not believe in "soft" Brexit

After the turbulent events of the past week, the financial world froze in anticipation. In early December, it will become clear whether the market will return to a state of relative stability or global uncertainty will continue further, defining the corresponding prospects for 2019. Given such an eventual fork, any prediction of currency strategists somehow comes down either to Brexit or to US-China trade relations. In the case of the pound-dollar pair, both topics are relevant - especially now, on the eve of the G20 summit and the key vote in the British parliament.

Brexit has an unconditional priority for the pound - all other fundamental factors are of secondary importance. These may affect the dynamics of the currency only if an information vacuum is temporarily created around the "main" theme. Recently, there are practically no such periods: the prospects for the most important voting are spoken daily, the most diverse speakers - from political scientists to the leaders of British political parties.

The disposition at the moment is as follows : there are 650 deputies in the British parliament. Meanwhile, the prime minister needs 320 votes in favor in order for the deal to pass through the millstones of the House of Commons. The complexity of the situation lies in the fact that, after the extraordinary re-election, the conservatives have lost the majority - now they are only left with 316 votes. In this regard, they entered into a coalition alliance with the Democratic Unionist Party (DUP), 10 deputies of which has provided control over parliament to conservatives. Theoretically, Theresa May has the necessary number of votes. However, in practice, the situation is completely different. Unionists have already managed to declare that they will not vote for the draft deal: a similar statement was made by the representatives of the Labor party and the Scottish National Party.

True, in each case that they did not manage to gain the necessary number ( 48) of supporters - but from this, it can be concluded that the backbone of the inner-party opposition is about three dozen deputies. Overwhelmingly, they are supporters of a more "rigid" Brexit. In their opinion, Theresa May gave in to the pressure of Brussels and allowed too many concessions to the Europeans. And although the number of opponents among conservatives can vary, the prime minister does not have to rely on the monolithic support of party members.

This means that Theresa May needs to do the almost impossible: to win over the representatives of the Labor Party to her side. It is worth noting that among the Laborites, there are also supporters of Brexit, however, it is in their interpretation, which provides for maximum cooperation with the European Union. Even when the possibility of early elections was discussed in London, Labor declared that Brexit would take place anyway if he won, but under different conditions.

According to experts, Theresa May will seek support from those Labor Party deputies who, on the one hand, are in favor of the country's withdrawal from the EU, and on the other hand, are satisfied with the formula for further cooperation with Brussels. Also, the prime minister will continue to put pressure on his party members, emphasizing the lack of an alternative to the achieved deal. Rather, the only alternative in this case is the chaotic Brexit, the negative consequences of which have been voiced more than once.

In this way, The British Prime Minister faces a very difficult political task, which may be unsolvable for her. At least, many analysts doubt that she will be able to consolidate the deputies - especially from the two opposing camps. Other experts are confident that the fear of the disordered Brexit will force many parliamentarians to support the deal, despite the flaws that have been declared. Uncertain prospects put a lot of pressure on the pound. Today, a pair of GBP/USD has finally consolidated in the 27th figure, testing a half-week minimum. And the closer the "hour of the X", the stronger the volatility will be for the pair, since the degree of intensity will only increase. In particular, a televised debate between Theresa May and Labor leader Jeremy Corbyn can take place next week. The premier has already confirmed Theresa May's participation in this event. If the head of the government looks unconvincing, then the British currency will again surrender its position, updating all the new price prima.

One must not forget about the quoted currency GBP / USD - dollar. On the eve of the G20 summit, Trump made a rather unfriendly statement about the introduction of new tariffs on Chinese imports - from January 1 of next year. Such rhetoric only increased the importance of the G20 summit, which will begin this Friday. Against the background of increased uncertainty, the American currency is again increasing its position: the dollar index is in the area of 97 points. In other words, the uncertainty of the British currency and the restoration of the greenback determine the southern trend for the pair. The nearest support level is far below the current levels at around 1.2670. This is the bottom line of the Bollinger Bands indicator on the daily chart.

Analysis are provided by InstaForex
 
Bitcoin analysis for December 03, 2018

Company does not offer investment advice and the analysis performed does not guarantee results

Trading recommendations:

According to the H1 time - frame, I found the upward breakout of the 6-hour balance, which is sign that buyers are in control today. I also found the rejection from the demand zone (blue shape), which is another sign that selling looks risky. My advice is to watch for buying opportunities. The upward targets are set at the price of $4.117 (Fibonacci expansion 61.8%) and at the price of $4.225 (swing high).

Support/Resistance
$4.000 – Intraday resistance
$3.870– Intraday support
$4.117– Objective target 1
$4.225 – Objective target 2

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Analysis are provided by InstaForex
 
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