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KeyToMarketsUK

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KTM FX Weekly: EURCHF outperforms EURUSD

This week’s trending topic is ECB. The consensus of forecasters foresees a 10bp rate cut at the upcoming meeting on September 12. How deep the central bank can go to is the multi-dollar question.


The euro bulls failed to push the common currency above 20MA last week and this week as well despite some dollar weakness. They wait for the latest announcements from ECB in Frankfurt, followed by Draghi’s speech. Analysts are looking for a deposit rate cut and restarting net asset purchases.

The deposit (or depo) rate, currently set at -0.40% and having been negative now for the past five years (i.e., since June 2014), according to Nomura.

Risk appetite: Since early September the common currency volatility has been reduced on the back of positive developments in Italy and Hongkong and easing risk of no-deal Brexit and policy stimulus in China.

Looking back to the June and July meeting, Draghi sent clear signals that an easing package would be launched. We expect this is going to happen in the September 12 meeting.

“The expectations of Mario Draghi to deliver something big and effective are high,” Sentix said.
Besides, investors seem to be confident that the Fed will continue to cut rates. Geo-political risk like Brexit and Trade conflict are the contributing factors for Global economic slowdown in the past few months. Moreover, these factors show no signs of ending.

Sentix said, “The economic situation in Euroland remains tense, and the recent data suggests that the Eurozone is not far from a recession. In Germany, on the other hand, it must now be assumed that the economy will no longer grow.”

Data review: Eurozone manufacturing slump continues in August whereas Services Business Activity Index signaled a further solid increase in business activity during August.

  • Final Eurozone Manufacturing PMI at 47.0 in August (Flash: 47.0, July Final: 46.5). The index registered its second-lowest reading since April 2013 to indicate another notable deterioration in operating conditions.
  • Final Eurozone Services Business Activity Index: 53.5 (Flash: 53.4, July Final: 53.2). Remaining above the 50.0 no-change marks for a seventy-third successive month, the index recorded 53.5 in August compared to 53.2 in July.
  • The Sentix economic indices improved slightly in September to minus 11.1 points, according to the official release.
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Data preview: Ahead of the ECB event macro data likely to take a back seat.

Thu, September 12 ECB monetary meeting:
The consensus of forecasters foresees a 10bp rate cut at the upcoming meeting on September 12. Analysts are looking for a deposit rate cut and restarting net asset purchases.

Here is a gist of what analysts anticipate from ECB:

  • ING: All eyes on the ECB this week as months of buildup should now result in dovish action. A rate cut seems to be a done deal, the big question is whether renewed QE will be part of the package. The governing council is likely to remain divided on the topic as quite a few ECB speakers have come out against a reboot of the asset purchase programme in recent weeks. Markets have come down on the side of the doves on this one and disappointment is therefore a possibility come Thursday.
  • Danske Bank: On Thursday, we expect the ECB to announce (1) a 20bp cut in the deposit rate (other key rates unchanged) and an extended forward guidance (‘at present or lower…. well past the horizon of net asset purchases’), (2) a 12-month QE restart of EUR45-60bn per month and (3) a tiering system, which could involve less than 1:1 effect on EONIA from the deposit rate cut, where the ‘tiering premium’ may be worth around a quarter of the rate cut.
  • Nordea Markets: We expect the ECB to reveal an easing package consisting of several steps next week: 1. 10bp cut in the deposit rate. 2. Restarting net asset purchases at a pace of EUR 30bn per month (with the purchases starting in October). 3. Strengthening forward guidance by linking it more concretely to the inflation outlook.
  • Credit Agricole: We expect that on Thursday, the ECB will (1) cut its deposit rate by 10bp to -0.50%; (2) announce a sizeable QE2 programme (EUR30-40bn per month for 18 months); and (3) announce measures to support banks’ profitability as the negative rate environment may last for a long time (via easier terms for TLTRO3 and a tiered deposit system). At the same time, the ECB will likely make a slight downward revision to its growth and inflation forecasts.
  • Morgan Stanley: A combo of policy measures including a rate cut with an associated mitigating mechanism, the restart of QE and extra forward guidance is likely to be announced. we think that the ECB will likely announce a 10bp rate cut to -0.50% together with a mechanism to mitigate the impact of negative rates, plus purchases of government and corporate bonds amounting to €30 billion/month for 9-12 months and a good dose of forward guidance.
  • Goldman Sachs: We expect a substantial easing package from the ECB next week (including a 20bp deposit rate cut, bond purchases of €30bn per month for nine months, and forward guidance emphasizing a commitment to keep rates low).
  • Scotia Bank: A deposit rate cut is widely expected and Scotiabank Economics expects a 10bps reduction to -0.5% whereas consensus is somewhat divided toward 10 or 20bps. A smaller reduction now may be followed by a further reduction later if not done in one fell swoop. The grander issue is whether the ECB is prepared to roll out another wave of quantitative easing, and if so, how much will it purchase, over what time horizon, and across what mixture of assets?
  • Nomura: We expect lower rates (10bp off the depo rate, another cut to come later in the year), an extension/reinforcement of guidance, deposit rate tiering and a restart of the asset purchase programme (€30bn per month until the end of 2020).
Technical view

The common currency marginally rose on Monday from the support of 1.1015, it’s last three days low. Whereas the euro bulls failed to push the common currency above 20MA previous week and this week as well despite some dollar weakness.

Looking at the recent elevation of market sentiment, the EURCHF outperform EURUSD, and this will continue as long as risk-on is the driver.

The weekly trend of the common currency is range-bound with negative bias. The inability of EURUSD to sustain above the critical resistance of 1.1251 should be a negative indication for the bulls. According to the daily chart, the key support level is placed at 1.1015/1.1000. In the near term, the price may fall to 1.0860 (if settles below 1.1000) suggested by the corrective A-B-C wave structure.

If the price starts moving higher, key resistance level to watch out for are 1.1140 and 1.1180. A decisive break out above 1.1085 could allow the bulls to raise the headroom towards its 50MA.

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View: Ahead of the ECB meeting, we recommend selling on rallies.

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KeyToMarketsUK

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KTM FX Weekly: EURUSD gains short-lived


Ifo business climate and US core PCE among top-tier events to keep forex traders busy. Events wise several scheduled speeches from ECB and Fed officials due this week. Behind the past two-week central bank meetings, traders shift the focus back to macro data. On top of these, the financial markets will continue to focus on the US-China headlines

The ECB and Fed delivered a rate cut which was widely expected. After last week’s Fed rate cut, the financial markets have reduced their bets on another cut in the next monthly meeting.
At the press conference, Draghi has emphasized the importance of the fiscal stimulus. Financial markets are expecting a fiscal stimulus in 2020, which can strengthen the euro.
Before fiscal stimulus happened, we expect the EURUSD to fall to 1.0850 and 1.0600 levels, suggested by the corrective A-B-C structure.
  • Danske Bank said, “We doubt very much that the ECB’s new package will succeed in jumpstarting the euro area economy and send inflation higher.” Also said, “The economic cycle is still pointing downward, the German economy being a particular case in point. The economy contracted by 0.1% in the second quarter and Germany will likely see negative growth and go into technical recession in the third quarter. Very likely, the next step could be unemployment beginning to climb as already seen in Sweden.”.
  • UBS said, “The ECB cut deposit rates by 10 basis points and announced a second quantitative easing program. But we think the economic impact of the ECB’s easing package is likely to be marginal due to its size, and is unlikely to move Eurozone stocks much higher from here.”
Data review: Last week data releases were mixed with ZEW Indicator of Economic Sentiment for Germany experienced a sharp rise in September 2019, making up for the significant decline witnessed in August according to ZEW, EA annual inflation stable in August whereas EA PMIs continue to fall in September. The weaker PMI data suggest more ECB easing is expected in the next meeting (October).
  • ZEW indicators currently standing at minus 22.5 points, the indicator climbed 21.6 points compared to the previous month, according to the official release.
  • The euro area annual inflation rate was 1.0% in August 2019, stable compared to July. A year earlier, the rate was 2.1%.
  • Flash Eurozone Manufacturing PMI at 45.6, which was significantly less than 47.0 in August. 83-month low. Flash Eurozone Services PMI Activity Index at 52.0 was less than 53.5 in August. 8-month low.
Data preview: Behind the past two-week central bank meetings, traders shift the focus back to macro data.
Moody Analytics said, “The Trade War, China Slowdown and Brexit Weigh on Europe.”

Ifo (Tue) are the only data points for the common currency.
Draghi is due to testify about the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, in Brussels.

TECHNICAL VIEW

The weak daily volatility and the bearish turnaround of the daily stochastic should cap the rallies in the coming days. Against this backdrop, a lasting break of the 1.0960 level sounds tricky, and we rather fear a decline to the double bottom located at 1.0925.

Note, that a break below these levels would underpin bearish momentum, paving the way for a decline to 1.0850 initially and even to 1.0820 levels its 78.6 fib reaction.
The resistances stand at 1.1025 and 1.1075 levels.

Also read EURGBP bullish forecast in our KTM blog
http://www.keytomarkets.com/blog/blog/ktm-fx-weekly-we-could-be-one-two-weeks-from-reaching-a-near-term-bottom/

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Leveraged funds heavily added net EUR/USD shorts, according to the Danske Bank.

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KeyToMarketsUK

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KTM Crypto Daily: Bitcoin has now nearly completed wave C; what’s next?

  • Cryptocurrencies tumble between 15.00%-20.00% overnight.
  • Bitcoin plummeted 15.00% to $7890, closed at the lowest level since June 2019.
  • The descending triangle breakdown suggests more legroom.
The digital asset class dropped on Tuesday a few days after Bitcoin futures launched on NYSE. The most traded cryptocurrency Bitcoin fell $1770 or 15% to end at $8520, while Dashcoin and Ethereum dropped 20.00% and 18.00$ respectively.
“The owner of the New York Stock Exchange launched its long-delayed market for bitcoin futures Sunday, a high-profile bet that consumers, businesses, and Wall Street will embrace cryptocurrencies.” WSJ reported.
“The New York Stock Exchange, launched its bitcoin futures contracts as a way to usher in investors who have been hesitant about trading cryptocurrency. Those futures are “physically deliverable,” meaning they pay out in bitcoin instead of those from ICE competitor CME Group, which introduced its own futures contracts two years ago that pay out in cash.” CNBC reported.
Continuous selling pressure dragged the cryptocurrencies to the key support levels.
It’s possible to make the case that the Bitcoin has now nearly completed wave C in an A-B-C corrective structure.
  • A-B-C structure: 9974-9015-12310 points to $7550
  • A-B-C structure: 12310-9254-10933 points to 7890$, overnight low.
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The market appears to have completed a 3- wave sequence from June 2019 high, which we forecast the level of $7550 on mid-August.

It the above is the correct interpretation, everything since the June 2019 high should be considered within the context of a corrective process. Bottom of the range is down at $7890-7550. Breaking lower than $7550 would further confirm the broader downside bias and open up the possibility of $7000 its 200MA and 20MA (Monthly).
Whereas by considering the descending triangle chart pattern, the price may go as far as below $5000 level, the lowest level since April 2019.

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KeyToMarketsUK

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KTM Commodity Weekly: Waiting for a clue
  • Oil prices eased on mini-trade deal between the US and China
  • Supply-demand issue takes a back seat, Global growth concerns surfaces
Brent crude oil broke its three-week losing streak posted a healthy gain last week. The price bounced up to $60.45 on Friday, but lowered on Monday, traced out a double top pattern formation. We expect dips to the 200MA (Weekly) level and parallel support located at $57.15 to continue to draw bargain hunting, as we have seen the case for the past two weeks and mid-August as well. Whereas, upside should be capped at $60.50 its 20MA.

The price may fall into a range of 60.50 and $55.70 identified as a double bottom.

It’s possible to make the case that Brent oil has now entered a consolidation phase. If that’s the correct interpretation, everything since early October should be considered within the context of a technical bounce. The bottom of the range is located at $57.15 and $555.75. Breaking lower than $55.70 would further confirm the broader downside bias and open up the possibility of $50.75 and $50.00 levels.

The relative strength index (RSI) indicator is not showing any strength, suggests a consolidation phase, whereas the oscillator has been bullish. If it starts moving higher, watch out for $61.80 and $63.00 levels.

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Oil traders are waiting for clues, US inventory data to be released tomorrow. Last week’s mini-deal between US-China has been keeping the cap on prices besides global growth concerns is over the surface.

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KeyToMarketsUK

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KTM FX Weekly: USDMXN trade idea
The value of emerging currency peso appreciated as much as 6.00% to 19.00, its highest level since August 2019 before closing at 19.12.
  • Approaching interesting support here at 19.00-18.75
  • Focus on a fairy thick congestion area
  • Consider buying if reached support zone
The cross may fall into a range of 19.00-18.90 identified as the A-B-C corrective structure from the end of Aug 2019. However, the corrective wave pattern suggests that the cross is in the final wave of correction, and a bounce may start from 19.00-18.75 range. It broke below parallel support at 19.31 and its 200MA as well, suggesting a move to 19.00-18.75 we could find a meaningful bottom.
Turning to daily indicators, the relative strength index (RSI) is recovering from 30 equilibrium levels, implying that the cross is oversold and about to change the direction. On top of this, the oscillator has been remaining bullish, which is supporting our fresh bounce. A decisive breakout above 19.20 could allow the price to price to bounce toward the key resistance at 19.30, which was earlier support level ahead of 19.50.
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Whereas breaking below the support level 18.74 would increase the chances of continuing down towards 18.50-18.40. its 61.8 fib reaction (17.44-20.95 rally) and 18.20 its 78.6 fibs.

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The higher time frame still suggests the cross might fall further.

View: Watch how price action develops around 19.00-18.90. Break lower opens the potential for 18.75. Consider buying if reached with sl around 18.40

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KeyToMarketsUK

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KTM Commodity Weekly: Traced out a triple top pattern

With the lack of any major positive triggers on the US-China trade deal, we continue to maintain a cautious stance on the Crude oil price. The oil market started the week on a negative note on November 18 and capped at 50MA (Weekly).

The price of Brent crude traced out a near-term price top near $63.00 in November 2019 via the formation of a triple top pattern. The daily studies RSI and oscillator have been shifted bearish. The shift in sentiment indicates that rallies to resistance at 0.8970-0.9030 should attract selling interest, with substantial support finds at $60.70 and $60.30. Below here, the focus will move down to 0.8770 and $59.00.
Potential threats remain between $63.00-$64.20 its 200MA.
We expect trade to continue to remain range-bound over the coming days due to lack of clarity on Trade deal and $60.20 and $59.00 to remain crucial support in the near term.
The key lower support area of $60.20-$59.00 could be tested amidst a range move in the next few sessions, but that area is unlikely to be broken decisively on the downside in the next 2-3 sessions.

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The near-term behavior price of the crude oil price depends on the progress of the trade talks between US-China.

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KeyToMarketsUK

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KTM Commodity Weekly: Correction will get accentuated further

Brent crude oil formed a bearish candle on the daily charts for the 2nd consecutive day in a row. The below chart pattern suggests that the price is vulnerable to a selloff.
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In the near-term critical support for the index is placed around $59.50 October low coincides with 200MA (Weekly), and below that $58.40, its 50MA will act as support.
Upsides shall remain capped around $63.50 unless Brent crude manages a strong breakout above the said level.
Three levels to watch this week: $59.50, $59.00 and $58.40
The current correction will get accentuated further if bears manage to push the price below the said average at $59.50 on the closing basis, and in such a scenario initial target can be around $59.00. But, breach of this level can easily drag the index further lower towards $58.40 levels.
On the fundamental side, expectations are building for action to be taken by OPEC+ at its semi-annual meeting on 5 and 6 December.

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KeyToMarketsUK

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KTM Commodity Weekly: Rejected at the higher end of the range

Middle-east tensions spooked the crude oil prices. Brent crude oil breached $70.00 level to post its biggest one-day rise since September 2019. In fact, in the last year there have been five such sessions in which the price closed with more than 3.00% gains whereas there have been 14 sessions in which the price suffered a loss of 3.00% or more.

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Let’s look at the year-end tally; the Brent crude surged $13 or 23% to closed at $67.45 levels.
So what should investors do? Historically, spike on account of external factors such as geopolitical concerns is usually regarded as the best time to take profit (remember September 2019 big up).

Now the daily chart suggests that the price could face stiff resistance at the 78.6% fib level $70.50 ahead of $71.50 and $73.00 its 200MA (Monthly).

The daily RSI lacks momentum, and the oscillator has been bearish. Hence the price should cap soon. However, if the price breaks above $70.50 level, it would witness some pushup, which would take the price to key resistance levels towards $71.50 and $73.00.
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The price is trading above 200MAs (Weekly), which is an important medium-term moving average, indicating a limited downfall; however, if the price breaks below $64.90 levels, it would face selling pressure which would drag further towards $63.50-$63.00 levels.

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KeyToMarketsUK

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KTM Commodity Weekly: Hits 5-weeks low, in final wave of correction


The Brent crude oil has remained under selling pressure at the start of this week resulting in Brent falling back to 200MA. The oil price is now testing the key support level provided by the previous break out level at $63.50 and $63.00 its two-month ascending trendline. A decisive break below the trendline would open further down towards $62.00 its 100MA. As we highlighted in our previous weekly report, the price is running towards our bearish target $63.50-$63.00.

What’s next?

Oil price lost 1.50% on Monday as the middle east tensions ease. Now the oil prices may fall into a range of $63.00-$59.50 November 2019 swing low. A break below $59.50 would increase the chances of continuing down towards $58.00; its 100.fe. However, the short-term technical picture suggests that the oil price is in the final wave of correction, and a decent bounce may start from the $63.00-60.00 range.

The relative strength index indicator is at 42, and the oscillator is remaining bearish. These suggest remaining neutral and keep focussing on the key support area (below chart). In case of a decent bounce watch out for $65.00 and $67.00 levels.

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KeyToMarketsUK

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KTM Commodity Weekly: Why we still believe that the oil price is in the final wave of correction?

The market sentiment took a hit by a fast-spreading coronavirus, as it might lead to a slowdown in the global economic engine. The Brent oil price logged sixth-day straight fall (fourth-week consecutive fall as well) of 2.20% as traders concern death cases of the coronavirus throughout China and also in the U.S.
Why we still believe that the oil price is in the final wave of correction?
  1. The price was closed below the 200MA (Weekly) for the first time since December 2018. Back in September and October 2019, the price fell below 200MA (Weekly) but failed to close below the same. As shown on the chart below, on the two occasions, the price managed to bounce back after losing the 200MA (Weekly). If the same theory works this time, we could expect a decent bounce to $59.60-60.00 and $63.00 levels after China back from holiday.
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2. Before dropping to its lowest level in three months, the price traced out an A-B-C corrective structure on the H4 chart. The pattern suggested a fall to $57.50, which was nearly the lowest point on Monday.

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3. The daily indicators suggest limited legroom. RSI stands at an oversold level at 22, and the oscillator has been remaining bullish.

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Based on these three factors, we still believe that the oil price is in the final wave of correction. We use a stop loss at $55.70 (closing basis).
If the price closed below the April 2019 low, $50.50 is the next destination.

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KeyToMarketsUK

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KTM Commodity Weekly: Scanning bottom side of the fall
  • The oil market sentiment took a hit by a fast-spreading coronavirus, as it might lead to a slowdown in the global economic engine led by China’s economic slowdown.
  • China is the world’s biggest oil importer, nearly 20.0% of total crude oil imports. The fast-spreading Coronavirus could dent the oil demand.
On Monday, the Brent crude oil fell 4.00% to $54.25 its lowest level in 13-months. The price has been falling five straight weeks, followed by five straight weeks of gains. It has lost the 200WMA and settled below the key moving average.

Since 2017 the price didn’t close below the key moving average for more than two weeks. Whereas now this is the third week, the price is trading below the key moving average.

Since the beginning of the year 2020, Brent has fallen more than 23% and lost more than 15% since the Lunar New Year holidays. This is the biggest straight fall since December 2018.
The momentum is clearly to the downside and could continue if the coronavirus headlines hit the wires again. Last week the World Health Organization declared the Coronavirus an international emergency.

Going forward remains below $60.00 its 200WMA; we may see more downside risk towards $52.50 and $50.00 levels. The corrective wave pattern suggests it might fall to $51.70.

Our last week’s technical rebound forecast got dampened and thus requesting traders to remain sidelines until the upcoming OPEC meeting. The daily RSI located at 18, which is the lowest reading since December 2018.

We request traders to focus on the facts, not on opinions. Facts are backed by evidence, whereas opinions are what a
person thinks about something. Based on the RSI indicator oversold condition, we wait for a better buy trade opportunity (meaningful rebound). The first sign of reversal could be on the cards if the price settles above $55.75.

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KeyToMarketsUK

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KTM FX Weekly: Finally, Goliath meet David
Something must stop the fall and support the price. The level which holds the price should be remembered in the next coming weeks. We have been waiting for a bullish pattern to be developed on the daily chart, or some moving average should hold on. Finally, the 100MA (monthly) said, “I will do it,” like what David told to king Saul.

The previous forecast, “Every Goliath needs a David; we expect 100MA (Monthly) could be the David.”.

Since December 2019, the price remained in ranges between 0.8275-0.8640. Finally, the cross traced out a double bottom and produced a breakout through the roof located at 0.8600. The bulls took control in the last four days as the price rallied from its recent low of 0.8280 to close at 0.8735, gaining 450 pips in the process. The euro performed in line with our last week’s forecast against CHF, GBP, and USD, whereas the current rally could remain capped at 0.8770 (Weekly basis).

Data review:

Last week we got a UK consumer confidence survey, which improves by two points and sees the third monthly increase in a row. And UK manufacturing expands at the fastest pace since April 2019.


  • GfK’s long-running Consumer Confidence Index has increased two points to –7 for February. Three measures increased, one measure decreased, and one measure remained the same this month, according to the Gfk.
Commenting on the latest data Joe Staton, Client Strategy Director at GfK says: “Against a February backdrop of rising wages and house prices, low unemployment and stable inflation, we report another healthy uptick in consumer confidence this month – the third monthly increase in a row.”
  • The Manufacturing PMI rose to 51.7 in February, up from 50.0 in January, but below the earlier flash estimate of 51.9. The PMI posted above the 50.0 neutral mark for the first time in ten months.
Data preview:
As the EU and the UK started their trade negotiations, we remain cautious in the coming days. We don’t expect a straight-up move from hereon, rocky road ahead.

BBC reported, “Negotiations are to take place once every two or three weeks from now until the summer at least, alternating between Brussels and London – with the prime minister insisting a deal must be struck by the year’s end.”

Danske Bank said, “We believe tensions will increase over the coming months ahead of the first deadlines in June, which is the main reason we are still negative on GBP.”

Besides Services PMI (Wed) will receive some focus.

TECHNICAL OVERVIEW

It’s a nonstop boom now to 0.8700 levels. A range breakout followed by a double bottom pattern on the daily, Weekly and Monthly charts suggests further headroom is likely in the coming days to weeks.

A fresh assault at 200MA is on the cards, and the next target above here is 0.8770-0.8800 levels. Bigger picture we could even start to think about 0.8900 its 61.8 fib reaction, 0.9000, and 0.9080 levels.

On the downside, 0.8570 and 0.8415 can act as proper support. Until the euro stays above the support at 0.8380, it can be approached with a bullish bias. Note that we don’t expect a straight-up move from hereon, rocky road ahead.
EURGBPDaily.png


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KeyToMarketsUK

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KTM Commodity Weekly: Shakedown and Break down. What’s next?
  • Price ran through the target we set
  • Expect a bounce-back
Brent crude Oil rebound from last week’s sell-off: It was another wild swing for the Oil market, with Brent Oil down $19.40 in Asia session on April 22 and bounce back to $26.60 the very next day. Global equity markets bounced back along with Crude Oil.

The oil price movement is creating a risk-on/risk-off investment market sentiment to the financial and forex markets. In the past few weeks, the oil price has dropped to 18 years lows of $19.60 levels. We have been recommending a bearish target of $20.00 and $17.00 levels. In our latest article last Tuesday, we forecasted a target of $22, which the price runs through on Wednesday. The crude oil price lost above two-thirds of their value in1Q 2020.

Positioning:
  • Danske Bank’s latest IMM positioning (April 14-22) reported that speculators raise long bets “Largest single week net bullish WTI build since May 2016”.
  • Reuters reported, “Money managers raised their net long U.S. crude futures and options positions in the week to April 21, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group raises its combined futures and options position in New York and London by 107,777 contracts to 307,321 during the period”.
Demand: Due to the COVID-crisis, most of the economies are placed lockdown restrictions. Even after the lockdowns, the demand crisis will remain in place due to travel restrictions. Demand refers to how much of a product consumers are willing to purchase, at different price points, during a specific period. Australia and New Zealand are easing lockdown rules. Today New Zealand is officially in level 3 lockdown (down from level 4).

  • HE Mohammad Sanusi Barkindo, OPEC Secretary-General, said, “Global oil demand in 2020 is now forecast to fall by as much as 6.8 mb/d y-o-y, due to the global COVID-19 pandemic and its impact on transportation and industrial fuels. Oil demand is expected to suffer the most in the first half of the year and shrink by more than ten mb/d before recovering somewhat in 2H20.”
What’s next? Now all the commodity favored eyes focus on Oil as the output cut by the OPEC+ group of counties led by Russia and Saudi Arabia kicks in on Friday.

This Friday is when the OPEC plus cuts kick in. In a historic deal, OPEC+ agrees record cut to oil production by 9.7 million barrels a day in May and June 2020. It is the deepest cut ever agreed to by the World’s oil producers.

Coming back to the technical side, Brent crude Oil extended losses on Monday after bouncing back to $26.20 last Thursday. The Crude Oil closed the day $2 or 10%, lower at $22.90.

According to the daily charts, the key support level is placed at $22.00 and $21.00. If the price continues moving up, key resistance levels are set at $23.40- $24.00 and $25.20.

The RSI has been developing a positive divergence since March 09, 2020. In case of a bounce-back situation we could expect $30+ levels in the coming weeks.

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It is important to always keep in mind the risks involved in trading with leveraged instruments.

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