First, a few words about the events of the past week:
- EUR / USD. Which week the situation in the financial markets is completely under the authority of the coronavirus. And if many traders in 2019 complained to the lowest volatility of EUR / USD pair in the history of its existence, in 2020, the situation has changed dramatically. Only last week, the vibration amplitude exceeded 200 points, while the euro on Thursday, February 27 was the fastest since May 2018. And all this thanks Covid-19 virus, because of which investors shun investment in risky assets, preferring a quiet harbor.
Global and US stock indexes continued to fall, dropping by more than 10% from the February highs. Suffice it to say that only the S & P500 since 18 February has lost about 15%. Information about the fact that in California because of the epidemic were under surveillance for more than 8 thousand people, only increased the panic among investors to actively get rid of both US stocks and the US dollar.
As a result, due to sharply increased demand for such funding currency, the euro and the yen, the continuous rise in the dollar, which we have observed from 01 to 20 February, finally stopped. And those traders who had the nerves and money to withstand a drawdown on long positions of 310 points, were able to breathe a sigh of some relief. All week the pair rose, reaching on Friday 28 February a local maximum at 1.1053, followed by a correction and finish at around 1.1030;
- GBP / USD . If the dollar against the coronavirus does not feel very well, the British pound against the background of the consequences Brexit feels even worse. Bearish, which is supported by the majority of experts (55%), proved to be absolutely true - the pair will continue to move in the medium downlink and, as expected, after several attempts to overcome at least February 20 1.2850. Next fall acquired a landslide character and flying for a few hours about 125 points, found the local bottom at 1.2725. This was followed by rebound, and a pair of completed five days at 1.2820;
- USD / JPY . The vast majority of analysts (75%) predicted growth of the Japanese currency, but this result was not expecting anyone. Flight from the dollar and the rise in currency hedging demand allowed the yen to demonstrate a phenomenal growth of 410 points - the beginning of the week at 111.60, Friday evening but the dollar fell 107.50, updating the 2020 lows. With regard to the final chord of the week, then, after the correction, he sounded in the area of 108.00;
- cryptocurrency. Perhaps, and the rights of the old Wolf of Wall Street, Warren Buffett, contemptuously turned his back to cryptocurrency. In recent years, all kinds of bitcoin crypto gurus and enthusiasts have criticized him, assuring us that BTC has become a reliable safe haven in which you can invest your money safely. And what we see in reality?
The euro and the yen all week rose against the US dollar. And if bitcoin a hedge asset, his quotes would also need to go up. But it was exactly the opposite. Dollar spinning down, and together with the top bitcoin altkoynami including Ethereum (ETH / USD), laytkoyn (LTC / USD) and Ripple (XRP / USD), flew down faster. Fixing February 28-month low at $ 8,455, a pair of BTC / USD lost almost a week 12.5% of its value. Kriptorynka total capitalization decreased by 15%, while the index of fear and greed Bitcoin (Crypto Fear & Greed Index), having fallen to a mark of 40, stood in a state of "fear".
As for the forecast for the coming week, then, summing up the views of several experts, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:
- EUR / USD . According to analysts of the Chicago Mercantile Exchange, CME (Chicago Mercantile Exchange), the likelihood of interest rate cut at the next meeting of the US Federal Reserve on March 18 was 90%. (For reference, in early February, the figure was only 10%). If this happens, you can expect the dollar's decline. The data on the labor market, which traditionally will be published on the first Friday of the month, March 6, can also play against the US currency. So projected, NFP index might fall from 225K to 176K. On the other hand, the ISM index of business activity, is likely to stay above the critical level of 50.0, which is a positive factor. In such a situation is likely to determine the quotation EUR / USD pair will continue to reports from the front against the coronavirus.
At the time of writing 60% of the forecast of experts, supported by 70% of oscillators and trend indicators, look to the north, expecting growth of pair. Goals - 1.1055, 1.1100, 1.1175 and 1.1240. The opposite view is supported by 40% of analysts and 30% of the indicators are in overbought or dyed red. Support - 1.0950 1.0900, 1.0830 and 1.0777 at least February 20;
- GBP / USD . In contrast to the dollar, likely to reduce the interest rate on the British pound, on the contrary, it decreases. According to John Cunliffe, responsible since 2013 for the financial stability of the Bank of England board member, the regulator expects the inflation rate. Due to the positive dynamics of the labor market and the increase in the average wage index of consumer prices may even exceed the target level of 2%. And in such a situation, lowering interest rates is simply not necessary.
In addition to statements Cunliffe, markets worried about what to say in his speech on Thursday, March 5 head of the Bank of England Governor Mark Carney. Among the key issues - the reaction of the British regulator on the fall of the stock markets due to the epidemic coronavirus. In addition, investors are interested in and the purpose for which the Bank of England increases its gold reserves. In Russia alone, the last time the UK has bought a record amount of this metal in the amount of $ 5.33 billion, which is 12 times higher than normal volume of purchases.
Given the difference of influence Covid-19 epidemic in the US and the UK, as well as the forthcoming reduction in the Fed's interest rate, the majority of experts (65%) favors the bulls, awaiting the return of the pair GBP / USD in the 1.3000-1.3070 area, and, perhaps, even to 100 points higher. With such developments agree graphical analysis on D1, as well as 15% oscillators H4 and D1, feeding signals about oversold.
On the bears side is analysts minority (35%), the majority of the oscillator (85%) and almost 100% trend indicators;
- USD / JPY . It is clear that the vast majority of indicators is colored red. However, over 25% of the oscillators are in oversold zone, which may indicate if not a complete reversal of the trend, then, at least, the strong upward correction. Waiting lifting pair and 65% of analysts. The nearest resistance level 109.25, the immediate goal - returning to the zone 109.65-110.25, the next goal - the height of 112.00. It can contribute to achieving the reduction of panic on global stock markets, due to the success in the fight against coronavirus. Last week, the number of patients Covid-19, on average decreased by 1600 people a day. And next week the number of cured can exceed 50% of the cases.
Of course, it would like to see an epidemic of this infection has declined. But if this does not happen in the coming days, the dollar may continue to fall, and a pair of one by one breaks through the support 107.50, 106.65, 105.65, and close to the low of August 2019. in the area of 104.45;
- cryptocurrency . Against the background of cosmic predictions of his colleagues behaved interesting chapter crypto exchange Binance Chanpen Zhao, issued a statement more like persuasion. According to him, if the result halvinga bitcoin does not rise in price twice, the industry are big problems. The number of miners will begin to decline. In addition, the asset risks losing the support of large investors, who expect growth of its value. "In May, miners will lose part of their earnings in kriptovalyutnom terms. Bitcoin has to compensate for this event dollars. If the asset will not be able to provide the miners at least similar conditions, most of the players just out of the industry. To prevent this can not be! "- Zhao persuades his colleagues.
Will act if his entreaties in the future is unknown, but as long as the majority of experts (45%) are pessimistic, expecting to reduce the BTC / USD pair in the $ 8,000-8,250 zone. Optimists among analysts is currently 30%. In their view, the fall of the last two weeks - just a correction, and soon we will see how bitcoin will once again storm the height of $ 10,500. As for the remaining quarters of the experts, they have been unable to form an opinion.
Roman Butko, NordFX
Disclaimer: This material is not a recommendation to invest or guidance on working in the financial markets and are purely exploratory in nature. Trading on the financial markets is risky and can lead to complete loss of funds contributed.