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Forex forecast and recommendations today 05/06/2020

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Events today:

15.15 Moscow time. USA: change in employment from ADP.

17.30 Moscow time. US: Department of Energy data on crude oil inventories.


Forex forecast for the EURUSD rate today 05/06/2020
 

The German Federal Constitutional Court banned the Bundesbank from participating in the purchase of bonds of European countries as part of QE operations from the European Central Bank. This process lasted two years and finally put an end to this issue. What does this mean for the euro? In the short term, this is negative, as traders did not expect such an outcome. In a few days, the market will forget about it, as the ECB will find opportunities for a successful asset buyout program. US Treasury Secretary S. Mnuchin announced that in the second quarter, the Treasury will issue bonds for a record amount of $ 3 trillion. Who will buy such a volume of bonds? In my opinion, the Fed, because American securities are of little interest to investors, since the real yield on them is negative. To the Federal Reserve no matter what to buy and in what volume - the real profitability is of little interest to him. Recall, for the period from March to April, the Fed bought back Treasury bonds worth $ 1,469 trillion. Roughly speaking, the Fed, maintaining this pace, can buy back 2.2 trillion dollars worth of securities, and the rest will be bought by investors. If my hypothesis is confirmed, and it will be clear about this in two weeks, since the US Treasury has already begun to actively place bonds this week, then the dollar expects a strong drop in quotations. What does the euro expect today? There is a likelihood of a moderate increase in quotes, against the backdrop of an uptrend in the commodity market. and the rest will be bought by investors. If my hypothesis is confirmed, and it will be clear about this in two weeks, since the US Treasury has already begun to actively place bonds this week, then the dollar expects a strong drop in quotations. What does the euro expect today? There is a likelihood of a moderate increase in quotes, against the backdrop of an uptrend in the commodity market. and the rest will be bought by investors. If my hypothesis is confirmed, and it will be clear about this in two weeks, since the US Treasury has already begun to actively place bonds this week, then the dollar expects a strong drop in quotations. What does the euro expect today? There is a likelihood of a moderate increase in quotes, against the backdrop of an uptrend in the commodity market.


EURUSD recommendation: Buy 1.0820 / 1.0800 and take profit 1.0870

 

 

 

 

Pound dollar forex forecast GBPUSD today 06/05/2020
 

The Bank of England will hold its next meeting tomorrow, where it can announce an increase in its quantitative easing program by £ 20 billion - these are exactly the expectations on the market today. The UK has come under a “double blow” - Brexit and Coronovirus put strong pressure on the UK economy. For the pound, this is negative news. On the other hand, a bullish rally in the oil market may support the pound, as historically the British currency correlates with BRENT oil. The OPEC + deal to reduce oil production is paying off - since May 1, quotes of black gold have risen in price by 15%.


GBPUSD recommendation: flat 1.2400 - 1.2488

 

 

Dollar yen forex forecast pair USDJPY today 06/05/2020
 

Two factors will strongly influence the course of trading. First, investors are actively buying gold, since negative real yields on US government bonds leave them with no choice but to buy yellow metal. For this currency pair, this is a negative signal, since historically the yen correlates with gold. Secondly, we are seeing a bullish rally in the US stock market, which may support this currency pair, as it correlates with the index # SP500. The VIX “fear” index fell 9% on the eve - investors are increasing long positions in anticipation of the completion of coronavirus quarantine in G-20 countries. Which of the two factors will have a decisive influence on the course of trading? It’s hard to say. What to do in this case? In my opinion, it is advisable to open Buy positions on the American stock index # SP500 with a target of 2922.


USDJPY recommendation: flat 106.00 -106.85

 

 

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