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As a matter of fact, all of Friday's activity fell within a short period of time, after which the market stubbornly stood still. Moreover, everything about everything was enough for a little less than an hour. But the funny thing is that this very movement took place in a kind of informational vacuum, since at that time no news came out at all. At the same time, the fact that the euro weakened clearly fits into the general logic of the trend towards a stronger dollar. This is a clear long-term trend that has been going on for several years. Sometimes certain events lead to strengthening the single European currency, but only for a short time.
It's funny, but at a time when all the main movement was happening, data on production orders in Spain were published. However, these data have never had any impact on the euro. Of course, we can assume that in the absence of any news at all, market participants clung to at least something. True, this is extremely unlikely. This indicator itself has an extremely weak impact on the market. Moreover, Spanish statistics are generally not taken into account by the market. So even if the market really responded to this data, then this is literally the only such case. So it is worth noting that the decline in production orders accelerated from -0.1% to -16.4%. So there is no need to talk about any restoration of industrial production in Spain in the near future. And we are talking about the fourth economy of the euro area.
Production Orders (Spain):
It is a holiday today in the United States, so there will be an absolute lull in the market. Nevertheless, in Germany, the final GDP data for the first quarter were published, which coincided with preliminary estimates. So, according to the results of the first quarter, the largest economy of the euro area sank 2.3%. And if we take into account the fact that restrictive measures due to coronavirus began to be introduced only in mid-March, that is, at the very end of the quarter, it becomes clear that the decline will be even deeper by the end of the second quarter. However, there is no market reaction. This is understandable, since no one works in the United States. In addition, the market has long taken into account the recession in Germany, even at the time of publication of preliminary estimates.
GDP growth rate (Germany):
From the point of view of technical analysis, we see a reverse move from the psychological level of 1.1000, where the quote is already pinned below 1.0900. Actually, the existing course refers to the restoration process, which is directed towards the support of 1.0775. You should not forget that there has been a side band of 1.0775/1.1000 on the market for a month and a half, where the quote is sequentially developing.
In terms of a general review of the trading chart, the daily period, the same lateral band is visible, but it is worth considering that it is in the structure of the global downward trend.
It can be assumed that stagnation within 1.0885/1.0910 will continue for some time, where the main strategy is to work on breaking the established boundaries. It is worth noting that the specified downward tact from the 1.1000 level is still preserved in the market, which means that there is a chance of further descent.
We will specify all of the above into trading signals:
- We consider buy positions as local transactions in case of price taking higher than 1.0915, towards 1.0955-1.0965.
- We consider sell positions as major transactions lower than 1.0880, towards 1.0850-1.0775.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments have smoothly changed the signal to sell, corresponding to the current market dynamics.
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