12.03.202011:12 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on 03/12/2020

I'll be honest with you, I emptied all the popcorn stores in the next store yesterday. After all, what happened yesterday is cooler than any Hollywood blockbuster. Yes, there is hollywood as well as bollywood which is resting here.

It all started almost at dawn in London. While Her Majesty's respectable citizens sipped their morning tea instead of the weather forecast in the morning television shows, they were informed that the Bank of England had an emergency meeting and during which, it reduced the refinancing rate from 0.75% to 0.25%. In general, the morning tea party was ruined. However, when they got to work and calmed down a bit, the residents of the United Kingdom were forced to let tea out of their ears again. Opening the official press release of the Bank of England, they suddenly found out for themselves that, it turns out, this is not a bank, but a legendary hospital where the best medical luminaries in the world practice. This is what the name of the press release tells us, which sounds like Bank of England measures to counter the coronavirus. It turns out that the Bank of England is not a credit institution, but a health resort specializing in epidemiological issues.

Refinancing Rate (UK):

Not having time to recover from this shocking news, the UK received a control full blow in the form of macroeconomic statistics. Indeed, the GDP growth rate slowed down from 1.2% to 0.6%. They expected a slowdown in economic growth to 0.8%. To simply put it, the recession is no longer on the horizon, but almost on the verge. In confirmation of this, the growth rate, or rather the decline, industrial production accelerated from -1.8% to -2.9%. And after all, the decline in industrial production has been going on for the tenth month in a row. But the pound, apparently, was so stunned by everything that was happening, that, having swept from side to side, it could not decide where it should go. Although everything indicated that you need to move only down. However, we should still wait for a little for this.

GDP growth rate (UK):

To some extent, the indecision of both the pound and the single European currency can be attributed to the expectation of the publication of inflation data in the United States, which, as expected, declined from 2.5% to 2.3%. The fact is that the slowdown in inflation makes another decrease in the refinancing rate of the Federal Reserve System practically inevitable. And that such a probability exists, the market has been talking for almost a whole week. Another thing is that this is all at the level of rumors and speculation. Now, there is practically no doubt that this is exactly what will happen. Well, the confirmation of these fears was supposed to change the mood and contribute to the weakening of the dollar.

Inflation (United States):

However, it was at this point in time that the plot took another sharp reversal, and the state of things turned upside down again. First, Christine Lagarde came out and began to cry that the coronavirus carries great risks for the economy. And it seems that such statements are not surprising in the light of the panic that mass media are promoting and disinformation. Rather, if you do not talk about it, then you risk being branded as the enemy of all good versus all bad. However, the interesting thing in this situation is that Jerome Powell was the first one to inform this, after which the Federal Reserve held an emergency meeting and lowered the refinancing rate. After that, this was repeated by Andrew Bailey, and the Bank of England reiterated the focus of the Federal Reserve literally a few days later. And now, we heard the hit of the season performed by the European Central Bank. The funny thing is that no one expects from the European Central Bank to lower the refinancing rate - not just in an emergency, but even as part of a scheduled meeting. All proceeded from the fact that only the deposit rate would be reduced. However, after such appearances, all sorts of bad thoughts are started to be thought about. From which the single European currency clearly should have started to feel bad.

But the unfortunate market participants were not allowed to calm down and put all this in their heads. Indeed, Donald Trump made an appeal to the nation right there, during which he reproached Europe in every possible way for the fact that these mediocrity was incapable of ensuring compliance with elementary measures of epidemiological safety. He completed his fiery speech, standing with fists clenched to blood, an animal brilliance in his eyes and a sly grin. Along the way, banning Europeans from visiting the United States for the next thirty days, but excluding the UK from this list. The poor market participants, overwhelmed by what is happening once again, began to sell a single European currency with a vengeance. However, the decline in the pound raises some questions.

So, the main event of today will be the meeting of the Board of the European Central Bank. The main scenario is that the refinancing rate will remain unchanged, and the deposit rate will be reduced from -0.5% to -0.6%. And against the background of the recent actions of the Federal Reserve System and the Bank of England, this will look like something bold and challenging. As well as increasing interest in the single European currency. Nevertheless, one should not exclude the possibility that the European Central Bank will present an unexpected surprise, as the pressure on it is just crazy. Especially from the various media and disinformation media that have already successfully pushed interest rates down in the United States and Great Britain. Moreover, they do not intend to stop there especially since we are talking about saving humanity by stimulating the economy. However, it's completely incomprehensible to stimulate much more than the European Central Bank does. And where are the results of this very stimulation, which has been going on for several years now, and there are no answers. Nevertheless, it must be recognized that the pressure is very, very serious, and the possibility that the European Central Bank will become another victim of general panic should not be ruled out. And in this case, a single European currency will not stand. And it's quite obvious that the information space will be full of all kinds of speculation before the announcement of the results of the meeting of the European Central Bank's board. Therefore, you should be careful.

Refinancing Rate (Europe):

The euro/dollar currency pair managed to maintain the previously set downward interest, focusing below the level of 1.1300. It is likely to assume that the upcoming ECB meeting will provoke many outbursts, which already now shows the desire of prices to break through at least the past day. The characteristic ambiguity will attract speculators, where we will see an upward or downward momentum depending on the decision on the rate. At this time, local decline is not ruled out in case of breakdown of the level of 1.1250 in the direction of 1.1220-1.1200. In turn, subsequent actions will depend on the controller and the external background.

The pound/dollar currency pair managed to recover relative to the past corrective move, where the quote approached the level of 1.2770 once again. It is likely to assume a temporary concentration within 1.2750 / 1.2800, where a breakdown of the control level will be considered only if the price is fixed lower than 1.2725. Otherwise, another rebound is not exempted, as it was a period earlier.