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30.03.202016:41 Forex Analysis & Reviews: EURUSD and GBPUSD: Bulls rushed to close long positions on the euro. Traders of the pound are at a loss and do not know what to do next

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The European currency has lost more than 100 points since Monday's opening level against the US dollar, and the British pound has remained in one place. A weak report on the mood of companies and consumers in the eurozone could not pass for the market without a trace.

Exchange Rates 30.03.2020 analysis

The speech of US leader Donald Trump also instilled confidence in traders that the US economy will be able to withstand the impact of the coronavirus epidemic. During his interview, the US President said that his country should have enough equipment at the moment when the peak of cases of coronavirus infection occurs, and currently, the federal government is doing everything to provide the necessary amount of equipment to all those in need. Trump expects that the peak of cases of infection will be passed during the Easter period or around this time, and also believes that due to the measures taken in time, the number of deaths will be very low. Also during the interview, the US leader said that he plans to hold a telephone conversation with Russian President Vladimir Putin. The speech will focus on energy resources, trade, and coronavirus. Let me remind you that black gold prices continued to update their annual lows, and WTI crude is currently trading below $20 per barrel.

As for fundamental statistics, as noted earlier, the indicator of the mood of companies and consumers in the eurozone collapsed in March against the background of the spread of the coronavirus and the tightening of measures related to its containment. According to the report of the European Commission, the index of sentiment in the eurozone economy, which includes the mood of companies and consumers, fell immediately to 94.5 points in March this year, against 103.4 points in February. The indicator of sentiment in the service sector fell to -2.2 points.

Exchange Rates 30.03.2020 analysis

The largest drop was observed in Italy, where the index fell from 101.3 points to 83.7 points. The most persistent was Spain, where the index fell from 102.7 points to 99.3 points. In Germany, the index fell by almost 10 points to 92.0. Given the current situation in many countries of the eurozone, it is too early to say that the indicators have reached their lows. Most likely, the April values will also show a large-scale fall.

The expected slowdown in consumer price growth in Germany to almost zero once again confirms the fact that the eurozone is one step closer to recession. However, it is worth noting that the slowdown in growth is due to volatile factors, namely a sharp drop in energy prices. A report from the German Federal Bureau of Statistics showed that prices in March increased by 0.1% compared to the previous month, while economists expected a change of 0.0%. Compared to the same period of the previous year, prices increased by 1.4%. With regard to the harmonized standards of the EU indicator, it grew by only 1.3%. Economists had expected an annual price increase of 1.4%. However, the data is still preliminary, and the final report can be expected on April 16.

Exchange Rates 30.03.2020 analysis

After these data, Goldman Sachs changed its forecast for inflation growth in the eurozone. It is now expected that the consumer price index, harmonized according to EU standards, will grow by only 0.81% in March 2020 compared to the same period of the previous year, after an increase of 1.2% in February. Growth in core inflation may be slightly better at 1.08%.

Today, the US Treasury Secretary made another speech, which continued the topic of loans for small businesses, stating that new preferential access to them will be opened in the near future. Steven Mnuchin expressed hope that the developed process of lending to small businesses will be simple, as the economy is facing a difficult quarter due to the suspension of activity due to the coronavirus. However, given the state of the economy before the spread of the pandemic, it is expected to grow sharply in the second half of the year.

As for the technical picture of the EURUSD pair, you can see how the bears are gradually returning to the market, and the breakout of the morning support of 1.1050 allows you to count on a further decline in the trading instrument within the day. Sellers of risky assets will focus on the support of 1.0950, but the longer-term goal will be a minimum of 1.0870.

GBPUSD

The British pound remained trading in one place in the pair with the US dollar after news that the indicator of sentiment in the UK economy does not reflect the whole picture that is happening in the country after the spread of the coronavirus pandemic. According to the data, the index of sentiment in the UK economy in March this year fell only to 92.0 points from 95.5 points in February. Apparently, the data does not take into account the entire March period, when the UK economy stalled due to the pandemic. Therefore, it is not quite right to be optimistic about this indicator. Many experts expect a reduction in UK GDP in the 1st quarter by 1.5%, and in the 2nd quarter immediately by 10-13%.

As for the technical picture of GBPUSD, it seems that traders are at a loss and do not know what to do next, since the desire to buy the pound after such rapid growth has decreased, but no one is in a hurry to sell it. A break in the support of 1.2330 will increase the pressure on the trading instrument and lead to its decline to the lows of 1.2150 and 1.1970. Growth is limited by the resistance of 1.2490, a break above which opens the way to the highs of 1.2690 and 1.2780.

Jakub Novak
Analytical expert of InstaForex
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