EUR / USD
On April 1, the EUR / USD pair lost another 75 basis points, and thus, continued to build a prospective wave 2 as part of the future C. If this assumption is correct, then the quotes of the instrument may resume rising within the framework of wave 3 in C in the next few days. On the other hand, a failed attempt to break the 23.6% Fibonacci level may indicate that markets are ready to buy European currency. At the same time, the wave pattern may take an even more complex form and require the introduction of certain adjustments.
Fundamental component:
The news background for the EUR / USD instrument on April 1 was quite influential, and for the first time in a long time, one can even assume that it was he who caused the instrument to move down over the past day. European news was important enough and weak at the same time. If the unemployment rate in the European Union in February declined to 7.3%, then business activity in the manufacturing sector decreased to 44.5, then in Germany – up to 45.4.
Thus, markets from the European industry will only expect negative news again in the form of new reduction. Moreover, business activity below the key level of 50.0 is not a few tenths of a point, which would be insignificant, but much lower. However, news from America was a pleasant surprise for the markets, despite the fact that in general they were also weak. Moreover, the ADP report on changes in the number of employees in the private sector showed a decrease of only 27K.
Markets expected to see a decrease of at least 150K. Business activity in the manufacturing sector also turned out better than the markets expected. The ISM index was 49.1, although expectations were at 45.0, while the Markit index was 48.5 with slightly higher forecasts of 49.2. Thus, the demand for the American currency could increase at yesterday’s trading thanks to these statistics.
There is no other positive news for the dollar right now. The COVID-2019 virus epidemic continues to take over America, which leads the world in the number of infected. And the forecasts of US President Donald Trump suggest that up to 200,000 Americans can die from a pandemic.
General conclusions and recommendations:
The euro-dollar pair presumably continues to build the rising wave C, which can turn out to be very long. The internal wave structure of this wave can take a 5-wave form. Thus, I recommend buying the instrument again in order to build a new impulse wave inside C after receiving the MACD signal “up” with targets located near the levels of 1.1165 and 1.1295, which corresponds to 61.8% and 76.4% Fibonacci.
GBP / USD
On April 1, the GBP / USD pair lost about 50 basis points. However, the amplitude of the movement of the instrument even decreased compared with the previous two days, when even smaller diurnal changes were recorded. Thus, the pound/dollar supposedly completed the construction of the ascending wave 1 or A as part of the new upward trend section, however, the construction of wave 2 or B has not yet begun. Meanwhile, a successful attempt to break through the level of 50.0% will indicate the willingness of markets to build a correctional wave.
Fundamental component:
The economic news background for the GBP / USD instrument on Tuesday was the same in strength as for the GBP / USD instrument. The pound also declined slightly during yesterday’s trading, and the current values of the amplitude of the instrument can not be compared with what it was a few weeks ago. In the UK, business activity in the manufacturing sector remained virtually unchanged from the previous month and amounted to 47.8. Well, I spoke about American economic reports above.
Toda, there will be another report on applications for unemployment benefits in America, which does not bode well for the US dollar. Last time, the number of applications exceeded 3 million, and this time, the numbers are likely to be no lower. Thus, more than 6 million people could have lost their jobs in just two weeks in America. For the economy, this is a crushing blow.
General conclusions and recommendations:
The pound / dollar instrument supposedly completed the construction of the first rising wave. Thus, the pound will be able to make new purchases after the completion of the proposed correctional wave or in the case of a successful attempt to break through the Fibonacci level of 61.8% with targets located near the calculated levels of 1.2767 and 1.3194, which corresponds to 76.4% and 100 , 0% Fibonacci.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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