Preliminary US economic situation
The greenback has had a very strong move on Friday, accounting for the entire increase in a week. After horizontal fluctuations from Monday to Thursday, the green color of the US dollar returned due to positive fundamentals from PMI manufacturing index and Michigan consumer confidence. The USD Index soared towards the resistance level – which is also the highest level in November at 98.50.
Economics of England and Europe
The EUR may be under selling pressure this week as the dollar soars and tensions between the US-China trade war erupted amid worsening negotiations between Beijing and Washington. While ECB officials predict the whole region is entering a period of slow growth, the longer the transatlantic trade negotiations can put Eurozone's financial stability at risk. . Basic information can also weaken the Euro if it raises the expectation that ECB cut interest rates.
Officials in Washington are said to be looking for new ways to impose tariffs on the EU after US President Donald Trump missed the November 14 deadline to impose automatic taxes. This provision in the Trade Expansion Act of 1962 allowed the United States to impose specific import duties if the Commerce Department determined that specific economic relations posed a national security threat. However, policymakers could still weaponize the Trade Act of 1974, which would lead to a broader investigation into the trade relationship between the EU and the US, allowing the US President States apply tariffs or trade restrictions differently if the country tested is found to weaken US trade.
Why would this cause a downward pressure on the Euro? Because a prolonged period of tension in EU-US trade relations means that the deflationary effect of the unstable economy may put even more pressure on the already shrinking industrial sector. . Fed Chairman Jerome Powell blamed the US economic slowdown on the US-China trade war. Transatlantic tensions will only increase this trend and weaken EU growth.
The decline in industrial production that will spread to the service sector is a growing concern for policymakers for fear that labor market erosion may increase the likelihood of recession. next time.
Is the Eurozone economy on the verge of recession? While Germany's Gross Domestic Product figures, the region's leading economy, confirm that the country escaped recession in the third quarter, recent statistics have drawn a picture. darker. The Markit purchasing management index for November showed a slowdown in the service sector. While production is shrinking at a more moderate pace, this has been dragging down both the German economy and the euro area. Economic data is weighing on the Euro and halting all efforts to increase its value. Christine Lagarde, the new President of the European Central Bank, was unable to promote the brilliance of the single currency. In her first speech, she called on eurozone governments to take more action. Germany is likely to maintain tight fiscal policy. And if the continent's leading economy is inefficient, the banking system may have to buy more bonds – pushing the euro lower.
The pound was still around 1.2850 at the beginning of the Asian session that began this week. The currency benefited from the polls, which showed popular support for the ruling Conservatives in the December election.
Over the weekend, UK Prime Minister Borish Johnson released a ruling Conservative party manifesto, which introduced austerity measures to enable smooth Brexit implementation. The party promised to raise the budget of the National Health Care System (NHS) by £ 33.9 billion by 2023-24, an additional 50,000 nurses and no increase in income taxes, national insurance or VAT. In the next five years has attracted great attention. However, this also faces criticism. Not only opposition leader Jeremy Corbyn, but analyzes from the independent charity Full Fact, published by The Guardian, also raised concerns that the policy would cost £ 879 million by 2023. / 24. In addition, concerns about an increase in workers' insurance contributions are also taking place.
Even so, the latest poll shows the Conservatives are in the lead with 10 percentage points more than the other parties.
The pound slumped on Friday when darker basic information was released to fuel the market's fear of Brexit. In addition, the good news from the US economy helped the greenback rise against the pound and plunged the GBPUSD.
Further information this week, including the UK CBI Trade Distribution Index and the National Performance Index, together with the Fed Manufacturing Index in Dallas, will affect the GBPUSD. Despite this, the market's major attention will be on trade and election war topics and create new incentives for prices.
Regarding the price of gold
Gold is trading around 1460, and is under pressure to reduce early in the week when the risk appetite is high and the US economic information is optimistic. Gold prices fell earlier this month, down nearly 5% to near 1445 before rebounding to test the area of 1480. On Friday, gold fell due to the dollar's appreciation following information from Donald Trump said that a deal agreement with China “is likely to be very close” also promotes risk psychology, causing cash flow from gold to stock market. However, Trump, as always, has taken the case and optimism leveled off with a cautious atmosphere – Trump emphasized that any deal would have to be weighed in favor of the U.S. after years of losing weight. by trade with China.
The ongoing Sino-US negotiations may encourage the Federal Open Market Committee (FOMC) to extend its interest rate easing cycle when officials find that the current view of monetary policy has can still fit.
In fact, recent remarks from New York Fed Chairman John Williams, a permanent voting member of the FOMC, also stated that the current stance of monetary policy seems consistent with the current situation.
In addition, Fed Chairman Jerome Powell and Governor Lael Brainard are likely to make similar moves next week when both officials are expected to give speeches, with less moderate directions if any will be able to pull. The price of gold followed as investors eased speculation about other rate cuts in 2019.
In terms of technical analysis, the EURUSD currency pair, after strong decline to Demand 1.098-1.101, had a slight recovery. This is also the Demand region, which overlaps with the previously identified demand area in this region. Once this zone is broken, it is likely that EURUSD will fall further to the next Demand zone at 1.094-1.096. However, there is a high probability that this pair will bounce from current Demand and approach a high of 1.108. This is the same Flipzone region acting as the current resistance. If this resistance is broken, the next target might be 1.1169 resistance.
Stop loss 1,0983
Profit taking 1,108 – 1,116
As for GBPUSD, the pair is sideway in a range of over 200 pips from 1,276 to 1,300. The Demand zone of 1,276-1,280 and Flipzone is currently acting as the last impetus for the current sideways trend. If this zone is broken, strong bearish force will pull GBPUSD to the next Demand zone at 1,260. However, if we hold the 1.27 zone, it is likely that GBPUSD will break out and create the next bullish trend on the daily chart. The target is to increase at 1.3, and if this zone is broken, GBPUSD will create a strong bullish force towards 1,317 and higher at 1,333.
Stop loss 1,275
Take profit 1,295
For the price of gold, after testing the Demand 1430-1447 area, this precious metal price rebounded rapidly towards the Supply area of 1480. Currently, on the daily chart, the gold price has appeared a bearish trendline, causing pressure. strengthened demand area 1430-1447. If this zone breaks, it is highly likely that the price of gold will plunge below 1400, the target is 1383. However, if Demand 1430-1447 holds, the price of gold will likely put pressure on the current downtrend line. as well as approaching Supply 1480.
Stop loss 1425
Take profit 1480
Stop loss 1495
Take profit 1450
Recommendation: This is forex Trading Idea only. For more accurate analysis, you should incorporate other indicators that you have mastered. In particular, always focus on capital management methods to prevent any possible market situation.
Author: Nguyen Chi Thanh
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