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“Bulls” go wild during trading conflict

“Bulls” go wild during trading conflict

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Erik Holm - Head of media

The fire of protectionism of Donald Trump spread to the American economy.

If in 2018 the slogan “everything that is good for America is death for everyone else” pushed the USD index upwards, then I 2019 it became clear that the USA is a non-isolated state and Donald Trump’s protectionist policy is a double-edged sword.

Deprived of support from the fiscal stimulus and the monetary restriction of the Fed, the dollar behaves quite differently than last year. The fall of stock indices and the yield of bounds, which is a typical anti-risk environment, leads to its weakening. But in 2018 it was said that trade wars allowed Greenback to intercept the status of the main asset-seeker from the yen and gold.

When investors fear about recession and easing of monetary policy are confirmed in the words of FOMC officials, EUR/USD “bears” find it hard to resist the attack of opponents. President of the Federal Reserve Bank of St. Louis James Bullard believes that the reduction in the federal funds rate may be justified in the near future. Firstly, the slowdown in GDP due to the US-China trade conflict is moving faster than the Fed expected.

Secondly, inflation and its expectations are below the goal. Thirdly, the dynamics of the yield curve suggests that the current adjustment of monetary policy is inadequately high.

Indeed, the inverse of the differential rates on US 10-years and 3-month debt obligations accurately predicted a recession in the past. At the same time, the peak of the yield of US-bound to multi-month lows and a reduction in the spread with Germany counterparts indicate an undervaluation of the euro compared to the US dollar.

According to the market statistics, there is a strong trend up in the pairs with USD as a second currency. And the move of the market is faster than usual because of the factors mentioned before. Apparently, it gives automated trading systems a wide field to make a profit and so the ForexStore market is the best place to find the best forex robots to get max profit out from the move of the market.  

What caused sharp recovery of the EUR?

What caused sharp recovery of the EUR?

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Jim Anderson - Public Relations

Despite the absence of important economic releases in the USA, Thursday turned out to be a very active day for the foreign exchange market. The US dollar which strengthened against the euro, the Australian dollar, and other currencies in the European session, then turned around and closed trades in the red against all major currencies. The USD/JPY pair was hit harder than others, which was pressured by a slowdown in new home sales. Although the stock market initially ignored the deterioration of relations between the US and China, investors finally began to realize the potential impact of a protracted trade war. Given the statement of the Chinese leader Xi Jinping about the “new long campaign” and “independence”, we should not expect a speedy resolution of the conflict. Turning to the language relating to the strategic retreat of the Chinese Communists from southern China in 1934, Beijing declares that they will not retreat and are ready to make the sacrifice necessary to preserve their industry in the coming years. If China refuses to cooperate President Trump may demand the introduction of new tariffs on Chinese goods worth $300 billion. The impact of the new tariffs on the United States may not be as strong as in other regions but there is no doubt that US companies and consumers will be under blow due to rising prices and lower demand. Wall Street finally recognized the high probability of deterioration in the financial results of companies in the second half of the year so the pair USD/JPY, which has already dropped below 110, can break the mark of 109.

And on the contrary, the euro closed with a rise in growth after in updated the monthly minimum against the US dollar. The sharp recovery was caused by pressure on the US dollar and profit taking at the April lows. Recent economic releases were weaker than expected: business activity in the services and manufacturing sectors in Germany and the Eurozone slowed down. The IFO report on Germany also reflected a determination: the business climate index has fallen to a minimum since 2014. The trade war has hit the mood of the business community and, according to IFO President Fouest, “there is cause for concern, especially about the manufacturing sector”. Markit Economics experts also noted, “moderate business growth amid stagnant demand”. The euro fell against this background but the elimination of the dollar position unfolded a single currency during the American session. Also, do not forget about the elections to the European Parliament, the results of which will be announced at the weekend.

The pound also won back its loses after falling to 1.26. The resignation of the leader of the House of Commons, Andrea Leds increases the pressure on Prime Minister May and some expect her to resign within a week. We believe that for her the situation is very clear and May will be forced to resign before the parliament accepts the agreement on withdrawal from the EU. On Friday a report on retail sales will be published and, given the rising costs reported by the British consortium of retailers, we can expect a strengthening indicator. If costs increase more than expected, the pound (which is clear oversold) may be subject to aggressive short squeezing.

Good data does not seem to have affected the Canadian dollar at all. Wholesale sales rose sharply in March, reflecting the growth in retail sales but instead of resuming the decline, the USD/CAD pair rose amid falling oil prices by almost 6%. Now that prices have fallen below $60 a barrel, we can expect further losses if the risk appetite remains low and concerns about a trade war increase. On the other hand, Australian and New Zealand increased while the trade surplus increased to 433 million.   

For trading on the EUR/USD pair we recommend one of the best forex EA in Forexstore FXCharger MAX, which shows very stable results regardless of the market situation, jumps or drops and brings a stable profit even in the current market situation. Also, check out other best Forex robots on our website.

3 REASONS FOR THE DECLINE IN EURUSD PAIR

3 REASONS FOR THE DECLINE IN EURUSD PAIR

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Erik Holm - Head of media

During a few last days, there has been a strong progression down in the EURUSD pair and so it gave a nice opportunity for «bears» players to gain profit. In this article, we’ve considered three main reasons why the future decline in this pair is possible.

EURUSD attempted to grow yesterday but then again slipped to the lower boundary of the current range. The pair has three main reasons to continue the decline:

  • We might say goodbye to Therese May not later than in May. Yesterday the euro actively reacted to the movement of the pound due to the news on the topic of Brexit. British Prime Minister T. May made it clear that she is open to the second referendum and even to abandon the idea of leaving the EU. Nevertheless, her “new offer” again failed to convince anyone. GBPUSD fell sharply to 4-month lows and EURUSD returned to its usual range.

Now what? According to recent reports, more and more members of the Conservative Party are calling on May to resign. The main contender of the post of prime minister is Boris Johnson, who takes a much more aggressive stance on the Brexit issue.

There is no secret that if the pound continues to fall the pair EURUSD may also suffer. But it gives a lot of possibilities both for manual traders and for those who use automated trading systems. The downward movement makes the daily trading pretty simple and gives opportunities for EA’s to operate bigger amounts of money and apparently to gain more profit.

  • Trade wars: not only Huawei. The United States continues to raise the escalation of the trade conflict with China, now talking about the possible blacklisting of Chinese companies involved in the production of the video surveillance systems. This further worsened the mood of the players and increased the demand for the dollar as a traditional refuge.
  • EU elections. Elections to the Europen Parliament will start tomorrow. Euroskeptics parties have significantly increased their chances of winning especially in Italy and France. Also, German Chancellor A. Merkel, who embodies the bastion of the political mainstream, can resign. Concern about the results of the elections puts pressure on the euro and it is possible that the markets have not yet priced up all the scenarios.

Considering all the factors mentioned it gets clear that the dynamic of the pair can be changed with great difficulty which means it's perfect time for EA’s to make a profit. With our store, everyone will find the best forex robots for most pairs in the market. We have a wide selection of robots for trading on EUR/USD pair.

How low can fall EUR, GBP and AUD?

How low can fall EUR, GBP and AUD?

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Jim Anderson - Public Relations

Now everyone is interested in the question of how low the euro, the Australian dollar, and the pound can fall. Last week these three currencies plummeted wherein even having updated multi-month lows. The dollar remained stable or was trading positively in relation to all major currencies against the background of high demand for the US currency.

Despite the recovery of stock markets, it will be difficult to convince anyone of the strong growth prospects after an escalation trade war that we wrote before in this article. Investors all the reasons to be nervous and central banks will probably soon express their concern. The trade war harms both the US and the rest of the world but there is no doubt that the US is more easily holding a blow, which explains the demand for the dollar and stocks even against the backdrop of rising trade tensions.

The man reason for the weakness of the currencies of the Eurozone, UK, Australia and New Zealand is the prospect of slowing their economic growth. Last month central banks focused on trade uncertainty and after the new tariffs from the US and China prospects only worsened. On Friday China questions the sincerity of the United States. Beijing sees no point in Mnuchin’s arrival for negotiations since “the United States does not show any sincerity. Instead, they increase the pressure. On the one hand, the United States declares that they are negotiating, and on the other hand they continue to use various tricks to destroy the atmosphere of negotiations”.

Fresh economic releases leave the Reserve Bank of Australia no choice but to lower interest rates next month and hold another easing round in the fall. Inflation expectations are falling, unemployment is rising and the economy is losing full-time jobs. The markets estimate the likelihood of a rate cut at the June meeting at just 69% so far, but according to our estimates, the odds are approaching 90-95%. At the last meeting, the RBA could not identify any positive points about the economy and the only reason for deciding to keep rates unchanged was to wait for Trump’s decision. Trade tariffs, the threat of increased duties and the failure of trade negotiations are the worth-case scenarios for China and Australia. The upcoming publication of the minutes of the RBA meeting is more likely to hurt than help the currency. The pair AUD/USD finished the week at 4-month lows and we believe that it can test at least 2019 near 0.6750.

Unlike other currencies, the euro has not reached any significant levels this week. The demand for the single currency clearly declined as the EUR/USD pair was falling all five days in a row. Data on the Eurozone cannot be called strong but the fall of the currency is largely due to the possible impact of a slowdown in global growth. For the most part of the year, the ECB only warned about these very risks and if relations between the US and China do not improve over the next weeks the upcoming regulator meeting will be bleak. Fears have increased so much that investors have completely ignored President Trump’s decision to postpone the introduction of car tariffs for 6 months. This temporary postponement implies a long period of tense negotiations with Japan and the Eurozone. This week Eurozone business activity indicators and the IFO report on Germany will be published. If the data is weak the EUR/USD pair may decline to 1.10.

The pound was the main outsider of the foreign exchange market. It lost more than 2% against the US dollar, the Japanese yen, and the Swiss franc. In addition to labor market data (which was weak but not terrible), no important country statistics were published. The number of applications for unemployment rate fell, but the growth of the average weekly wage (including premiums) slowed sharply. For the pound the main problem is Brexit. There is no progress and Prime Minister May plans to put his draft deal back to vote. The pound remains under pressure as the lack of progress increases the risks of a “hard” Brexit. This week there will be data on inflation and retail sales. Costs may increase but inflationary pressure must be contained. The mark of 1.2700 is an important support level for GBP/USD but the pair cannot fall below 1.26.

According to the situation on the market, there is a high possibility for Forex traders to gain high profit as well as to go to deep drawdown because every move or word from both sides of the “war” could influence the market. But there always the option to use automated trading systems which is the best way to secure your trading. On ForexStore everyone can find the best Forex robots for any kind of trading style or strategy.

Can Bitcoin attract new costumers?

Can Bitcoin attract new costumers?

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Erik Holm - Head of media

The inability to sustainably overcome the $ 8,000 threshold resulted in a drop for Bitcoin by $1,400 and this happened within only a few hours. Apparently, some of the players decided to exit Bitcoin, finding that the rally had already exhausted itself. However, of course, there were those who entered the market with joy and went out under the funeral march. Now BTC is trading at about $7,300, partially recovering from falling to $6,600 and showing the irony of market volatility.

Analysts say that the decline was caused by a large (several thousand bitcoins) order for sale on Bitstamp. It also became a trigger for the correction of prices for the main altcoins, most of which still lose more than 10% to the levels of the previous day.

On the technical analysis side, Bitcoin ran into resistance near $8,200, which in July last year also stopped the rise of prices. The RSI on the daily charts marks a divergence: the new highs for the last month are not confirmed by the peak values of this indicator and therefore they cannot be taken for granted. Even more alarming. The RSI fell sharply in the range below 70, probably marking the beginning of a longer correction.

The upcoming weekend may determine the further direction of the price dynamics of Bitcoin and the entire cryptocurrency market as a whole. So far there are more signs that the pullback was short-term and the general trend for growth will continue at least until the end of summer.

Trading bitcoin gets much easier using Automated Trading systems. On ForexStore there are a bunch of the robots created exactly for trading bitcoin. Choose your best Forex robot!

As well as bitcoin we have a wide range of robots for every kind of trading you might need. There is a sorting system that was created to help to find the best Forex EA’s for everyone’s specific purpose.

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