23.04.202009:58 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on 04/23/2020

Overall, we continue to see capital fleeing from all over the world back to the United States. Macroeconomic data is largely ignored. And when there is no news, the dollar rises. At the same time, the dollar growth began immediately with the opening of the American session, so it is necessary to talk about the actions of American investors, who still continue to close their positions around the world and return money home.

As for the macroeconomic data themselves, the market reaction to inflation in the UK, which fell from 1.7% to 1.5%, was not very persuasive. Market participants were not impressed by either a decrease in inflation or the fact that the data turned out to be better than forecasts, since a slowdown to 1.3% was expected. Nonetheless, we are talking about inflation, which is traditionally one of the most significant indicators for financial markets.

Inflation (UK):

Some macroeconomic data were published in the United States, however, it's quite difficult to connect the growth of the dollar with the rise in housing prices by 0.7%. The indicator itself is not so important. Moreover, this is data for February, while everything changed dramatically in March. Moreover, the growth of the dollar began long before the publication of these data which continued after. Thus, there is no coincidence in time.

Home Price Index (United States):

Despite the fact that the market quite often ignores macroeconomic statistics, it is not worth passing by, since it can show the beginning of a trend reversal to strengthen the dollar. But it is still too early to talk about this. After all, preliminary data on business activity indexes in Europe should show a further decline in the mood of European business. In particular, the index of business activity in the services sector should decrease from 26.4 to 23.0. The manufacturing index may decline from 44.5 to 39.0. As a result, the composite business activity index should decrease from 29.7 to 24.0. So the data themselves indicate that investors have no reason to consider Europe as an object of investment.

Composite Business Activity Index (Europe):

The situation in the UK is also not pleasing, as the index of business activity in the service sector is expected to decline from 34.5 to 27.2. The production index is projected to decline from 47.8 to 40.8. Well, the composite index should decrease from 36.0 to 30.0. Therefore, the British business also does not see any prospects at least for the foreseeable future.

Composite Business Activity Index (UK):

However, American business also looks to the future without much optimism. For example, the index of business activity in the service sector should decline from 39.8 to 32.2. The index of business activity in the manufacturing sector may decline from 48.5 to 37.6. As a result, the composite business activity index is likely to decline from 40.9 to 34.2. But much more interesting is what the data on applications for unemployment benefits will show today. The number of initial applications for benefits may continue to decline and amount to only 4,545 thousand and usually the number of initial applications varies around 200 thousand. But that was before. On the other hand, the number of repeated applications can set another anti-record and should be as much as 13,000 thousand. Moreover, if these data are confirmed, then the number of repeated applications will grow for the fourth week in a row. Moreover, such an impressive increase in the number of repeated appeals is clearly demonstrated not even by the unprecedented increase in unemployment, but by the fact that this very unemployment is prolonged. Thus, people simply cannot find a new job which means they have no income. Consequently, they are forced to greatly reduce their costs. And this leads to a further reduction in retail sales and services. As a result, companies are forced to further cut costs, including by reducing staff. As a result, the spiral of crisis spins more and more. But strangely enough, this helps to strengthen the dollar. Investors assume that if everything is so bad in the United States, then, if economic collapse has not yet occurred in other countries, it is about to begin. However, many assume that the restoration will begin with the United States. So it is better to take advantageous places in advance. Moreover, it is likely that the United States will try to organize the restoration of its economy at the expense of other countries. This is indicated by Washington's attempts to convict China of the whole coronavirus epidemic. This means that China will be subject to certain sanctions restricting the work of Chinese business in the United States, including in terms of restricting Chinese exports.

Repeated Unemployment Insurance Claims (United States):

The euro/dollar pair managed to locally break through the variable flat 1.0810 / 1.0890, but it was not possible to stay below the quote, as a result of which a rebound was formed. It can be assumed that if the given mood is maintained and the price is consolidated lower than 1.0800, the downward interest will lead market participants to the main support point of 1.0775.

The pound/dollar pair is in the phase of correction from the structure of the previous downward movement. It is possible to assume that the mirror level of 1.2350 will play the role of the interaction of trade forces, where in the case of consolidating prices lower than 1.2320, the direction to the range of 1.2280-1.2250 will open for us.