official Daily Market Analysis From Forexmart.eu

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EUR/USD. December 22, 2020 – Euro strengthens again on fundamental background

During morning trading, the EUR/USD pair showed some weakening, dropping to the level of 1.2200. Both houses of the US Congress approved a $892 billion fiscal stimulus package, which could slightly improve US economic performance in the first quarter of the new year.

However, almost immediately, the euro began to strengthen again amid positive news on Brexit. The current quote for the pair is 1.2230. Today it became known that the UK and the EU may agree on fishing quotas, which brings back hopes for a full Brexit deal before the end of this year.

EUR/USD was also supported by statements from the WHO, which announced that the new Covid strain found in the UK is less transmissible than other infections. This means that existing vaccines can handle it as well.

Thus, the decision of Congress and the breakthrough in the Brexit negotiations provided strong support for the bulls on EUR/USD. The next target for the asset is 1.2250 and above.

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Brent. December 23, 2020 – Oil declines for the third day in a row

Oil quotes are declining during Wednesday morning trading: the current price of Brent is $49.90 per barrel. The asset was pressured by data from the American Petroleum Institute (API), according to which US oil reserves rose by 2.7 million barrels over the week (to about 497.7 million), while analysts predicted a decline of 3.2 million barrels.

Additional pressure on Brent continues to be exerted by concerns about a further drop in demand for hydrocarbons amid prolonged lockdowns in many countries.

In addition, US President Donald Trump threatened yesterday not to sign a bill on measures of financial assistance to the US economy in the amount of $892 billion, calling for an increase in the amount of payments to citizens from $ 600 to $ 2 thousand. It is worth noting that if Trump does not approve the new law by the end of this year, a recession for the United States will become almost inevitable.

EUR/USD. December 23, 2020 – Euro returns to 1.22 level after decline a day earlier

The US dollar on Wednesday again declines against the euro after some strengthening a day earlier. The day before, the American currency received support amid growing demand for safe assets after the news of the coronavirus mutation appeared. Then the dollar managed to strengthen to the level of 1.2950. The current quote for EUR/USD is 1.2190.

Today the pressure on the dollar is exerted by the approval of the US Congress of a new stimulus package. The adoption by the American authorities of measures to support the economy, as well as the expectation of an early vaccination, support the optimism of investors regarding the future prospects of the global economy. And this, in turn, leads to a weakening of the greenback.

American lawmakers have agreed on a program to support the economy, including direct payments to citizens in the amount of $600. However, Donald Trump demanded that Congress increase payments to $2 thousand or $4 thousand for spouses.

The euro is growing today also due to a breakthrough in the Brexit negotiations. The fishing issue has not yet been resolved, but sterling (and after it the euro) is showing significant growth, which suggests that investors still believe in the signing of a trade agreement.

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EUR/USD. December 24, 2020 – Consolidation at 1.22

The EUR/USD pair is showing consolidation in the area of local highs at 1.2200.

Yesterday's weak statistics put some pressure on the dollar rate. In particular, the number of initial applications for unemployment benefits did not increase as much as analysts predicted, but still the figure is still above 800 thousand, which is a high figure. Moreover, in November, the growth in durable goods orders slowed, personal income and expenses fell, and new home sales fell sharply.

In addition, the consumer confidence index in the US fell to 88.6 points in December, while experts had expected the index to rise to 97 points.

At the same time, the European currency is supported by the approaching final in the Brexit negotiations. Experts note that the main controversial issues have already been practically resolved, and if an agreement between the EU and the UK is adopted, the euro may rush to the area of 1.2300.

Today the macroeconomic calendar is almost empty, the markets are getting ready for Christmas. In the United States, it is a shortened day, and European exchanges do not work at all throughout the day. However, today you should still pay attention to the statistics on basic orders for durable goods in the US in November.

GBP/USD. December 24, 2020 – Sterling continues to storm the area of local highs

The British sterling was the leader on Wednesday trading, confidently moving to a local maximum at around 1.3570. Negative factors in the form of the emergence of new strains of coronavirus and the lack of progress in the Brexit negotiations have not yet put pressure on the British currency, but everything can change at any time.

The pressure on the US dollar was exerted by yesterday's weak statistics. In particular, the number of initial applications for unemployment benefits did not grow as much as expected, but still the figure is still above 800 thousand.Moreover, in November the growth in the volume of orders for durable goods slowed down, income and expenses of individuals decreased. and new home sales fell sharply.

At the same time, the sterling is supported by the hopes of investors for the successful completion of negotiations on Brexit, despite the fact that the deadline for making a decision on a trade deal is rapidly approaching. Negotiations between the EU and the UK lasted all night, and if an agreement is reached, the pound will rush to new highs in the 1.40 area. If the negotiations fail, the dynamics of the British currency will depend on whether the debate continues in the future.

Today the macroeconomic calendar is almost empty, the markets are preparing for Christmas, so the movement of the pair will be limited by a narrow range below the 1.3570 level.

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GBP/USD. December 28, 2020 – Pound falls despite achieving Brexit trade deal

The pound sterling declines on Monday despite the successful completion of post-Brexit deal negotiations. The current quote for the EUR/USD pair is 1.3480.

The UK and the European Union have nevertheless managed to agree on the terms of a trade deal, according to which free trade between Britain and the EU countries will be preserved, as well as visa-free travel and balanced access to markets and marine resources.

Starting December 31 (the date when London officially leaves the EU borders), trade deals will go without quotas and tariffs, but this does not apply to services and financial offers. Experts note that reaching an agreement is an excellent sign for the pound sterling, however, the further exchange rate will adjust to the circumstances.

EUR/USD. December 28, 2020 – The pair is storming again in the last week of the outgoing year

At the beginning of the last trading week of the outgoing year, the EUR/USD pair continues to demonstrate multidirectional dynamics. In the morning the quotes reached the level of 1.2250, but immediately dropped to 1.2200.

Most of the factors that increase uncertainty in the markets have already ceased to be relevant, but the pair continues to storm. The UK was finally able to agree with the EU on Brexit, and Donald Trump in the US still approved a $2.3 trillion economic aid project adopted by Congress. These events imply a sharp rise in demand for risky assets, but the euro is in no hurry to storm resistance levels.

The fact is that many investors have gone on vacation or are waiting for new drivers, which can be taken into account in building a trading strategy for the next year.

In addition, market participants are very interested in the success of vaccination in the cut of the global economic recovery, as well as Joe Biden's policy to further stimulate the US economy. If the Fed maintains its plan to inject large amounts of money into the economy, the EUR/USD pair could rise to 1.30 early next year.
 

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Brent. December 29, 2020 – Oil market demonstrates growth in the pre-New Year week

Oil prices are steadily growing during trading on Tuesday amid growing investor appetite for risky assets. A strengthening factor was the adoption of new stimulating measures in the United States. The cost of February futures for Brent rose to $51.65 per barrel, while the price of WTI reached $48.30 per barrel.

On Monday, the House of Representatives of Congress approved an increase in stimulus payments from $600 to $2,000 at the request of Donald Trump. Moreover, on Sunday, Trump signed the country's fiscal 2021 budget of $2.3 trillion. It is noted that the budget includes a package of measures to support the economy in a pandemic in the amount of $900 billion.

In addition, the general weakness of the US dollar also supports oil prices. However, experts believe that the growth of the oil market may be suspended due to concerns about a new strain of coronavirus and imposed restrictions on the movement of people between countries.
 

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EUR/USD. December 30, 2020 – Dollar has updated two-year lows

On Wednesday, the dollar renewed multi-year lows in pairs with many currencies: paired with the euro, the dollar reached its lowest level in two years at around 1.2300. The pressure on the greenback was put on by the postponement of the immediate consideration of raising household payments to $2,000.

The dollar index fell to 89.711 against a basket of six major currencies, its lowest level in more than two years.

Earlier, the dollar also showed a decline, and risky assets – growth. The reason was the signing by Donald Trump of a bill to help the population and economy in the fight against coronavirus. And while the payout remains uncertain, many analysts predict that the US currency could weaken further next year, as newly elected US President Joe Biden is expected to push for even greater economic support.

Another negative factor for the dollar is the expectation that the US Federal Reserve will keep interest rates low for a very long time.

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Brent. December 31, 2020 – What awaits the oil market in 2021?

In April 2020, Brent crude hit multi-year lows, falling to $16 a barrel amid the onset of the Covid-19 pandemic and the price war between Russia and Saudi Arabia. At the same time, the price for American WTI crude oil fell into the area of negative values.

Experts note that the consumption of crude oil and liquid fuels in the world for the year decreased by 9% (from 101 million barrels per day in 2019 to 92.4 million barrels). However, an agreement to cut oil production under OPEC + allowed oil to recoup most of the losses by the end of 2020. Today Brent quotes are holding at $51.50 per barrel.

However, it is possible that at the beginning of 2021, quotations may again fall to $30 per barrel amid the announcement of new lockdowns in many countries due to the further spread of coronavirus in the world. But, nevertheless, the market is now dominated by optimism. Analysts still expect the global economy to recover next year, which can support the demand for commodities. The oil price range is expected to be in the range of $40-65 per barrel over the next year.

On the last day of the outgoing year, Brent quotes settled at $51.40 per barrel.
 

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EUR/USD. January 04, 2021 – Dollar falls against most currencies

At the beginning of the first trading week of the new year, the US dollar depreciates against many competing currencies. In a pair with the euro, the greenback fell again to the level of 1.2300. The US currency is under pressure from growing appetite for risky assets amid continued optimism about the global economic recovery in 2021.

The incidence of coronavirus in the world and the beginning of vaccination of the population in many countries remain the main topics of discussion by analysts. Bloomberg experts note that without widespread vaccine distribution, the dynamics of the foreign exchange market will strongly depend on the dynamics of the spread of Covid.

The economic calendar for today is not very diverse. Germany presented data on the index of business activity in the manufacturing sector: the indicator came out worse than expected (58.3 against expectations of 58.6 points). A similar release of data from the euro area also reflected a decrease in the indicator: from 55.5 to 55.2 points. 

But the business activity index in the UK came out better than expected: the index rose to 57.5 (forecast 57.3 points). In the evening hours, the US will also release its business activity figures.

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Fundamental Brent analysis for January 5, 2021

On Tuesday afternoon, world oil prices shifted to growth amid expectations of an OPEC+ decision to further cut oil production in February. The current quotation of the asset is $52.05 per barrel.

The meeting of all OPEC+ countries was supposed to end yesterday, but the participants in the meeting failed to reach an agreement on the volume of reductions next month, and the debate will continue today. The meeting participants are discussing two proposals: to increase production in February by 500 thousand bpd or to keep production at the January level. Russia and Kazakhstan are in favor of increasing production by 0.5 million bpd from February, while the rest of the countries are in favor of extending production at current levels.

Oil prices are also supported by continued optimism related to the recovery in demand. The start of coronavirus vaccination in many countries gives hope for the early lifting of restrictions on movement, which, in turn, will contribute to the growth of demand for raw materials.

However, despite vaccinations, the world today is still seeing an increase in the incidence of Covid-19, which suggests that in the short term, the increase in demand will still slow down.

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EUR/USD. 06.01 | Euro has renewed its maximum at 1,2340

The euro is trying to gain a foothold above the 1.34 level. The current quote for the EUR/USD pair is 1.2340, which has become the next maximum since the beginning of 2018.

At the moment, investors are awaiting the election results from Georgia. As you know, Donald Trump continues to fight for the presidency, accusing the Democrats of rigging elections. However, the result of the recalculation should in no way affect the Fed's ultra-soft policy and monetary stimulus. Moreover, Democrats’ victory (with their stimulus plan) will only strengthen the upward impulse of the S&P 500 and lead to further weakening of the US dollar and a rise in risky assets.
 
During the day, the dynamics of the EUR/USD pair will also be influenced by the publication of business activity indices in Europe and the US, data on consumer prices in Germany and statistics on the number of people employed in the non-agricultural sector in the US from ADP. FOMC minutes will be published late in the evening.

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GBP/USD. January 11, 2021 – The sterling starts the year weakening

The GBP/USD pair continues to decline, reaching 1.3460. The sterling is under pressure from the negative fundamental background. In particular, due to the nationwide lockdown announced in the UK back on January 4, the blow to economic growth in the country will be more severe than in other European countries.

Experts expect that GDP will fall by 2.7% in the first quarter of the year, and this may lead to a decrease in the interest rate by the Bank of England in February. Earlier it was expected that the regulator would cut the rate only by the end of the year. And even the adoption of the Brexit agreement will not be able to allay the concerns of the Central Bank, since a number of questions remain on the deal.

However, if the mass vaccination is successful, the pound could recover somewhat in the second quarter. In the meantime, the British currency will continue to decline.

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EUR/USD. January 12, 2021 – The dollar stopped his rally at the level of 1.2130

On Tuesday, the dollar suspended its growth in the area of 1.2130. The EUR/USD pair has been hovering at 1.2150 for the second session in a row. The euro received some support after the release of data on the consumer confidence index in the euro zone from the Sentix institute in January: the indicator rose by 1.3 points against a decline earlier by 2.7. However, these statistics turned out to be worse than the forecast of 2.0 points growth.

The dollar continues to receive support from the election of a new president in the United States (Joe Biden will take office on January 20). Global markets are optimistic about the Democrat's plans to allocate additional trillions to fight the coronavirus pandemic.

Markets are usually a little nervous when it comes to stimulus processes as they can accelerate inflation and negatively affect the US currency. However, now in the foreground is the yield on 10-year government bonds, which keeps the US dollar afloat.

Today the macroeconomic calendar is not rich in publications, so the pair will continue to trade near the level of 1.2150. Attention should be paid only to the data on new vacancies (JOLT) for November in the United States. A job overview will give you an idea of what is happening in the labor market in relation to recruitment. Analysts point out that 6.652 million vacancies were recorded in October.

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EUR/USD. January 13, 2021 – The pair cannot determine the movement vector

The EUR/USD pair continues to trade in different directions, fluctuating within the range of 1.2130-1.2230. The current quote for the euro is 1.2165.

Yesterday the dollar weakened across the entire spectrum of the market amid declining yields on US government bonds. Today, the US currency has turned around and is showing corrective growth.

Today you should pay attention to the publication of inflation data for December. Analysts predict that the CPI added 0.1% mom after gaining 0.2% mom in November. Experts note that the more neutral the statistics are, the better for the dollar, since inflation surges would now be a high risk (in anticipation of the imminent introduction of a new stimulus package).

In the evening, the US Federal Reserve Beige Book will be published. Usually the market does not react to such publications, but they are important for understanding the general picture of what is happening in the American economy.

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January 14, 2021 – Why is the oil market declining?

Yesterday, Brent quotes updated an almost annual maximum at $57.38 per barrel, but today the asset has dropped to $55.77.

The pressure on prices was exerted by data on changes in US oil product inventories. According to a report by the Energy Information Administration (EIA) of the US Department of Energy, crude oil inventories in the country fell by 3.2 million barrels for the week, while analysts predicted a decline of 3.8 million. A day earlier, API released a similar report, according to which oil reserves decreased by 5.8 million

The report from the EIA also showed that gasoline inventories rose by 4.4 million barrels, and distillate stocks by 4.8 million barrels, which was worse than forecasts (3.2 million and 2.8 million barrels, respectively).

Additional pressure on Brent came from the recovery of the US dollar in the Forex market. The USD Index, which measures the US currency against a basket of six major foreign exchange competitors, rose 0.3% on the day. The new US President Joe Biden will speak today. The head of the White House may announce new measures to support the economy, which will put pressure on the dollar and, as a result, lead to an increase in oil prices.
 

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GBP/USD. 15.01 | Consolidation in the 1.36-1.37 price range

The GBP/USD pair continues to trade within the range of 1.36-1.37. The current quote is 1.3655.

Currently, the epidemiological situation in the UK continues to deteriorate. Moreover, on the eve of the country's Ministry of Transport announced the cancellation of flights with a number of South American states and Portugal after the discovery of a new strain of coronavirus in Brazil. Despite this, the British currency continues to trade in the area of the recent two-year highs. The fact is that market participants still take into account the high probability of the introduction of negative rates by the Bank of England.
 
At the same time, the dollar is under pressure from the decline in Treasury yields and the weak report on claims for unemployment benefits, published yesterday. According to the US Department of Labor, the number of Americans who filed initial applications for unemployment benefits amounted to 965 thousand, more than the forecast of 795 thousand. During the day, the movement of the pair within the current price range will continue.

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EUR/USD. January 18, 2021 – Euro continues to decline

The euro continues to decline against the dollar on Monday, reaching 1.2060. Weak economic statistics from the US, as well as uncertainty in the timing of the discussion of Joe Biden's stimulus program put pressure on risky assets.

It is noted that the package of measures to support the economy proposed by Biden includes direct payments to Americans in the amount of $1,400, a temporary increase in payments to the unemployed, and an increase in the minimum wage at the federal level to $15 per hour. However, experts believe that the new president will not be able to pass the stimulus plan in this form through Congress.

This week, all the attention of the markets will be drawn to the speech in the Senate of the former chairman of the Federal Reserve System Janet Yellen on Tuesday. Market participants expect that the country's new finance minister will make it clear that they are taking an approach in which the dollar should be determined by the market. This will mean that the Ministry of Finance does not intend to interfere with the dynamics of the national currency. 

Today is a day off in the United States to celebrate Martin Luther King Day, so the pair will continue to trade weakly around 1.2080.

Brent. January 18, 2021 – The oil market continues to decline on Monday

On Monday, oil prices continued to decline, reaching $54.50 per barrel. Such dynamics was a consequence of the strengthening of the US dollar, as well as a decrease in traders' optimism amid an increase in the incidence of Covid in the world. However, statistics from China, showing GDP growth of 2.3% (more than forecast) and an increase in industrial production in December by 7.3%, limit the decline in oil prices today.

Experts note that the oil market has grown strongly lately, and the current decline is giving it some respite. The key event for the market in the near future will be the inauguration of the US President-elect Joe Biden and his further economic program.

Brent was also under pressure at the end of last week with data from the American oil service company Baker Hughes. The report reflected an increase in the number of operating oil rigs in the US last week by 12 units to 287 rigs. The number of work units has been increasing for eight consecutive weeks.

The current Brent quote is $54.80. During the day, we expect a slight recovery in the price to the $55 per barrel area.

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EUR/USD. January 19, 2021 – The pair is awaiting Biden's inauguration

On Tuesday, the major currency pair started recovering from the 1.2050 area. The current quote EUR/USD is 1.2135.

Today the macroeconomic calendar is empty, but market participants have something to think over. For example, the results of the Reuters poll showed that the new stimulus package from the ECB is unlikely to have a positive impact on the European economy. In particular, we are talking about the already agreed PEPP package of 185 trillion euros, which was extended for another 9 months. Against the backdrop of such pessimistic opinions, the economic outlook for the eurozone looks rather bleak.

As for the United States, not everything is smooth here either. Former head of the Federal Reserve System Janet Yellen said that the US economy could find itself in a long and rather severe recession if Congress does not agree on additional support measures. Today, attention should be paid to Yellen's speech, which, as expected, Joe Biden intends to appoint the new head of the Federal Reserve System.

The inauguration of the new US President-elect Joe Biden will take place tomorrow. Market participants are waiting for this event, so the dynamics of trading today will not differ in activity.

January 19, 2021. Fundamental analysis of the oil market

The oil market, which has been growing steadily since the beginning of November last year (when the first news of successful trials of coronavirus vaccines appeared), is gradually losing its impetus. Having managed to rise from the $40 per barrel area to $57 from October to January, today oil is traded near the $55 per barrel level. 

The January 2021 high at $57.5 was reached after Saudi Arabia unexpectedly announced its decision to unilaterally cut oil production in February and March (by 1 million barrels per day). Then the pandemic and its consequences on transportation and fuel demand again began to put pressure on quotations.

At the same time, some support for the prices of «black gold» is provided by the approval of Joe Biden as the new US president. Market participants expect that its measures to support the economy will raise inflation, which has increased the demand for oil from speculators and investors.

Taking into account the current fundamental background, it can be concluded that oil prices are unlikely to grow significantly in the near future. We believe that the range of fluctuations in Brent quotes will be represented by a corridor of $50-55 per barrel.

Today prices are rising slightly from the $55 level in anticipation of a report from the International Energy Agency (IEA). The experts of the organization intend to share their forecasts for the further dynamics of the market, taking into account the new lockdowns in many countries.

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EUR/USD. January 20, 2021 – Euro continues to rise above 1.2150

On Wednesday, the euro continues to rise, reaching 1.2150. Yesterday, ex-head of the Federal Reserve System and future US Treasury Secretary Janet Yellen made a speech, which market participants were looking forward to.

Yellen calmed the markets by assuring them of additional fiscal stimulus and promised not to interfere with the dynamics of the dollar. The politician also noted that in the post-crisis period, the United States needs a weak currency in competition and said that the Treasury Department will fight against attempts by other central banks to manipulate the exchange rates of national currencies.

Now, in order to reduce the rate of the single European currency, the ECB will have to somehow outplay the FRS, but the European regulator has long since exhausted the entire arsenal of stimulating instruments. The expansion of the QE program is unlikely to spur inflation, analysts say. Thus, with the strong weakening of the dollar and the ECB's inability to influence the euro rate, the EUR/USD pair has only a way up.

Today we should pay attention to the data on inflation in the eurozone. Deflation has been raging in Europe for four months now. And the final data on consumer prices should reflect their continued decline at the level of -0.3%, which will put significant pressure on the euro rate and allow the bears to return quotes to the level of 1.21.

An important event today will be the inauguration of Joe Biden and his first appearance as the new president of the United States.