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Yesterday, no important data was set for release in the United Kingdom, Europe, and the United States. The focus was only on the COVID-19 vaccine and restrictions due to the virus.
In terms of market dynamics, traders were indecisive. That was clear from the daily candlestick of the US dollar index (DXY), which closed having a large shadow and small body. In the market, this kind of candlestick is called a Gravestone Doji and is considered to be a reversal signal. The index has been in the narrow range of 91.40/92.00 for several days. This means that the current candlestick is a classic Doji, which indicates uncertainty and the upcoming acceleration in the market.
Now, let's analyze EUR/USD on the chart. Yesterday, the quote was moving in an upward trend. Notably, the price level of 1.1880 served as a Pivot point. This was also the support level on March 10,16,17,19 and 22. This case was no exception. The quote slowed down within this area and rebounded towards the level of 1.1950.
As a reminder, 1.1950 is part of a psychologically important level of 1.2000, (1.1950/1.2000/1.2050).
In this case, 1.1950 is seen as resistance.
The GBP/USD was trading sideways within the 1.3820/1.3875 corridor at the beginning of the week. This also confirms the fact of market uncertainty. If we consider the existing sideways trend in terms of the corrective move from the peak of the medium-term trend (1.4224), we will notice that sellers are still trying to keep the market in the downward trend.
Trading recommendations on EUR/USD and GBP/USD on March 23, 2021.
As for the macroeconomic calendar, the United Kingdom delivered its labor market report today. The reading turned out to be better than expected. However, it did not have a positive effect on the pound.
Thus, the unemployment rate dropped to 5.0% from 5.1%. The reading had been projected to rise to 5.2%. Meanwhile, employment declined by 147,000 and the claimant count increased to 86,000 in February.
At the same time, average earnings excluding bonuses grew only to 4.2% from 4.1% and compared to a 4.4% forecast.
In the second half of the day, traders expect the US new home sales report to be published. The reading is projected to fall to 845,000 from 923,000. Consequently, the greenback may be brought under pressure.
According to the trading chart on EUR/USD, the quote is at the level of 1.1950. The volume of short positions is increasing. If the price is below the Pivot point of 1.1880, it is likely to go down to the low of 1.1835 recorded on March 9.
As for the current trading chart on GBP/USD, the price broke the sideways range of 1.3820/1.3875 downward. This means that the corrective move from the peak of the trend is still highly likely. If so, the price is expected to go down to 1.3775-1.3750.
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