Yesterday's economic calendar had such strong statistics that market participants did not believe in their reality.
Here's the details for the economic calendar on April 15:
The United States released its retail sales data, where they expected it to accelerate from 6.3% to 7.9%, which is very good, but the result was so positive that market participants could not believe it.
The previous figure was revised from 6.3% to 7.3%, but the current data year-on-year reflected an increase to 27.7%, which shocked the market.
The change in retail sales is considered the main indicator of consumer spending. The growth of this indicator is considered a positive signal and leads to the strengthening of the national currency – USD.
In our case, market participants simply stayed in place, and the value of the US dollar practically did not change.
As already noted above, such a strong change in the statistical indicator went against the theory of fundamental analysis, where there should have been a sharp increase in the US dollar.
In turn, the claims for US unemployment benefits, published synchronously with the retail data, were ignored by market participants.
- Volume of initial applications for benefits fell from 769 thousand to 576 thousand.
- Volume of repeated applications for benefits slightly rose from 3 727 thousand to 3 731 thousand.
The application rate reflects the number of currently unemployed citizens receiving unemployment benefits. This indicator reflects the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth.
To put it simply:
An increase in the number of applications leads to a weakening of the national currency.
A decrease in the number of applications leads to an increase in the national currency.
Analysis of trading charts from April 15:
The Eurocurrency (EURUSD) has been following the lower part of the psychological level area (1.1950/1.2000/1.2050) for more than 48 hours. It showed such low activity that many traders have concluded that there is a process of accumulation in the market, which will lead to acceleration and abundant attention from speculators.
The trading recommendation of April 15 considered the fluctuation process within the range of 1.1950/1.2000 as a starting point in the upcoming acceleration, but the trade should have been entered only at the time the price went beyond the established borders.
No trade deals were opened.
In turn, the British currency (GBPUSD) decreased its activity so much that the fluctuation amplitude was only 1.3760/1.3800 yesterday, which is considered atypical behavior for such a dynamic currency pair.
The trading recommendation of April 15 considered the process of stagnation within the borders of 1.3750/1.3800 as a lever for the upcoming acceleration, working on the principle of a breakdown of a particular border.
Trading recommendations of EUR/USD and GBP/USD on April 16, 2021
Today, the Eurozone will publish its inflation data, where it was expected to rise from 0.9% to 1.3%.
What is the consumer price index?
The consumer price index is the inflation indicator, prepared by the statistical office of the European Union (Eurostat), which determines the change in prices of the selected basket of goods and services.
From the point of view of fundamental analysis, inflation growth leads to the growth of the national currency -– EUR.
Due to the market reactions to the statistics published earlier, it should be noted that fundamental analysis may not work, as it interprets the possible reaction of market participants.
EU 9:00 Universal time - Consumer price index
Looking at the EUR/USD trading chart, it can be seen that the quote follows the lower part of the area of the psychological level of 1.1950/1.2000. Considering the long stay of the price in one place, we can assume that there will be a local acceleration in the near future, where one should work on the principle of breaking a particular stagnation boundary.
Let's illustrate the above into trading signals:
- Buy positions will be considered if the price is held above the level of 1.2000, with the prospect of moving to 1.2050.
- Sell positions will be considered if the price is held below the level of 1.1950, with the prospect of moving to 1.1920-1.1875.
As for the GBP/USD trading chart, we can see that the consolidation movement in the range of 1.3760/1.3800 was already broken in the downward direction during the start of the European session, just due to the speculative interest coming from the process of accumulation of trading forces.
The next actions will depend on whether the quote manages to stay below the level of 1.3750 in the H4 time frame, which will open the way towards the base of 1.3668. Otherwise, another fluctuation in the previously broken range is not excluded.
