logo

FX.co ★ Trading plan for EUR/USD and GBP/USD on April 1, 2021

Trading plan for EUR/USD and GBP/USD on April 1, 2021

French President E. Macron said that they are doing their best to continue vaccinating, without rest and day off. Along with this statement, he introduced a four-week quarantine. It is so strict that even kindergartens and schools are being closed. Due to this, all hopes of the Euro currency to break the trend towards strengthening the US dollar were gone. Moreover, Italy also joined such an initiative. Although introducing a full-fledged quarantine is not discussed yet, Italy has already quite strict restrictions until the end of April. Meanwhile, Germany took a similar step a little earlier. In this case, it is quite clear that other countries of the European Union will do exactly the same, that is, extending the restrictive measures. But it is very possible that the restrictions will only get tougher. So, Euro's optimism just lasted a few hours.

Trading plan for EUR/USD and GBP/USD on April 1, 2021

The optimism was due to the preliminary inflation data, which somewhat reduced the fears that appeared after the publication of data on consumer prices in Germany and Spain. It should be noted that European inflation rose from 0.9% to 1.3%, but this seems just an excellent result in the current conditions, as it was feared that growth would be much stronger. In fact, inflation rose within the framework of expectations and forecasts, which were quite moderate. In other words, the risks of an inflationary spiral in Europe have slightly declined. They still persist, but so far they are not so predominant. This was made possible by the inflationary dynamics in France and Italy.

In the second economy of the euro area, inflation rose from 0.6% to 1.1%, which fully coincided with forecasts. As for Italy, inflation rose to only 0.8%, although it was expected to rise from 0.6% to 1.0%. This is the third economy of the euro area, whose contribution to the pan-European statistics is quite noticeable. In view of this, European currency began to grow, which lasted relatively short. It sharply declined again after a small stop in the middle of the trading day.

Inflation (Europe):

Trading plan for EUR/USD and GBP/USD on April 1, 2021

The pound sterling started to increase a little earlier on the wave of unexpectedly good GDP data for the fourth quarter. The final estimates showed -7.3%, while preliminary estimates showed a slowdown in the economic downturn from -8.5% to -7.8%. This means that the British economy is recovering somewhat faster than expected, which is an extremely good reason for the pound to rise. However, France's decision to impose a strict quarantine has had a negative impact not only on the Euro currency, but also on the pound.

GDP Changes (UK):

Trading plan for EUR/USD and GBP/USD on April 1, 2021

At the same time, the optimism caused by Europe's relatively good inflation data led to the fact that the market actually did not notice the US employment data. This is despite the fact that it grew by 517 thousand, which is a great result. So, the US labor market continues to recover steadily unlike Europe.

Employment Changes (United States):

Trading plan for EUR/USD and GBP/USD on April 1, 2021

It appears that dollar's growth today will be supported not only by expectations of further tightening of quarantine measures in Europe, but also by the next labor market report. Here, the number of initial applications for unemployment benefits may fall from 684 thousand to 650 thousand, while repeated applications should also do from 3 870 thousand to 3 680 thousand. This individually is quite a good forecast, but if we consider the US Department of Labor report tomorrow, then the outlook is amazing. Needless to say, the reduction of unemployment is the main reason for economic growth.

Number of re-claims for unemployment benefits (United States):

Trading plan for EUR/USD and GBP/USD on April 1, 2021

The Euro currency found a resistance in the area of 1.1760 again after a short pullback stage. A stop occurred, which resulted in a price reversal. We can assume that the sellers are targeting the area of the variable support of 1.1700, where a breakdown with prolonged decline is not ruled out.

Trading plan for EUR/USD and GBP/USD on April 1, 2021

Following the European currency, the GBP/USD pair shows a downward activity, which has led the price back to the 1.3750 level. If the price is kept below this level, the euro may further weaken.

Trading plan for EUR/USD and GBP/USD on April 1, 2021

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
Go to the articles list Go to this author's articles Open trading account