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FX.co ★ Trading plan for EUR/USD and GBP/USD on April 20, 2021

Trading plan for EUR/USD and GBP/USD on April 20, 2021

Yesterday, the euro and the pound made a real circus show. It should be noted that the single Euro currency has long demonstrated its intention to rise to the level of 1.2000 and so, it broke through this level and even moved slightly higher. What's more especially impressive was the pound, which not only broke through the quite high level of 1.3900, but even tried to take the 1.4000 mark. At some point, it even managed to do it, but it failed to consolidate within it. Therefore, it just stayed below that level. However, it is alarming that all this is happening against the background of a completely empty macroeconomic calendar. In principle, the entire news background was kind of boring. There is no significant news, so there's literally nothing to grab onto. In other words, we are dealing with a common speculation that seems to be out of control. Everyone got too carried away. So if all this growth is not urgently supported by something, then the collapse of the euro, and especially the pound, is simply inevitable.

Trading plan for EUR/USD and GBP/USD on April 20, 2021

At the same time, we saw that the sarcasm went too far this morning, as the pound did not react at all to the data on the labor market. Here, the UK unemployment rate did not rise from 5.0% to 5.1%, but declined to 4.9% instead. So the data is quite optimistic. However, the pound did not rise. It has already been dragged so high that some news is needed, not to continue the growth, but to justify it. And oddly enough, the labor market data was not it. At best, they can give the pound some time to enjoy the current fantastic values longer. After all, there are quite a lot of questions about the British statistics on the labor market.

Moreover, the unemployment rate has been falling for months, while employment has been declining time after time, and the number of applications for unemployment benefits continues to grow. For example, employment decreased by another 73 thousand, while the number of applications increased by 10.1 thousand. And although the data was better than the forecasts, they still show a decline in the labor market. However, the unemployment rate is still declining, which contradicts even formal logic.

Unemployment rate (UK):

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Trading plan for EUR/USD and GBP/USD on April 20, 2021

After hovering around the level of 1.2000 for some time, the EUR/USD pair still managed to break through it, focusing not just above it, but locally rising towards 1.2070. We can assume that if the price settles above the 1.2070 mark, it may well open a way towards 1.2130, but it is noteworthy that the overbought status is accumulating and this may lead again to a technical correction to the area of 1.2000.

Trading plan for EUR/USD and GBP/USD on April 20, 2021

The GBP/USD pair showed even more activity, which eventually pushed the rate to the area of the psychological level of 1.4000. We can assume that the control level will negatively affect the volume of long positions in terms of their reduction, which will then lead to stagnation-pullback.

Trading plan for EUR/USD and GBP/USD on April 20, 2021

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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