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Trading ideas for EUR/USD, AUD/USD and Brent

March 16, 2022

EUR/USD: The European currency is strengthening against the U.S. dollar today, despite the publication of several negative statistical indicators. The Eurozone economic sentiment tumbled from 48.6 to -38.7 points. The index for Germany, the economic locomotive of the EU, decreased from 54.3 to -39.3 points. Such a serious decline is explained by the Russia-Ukraine crisis and the resulting wave of sanctions that hinder business development. January data on the volume of industrial production in eurozone countries were also weak. The index remained unchanged at 0.0% month-over-month, while year-over-year, it decreased by 1.3% after rising by 2.0% in December. We should also note the comments of Pablo Hernandez de Cosa, member of the European Central Bank and Governor of the Bank of Spain, who said that the Ukraine crisis will undermine economic activity in the Eurozone but will lead to lower inflation in the medium term, as real household incomes will decline and expenditures will fall.


BUY 1.0975/TP 1.1065/SL 1.0945

 

AUD/USD: The Australian currency is under pressure due to the new wave of pandemic coronavirus in China and a wait-and-see attitude of the RBA. Investors fear a decline in industrial production in China due to the introduction of new quarantine measures, as well as reduced demand for raw materials, including Australian coal. The industrial center of Shenzhen is already under quarantine, while strict containment measures have been imposed in Shanghai and Dongguan. Also disappointing were the minutes of the latest meeting of the Reserve Bank of Australia. Officials reiterated their wait-and-see stance on raising rates, even in the face of the Ukraine crisis that is pushing global inflation upward. They believe it is premature to argue that inflation will remain in the 2-3% range and wage growth is not yet large enough to tighten monetary policy.


BUY 0.7210/TP 0.7260/SL 0.71940

 

Brent: Brent continues its downward movement. Prices remain under pressure from a new wave of the pandemic in China, which could negatively affect production and reduce demand for “black gold” from its leading global consumer. In addition, investors are hoping for a soon conclusion of a nuclear deal between Iran and the U.S., as well as progress in the negotiations between Russia and Ukraine, the next round of which is taking place today. Some experts believe that prices have reached their peak, and buyers simply can’t pay more for oil, which causes a correction in quotations. Last night the API released data on U.S. oil inventories. They were expected to decrease by 1.867 million barrels, but the actual value was 3.745 million barrels, which may put pressure on the price.


BUY 102.50/TP 111.30/SL 101.50