The past week has shown that the measures taken by Central banks in the fight against the consequences of the beginning of the recession are consistent. Despite the fact that these measures are hailed as a response to the coronavirus pandemic, it is clear that the origins of these measures are in a completely different area.

It can be recalled that a liquidity crisis began in the UK last September 2019. On September 16, bank applications for short-term Fed loans doubled, which led to an increase in interest rates from 2.29% to 4.75% and during the next day, the volume of applications increased to 80 billion, and the rate exceeded 10%. As part of the fight against the unfolding liquidity crisis, the Fed sent 366 billion to the financial system from September 16 to December 20, which was clearly not enough.

The coronavirus has only increased the problem, but it is not the cause of it all. And the reason that forced the largest central banks of the world, headed by the Fed, to assume the obligations of the "lender of last resort", that is, to start direct financing of the economy, is that the largest American banks stopped issuing loans.

Again, the pandemic has only added to the problem, as massive trade cuts and a stoppage in production further deprived banks of the incentive to create credit. This means that "temporary measures" undertaken by central banks to support financial stability will remain constant at least until economic activity begins to increase. This probability is practically excluded in the future for the next two to three months and it is clear from this that it is impossible to expect growth in demand for risky assets.

The forecast for the spread of the United States is disappointing – the number of infected people doubles every 2-3 days, while in Italy the doubling occurs in 8 days. doubling occurs in 8 days. Apparently, investors believe that the United States is sinking into a deep depression, the way out of which will be more difficult for the American economy than for Europe.

The CFTC report which was published on Friday confirms this conclusion - for all, without exception, commodity currencies, as well as for oil, short positions are growing, which indicates increased pressure on them. At the same time, there is an increase in demand for gold, the euro and especially the dollar, which will turn out to be favorites for the coming week.

EUR/USD

Business activity in the services sector in the eurozone collapsed in March from 52.6p to 28.4p, which means a sharp decline in consumer activity, the threat of deflation and budget problems for most countries in the eurozone.

At the same time, the CFTC report showed that speculators continue to trade on the euro. The total long position increased by 3.8 billion, and even a strong pullback from a minimum of 1.0633 did not lead to a decrease in the upward momentum. The estimated fair price of the euro is growing steadily and is at 1.14.

The EUR/USD pair is likely to resume growth. The nearest resistance is 1.1160 / 65, while the target is 1.1290 / 95. It is logical to use any pull back for new purchases.

GBP/USD

The pound, like the euro, made an impressive correctional growth, but its prospects are noticeably worse. The estimated fair price is above the level of 1.29, which gives some reasons for continued growth, however, the dynamics are deteriorating.

It is possible that the local maximum of 1.2488 will not be broken through. The CFTC report suggests that the downward trend will resume and GBP/USD may return to the support zone 1.2120 / 40.