EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair continues to trade accurately between the Fibo levels of 61.8% (1.1224) and 76.4% (1.1180). Bulls and bears do not know whose hands to give the initiative in the forex market, as there have been few new data and economic reports in recent days. Traders are now mainly analyzing data on the trade war between America and China, which continues to escalate, as Trump continues to put pressure on Beijing, and Beijing is not going to give in to Trump and is just waiting for the end of his presidential term. The trade war itself, however, has no special impact on the euro/dollar pair. The economic figures in America are now heavily influenced by the trade war with Beijing. Donald Trump's policy on this issue harms the US economy and forces the Fed to reduce the key rate. Now, the question is: if the Fed did not need to cut rates before the trade war with Beijing, economic indicators were at a higher level, then maybe Donald Trump is to blame for the current threats of recession for the US economy? In anticipation of the 2020 election, this is very bad information for the current US President. Today, by the way, an interesting report will be released in America – an inflation report. The consumer price index is expected to increase by 0.3% m/m and 1.7% y/y. Now, the main thing is that the real figures are not lower than the forecasts, then the US currency will have a high chance of closing under the correction level of 76.4% (1.1180), which, in turn, will increase the probability of resuming the fall of quotations.
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
The EUR/USD pair has completed a new drop towards the correction level of 76.4% (1.1180). I recommend buying the EUR/USD pair with the target of 1.1224, with the stop-loss order below the level of 1.1180 if a rebound of 76.4% is performed. I recommend selling the pair with a target of 1.1107, and with a stop-loss order above the level of 1.1180, if the closing is performed under a correction level of 76.4%.
GBP/USD – 4H.
As for the pound/dollar pair, the bears do not need to "restore hegemony". No question in whose hands is the GBP/USD pair now arises. With great difficulty, after the formation of a bullish divergence at the MACD indicator, the quotes of the pair began the process of returning to the correctional level of 127.2% (1.2180), but it is already noticeable that the pair is preparing to resume the fall in the direction of the correction level of 161.8% (1.1853). Yesterday, I summed up the interim results of Boris Johnson's rule during the first three weeks. As it is easy to guess, there are no positive moments in these results. There is no positive feedback from Brexit. On the other hand, what can be positive in this situation, at least theoretically? Undoubtedly, for the pound/dollar pair, as well as for the UK economy, the best option would be a soft Brexit. That is, Brexit with the maximum number of agreements between London and Brussels, which would determine the further relationship between the Kingdom and the Bloc, at least for the next 5-10 years. But what does it take? This requires new negotiations with the European Union. And for this, it is necessary that the old agreement with Theresa May is canceled, and what exactly is the European Union, since Brussels holds it with both hands. Now, this option looks fantastic. The second option, oddly enough, is if Brexit will be canceled or postponed for a long time. And this option is much more likely, as it is still unclear how Boris Johnson is going to implement Brexit "No Deal" on October 31 without the support of Parliament. So, a new transfer is possible, and later a new referendum. But the results of a new referendum can be very discouraging. There is no doubt that most Britons are already tired of Brexit for three years, so they may well abandon it. Well, the Scots and the Irish will refuse. This is what will help the pound recover, but, unfortunately, this option is still very unlikely right now.
The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.
GBP/USD – 1H.
As seen on the hourly chart, the pound/dollar pair returned to the Fibo level of 261.8% (1.2057), after the bearish divergence of the CCI indicator. The closing of the pair under the correction level of 261.8% will work in favor of the US currency and the continuation of the fall in the direction of the correction level of 323.6% (1.1883).
The Fibo grid is based on the extremes of June 18, 2019, and June 25, 2019.
Forecast for GBP/USD and trading recommendations:
The GBP/USD pair resumed the process of falling. Thus, I recommend selling the pair with the target of 1.1883, with the stop-loss order above the level of 261.8%, if the closing is performed under the level of 261.8%. I recommend buying the pair with the target of 1.2227 and stop-loss order under the level of 261.8% level (hourly chart) if a rebound from the level of 1.2057 is performed.
