EUR/USD – 4H.
On September 4, the EUR/USD pair on the 4-hour chart performed an increase to the correctional level of 127.2% (1.1029) and a close above it, but at the moment this close looks like a false breakdown of the level. Thus, I do not recommend immediately "rushing into battle" and buy the euro on this signal, it is better to start with restrained purchases and a protective order under the level of 1.1024. Nevertheless, traders have a buy signal, and the euro/dollar pair can grow into the upper area of the downward trend channel. Closing the pair's exchange rate below the level of 1.1024 will work in favor of the US currency and the resumption of the pair's decline in the direction of the Fibo level of 161.8% (1.0918). And what will the information background tell us about this? Yesterday, business activity in the eurozone in the service sector remained at a fairly good level, as well as retail sales, so traders had no reason to sell the euro. No interesting economic reports came from America, so there was no reason to buy the dollar either. There were also no new tweets from Donald Trump on pressing topics, so one factor affecting the US dollar is now "disconnected".
What to expect from the euro/dollar currency pair on Thursday?
On September 5, I look forward to continued correctional growth of the pair in the direction of the upper area of the downward channel and the correction level of 100.0% (1.1106). Near this level, I expect a reversal as the main option and closing above it as a secondary. Today, there will be some interesting reports in the US, in particular on business activity in the service sector. A very important ISM index of business activity – what I recommend paying close attention to today. If it turns out that this index does not reach the forecast of 54.0, it may contribute to further growth of the euro to the designated area.
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair with the target of 1.0918 if consolidation below the level of 1.1024 is completed. Stop-loss order above the level of 1.1029.
It is possible to buy the pair now, as it closed above the level of 1.1029 with a target of 1.1106.
GBP/USD – 4H.
Well, the most interesting thing happened yesterday in the UK Parliament. In the last days, while the deputies did not leave their vacation, there were a lot of discussions on what parliamentarians can do to prevent Brexit "No Deal"? Yesterday, the monetary community received an answer to this question. The British Parliament narrowly passed a bill prohibiting Brexit "No Deal". That is, firstly, Boris Johnson was ordered to request a postponement of Brexit from the European Union, secondly, Brexit will be possible on October 31 only if Boris Johnson manages to negotiate a deal with Brussels, and thirdly, Brexit "No Deal" on October 31 will be possible if approved by parliament. Boris Johnson, in turn, tried to initiate early parliamentary elections in response to such a demarche, but this proposal was rejected by the same parliament and with a huge preponderance of those who vote "against" over those who vote in favor. Now, the pressing issue until September 9, when the deputies will go on a second leave in 2019 for 5 weeks, is whether Johnson will be given a vote of confidence? The vote of confidence approved by deputies, in fact, points Johnson "to the door." However, the Prime Minister does not have to go through that door. But he can oblige the parliament to form a coalition government within two weeks after the announcement of the vote, and if the government is not formed, dissolve the parliament by force. In this case, parliamentary re-election will not be avoided. The fact that deputies do not need re-elections is clear from yesterday's vote. Accordingly, making a vote of confidence now makes no sense. However, the coalition led by Jeremy Corbyn can still take such a step, trying to remove Johnson from his post.
What to expect from the pound/dollar currency pair on Thursday?
Now, the pound/dollar pair is in a good mood and has reached the top line of the downward channel. However, it is suspected that the breakdown of this line is false. However, in this case, the pound should turn down and resume falling today. The bearish divergence of the CCI indicator speaks in favor of this. Accordingly, the breakdown of its peak will allow expecting the continuation of the growth of pair towards the peak from August 27 – 1.2308. And closing the pair's quotes above this level will increase the chances of continuing growth towards the next Fibo level of 100.0% (1.2437).
The Fibo grid is based on the extremes of January 3, 2019, and March 13, 2019.
Forecast for GBP/USD and trading recommendations:
I recommend buying the pair very cautiously with the target of 1.2308, if a break of the peak of the bearish divergence, with a shortstop, is performed.
I recommend selling a pair with the target of 1.2014, if a close is performed under the level of 1.2180, with the stop-loss order above the correction level of 127.2%.
