EUR / USD
On Tuesday, July 16, trading ended for EUR / USD with a 50 bp decline. However, even such a reduction does not clarify the current wave pattern, since at least the supposed wave 2 or b is not broken, the minimum of July 9 is also not broken.
In this regard, the euro-dollar pair retains the chances of building the upward trend section and the complication of the c. At the same time, a successful attempt to break through the minimum of June 18 will indicate the willingness of markets to sell Eurocurrency again and build a new downward trend.
Today, I recommend paying attention to the report on inflation in the European Union. Since the instrument is currently trading near two important lows, a weak report on inflation can push the pair further down and contribute to the breakthrough of the indicated levels.
Yesterday, the fall of the euro was caused by a strong report on US retail sales for June. But the speech of Jerome Powell, whose essence is nothing special does not differ from the performances last week in Congress, did not attract the attention of the foreign exchange market. Powell reiterated that the Fed is ready to take appropriate measures to support US economic growth.
Purchase goals:
1.1417 – 100.0% Fibonacci
1.1480 – 127.2% Fibonacci
Sales targets:
1.1180 – 0.0% Fibonacci
General conclusions and trading recommendations:
The euro / dollar pair still holds hopes for the upward trend. I recommend small euro purchases with targets located near the estimated levels of 1.1417 and 1.1480, which equates to 100.0% and 127.2% of Fibonacci, and an order restricting possible losses under the minimum of wave 2 or b. Leaving the tool below the level of 0.0% will require making adjustments to the current markup and will confirm the transition to the construction of the descending section.
GBP / USD
The GBP / USD pair declined on July 16 by 110 basis points due to an even greater increase in the chances for a tough version of Brexit.
Regular debates between Jeremy Hunt and Boris Johnson took place in the United Kingdom yesterday, during which, it became clear that the border between Northern Ireland and Ireland would not be a back-stop mechanism for the future prime minister, but according to British politicians, owes the EU.
But the newly elected head of the European Commission, Ursula von der Leyen, on the contrary, believes that there is no need to make any concessions to the UK. The hard version of Brexit also does not frighten her.
Thus, whatever the debate between European and British politicians, they failed to come up with a general agreement in three years, and since the UK has firmly decided to leave the EU, the only option left is to leave without an agreement.
Sales targets:
1.2334 – 200.0% Fibonacci
1.2194 – 261.8% Fibonacci
Purchase goals:
1.2783 – 0.0% Fibonacci
General conclusions and trading recommendations:
The wave pattern of the pound / dollar instrument suggests the continuation of the construction of the downward wave e. Thus, I still recommend selling the pair with targets located near the estimated marks of 1.2334 and 1.2194, which corresponds to 200.0% and 261.8% in Fibonacci.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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