EUR/USD
On June 5, EUR/USD lost nearly 45 pips, thus having hypothetically completed the formation of expected wave 3. If it is true, the currency pair has already begun building the 4th correctional wave. As soon as its formation is over, the pair is expected to resume its upward move. At the same time, the current wave grid enables a much higher climb. Indeed, analysts do not rule out the formation of wave 5 apart from C and B.
Fundamental analysis:
On Friday, the US Department of Labor released data of crucial importance such as nonfarm payrolls, an unemployment rate, and average earnings. The market was amazed by unexpectedly strong figures. The unemployment rate went down. Besides, the US public and private sectors added 2 million jobs in May defying pessimistic forecasts. No wonder, demand for the US dollar boosted immediately. So, EUR/USD started forming a correctional wave.
In addition, US Senator Rick Scott stated that China was allegedly disrupting US companies’ work on inventing a vaccine. Interestingly, he said nothing what companies had been exposed and how exactly. Neither, he expanded on the details and provided any proof. Thus, the Senator’s statement did not clear up the case. Likewise, US State Secretary Mike Pompeo said that Beijing’s moves towards Hong Kong reminded him about the Nazi Germany’s brutality during World War II. One thing is obvious. The verbal feud between Beijing and Washington is going on.
Grim prospects are hanging over the trade relations of the two largest global economies. The White House warns to impose a batch of new sanctions, tariffs, and restrictions. In turn, Beijing threatens to cancel the trade deal. On Monday, Germany posted data on industrial production. The report reads that a factory output contracted 17.9% in April month-on month. In midday, investors are alert to a speech by ECB President Christine Lagarde.
Conclusion and trading recommendations
EUR/USD is presumably carrying on with building upward wave C inside wave B. Therefore, I would recommend long deals on EUR/USD with targets set at 1.1406 and 1.1570 that are equal to161.8% and 200.0% Fibonacci correction for each of the new upward signal. Meanwhile, the currency pair has started plotting correctional wave 4.
GBP/USD
On June 5, GBP/USD gained another 60 pips. Thus, the currency pair is still building the upward wave. As the price has broken the peak of wave b, the odds are that wave 2 or B is over and now wave 3 or C is keeping on its developments. If this is the case, in light of the successful attempt of breaking the high of wave b, GBP/USD will carry on climbing with targets at near 61.8% and 76.4% of Fibonacci correction.
Fundamental analysis
When comes to Brexit news, the latest round of the trade talks between London and Brussels ended with zero success. European Union’s chief Brexit negotiator Michel Barnier stated that the British side is deliberately stalling the talks rejecting earlier commitments. The nearest meeting between Boris Johnson and Ursula von der Leyen is scheduled for June.
Policymakers pin hopes that the meeting is likely to give fresh impetus to the talks which have reached a stalemate. Today the UK does not present any economic data. Trading sentiment on the US dollar is the same today. Nevertheless, the pound sterling is not poised to develop any correctional wave.
Conclusions and trading recommendations
GBP/USD is presumably carrying on with developing the upward wave. To sum it up, the idea of long deals is valid. Target levels could be placed at about 1.2844 and 1.3030 that correspond to 61.8% and 76.4% of Fibonacci correction. In case the level of 1.2698 (50.0% of Fibonacci) is breached successfully, this will signal the market’s readiness for more long bets.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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