EUR / USD
On July 28, the EUR/USD pair lost about 40 pips, but such small losses did not affect the current wave markup in any way. Thus, now there is no reason to assume even the completion of the construction of the wave 3 in 5 in C in B. In other words the instrument is not yet ready to build a correction wave 4 in 5 in C in B.. Due to this, the increase in quotes should continue with targets located around the 261.8% Fibonacci level. And in case of a successful attempt to break through this level – with the goal of 323.6% on Fibonacci.
Fundamental component:
The main problem in the United States now is the coronavirus. Despite the fact that the growth rate of the spread of COVID-2019 has slowed down slightly in the last week, it is too early to say that the next “wave” is over. Thus, the American economy is still at the highest risk. This is understood by all representatives of the Fed, who have repeatedly stated in their interviews that the most important thing now is to overcome the coronavirus.
Without this, there can be no question of any rapid and complete economic recovery. In general, the Fed, Congress and the White House will have to pour trillions of dollars into the economy endlessly if the epidemic cannot be contained. But all the money poured into the economy is borrowed funds, that is, the US national debt is growing. Not that it greatly scared the rulers of America, but nonetheless.
The worst thing is not even the growth of the national debt, but the fact that the country cannot fully go to work, and the economy cannot fully earn money if 60 thousand people fall ill every day in the country. And the words of Donald Trump that the majority of sick Americans have “a mild form in the form of a runny nose” are very little reassuring.
People with a runny nose do not go to the hospital and do not do coronavirus tests. In general, the only thing that can be expected from the Fed today is talk or concrete actions to expand stimulating measures for the economy. What is also interesting will be a press conference with Jerome Powell, where the head of the FRS can share very important information.
General conclusions and recommendations:
The euro/dollar pair presumably continues to build an upward wave C in B. Thus, I recommend buying the instrument with targets located near the estimated level of 1.1827, which equates to 261.8% Fibonacci, for each MACD “up” signal in the calculation to continue building wave 5 in C in B.
GBP / USD
On July 28, the GBP/USD pair gained about 55 pips by the end of the day and thus, continued the construction of the expected wave 3 in 5. A successful attempt to break through the 76.4% Fibonacci level, which is also the peak of wave 3 or C, indicates that the markets are ready for further purchases of the European currency. The whole wave 5 takes on a rather extended form, but after its completion, I expect a new downward trend section to be built.
Fundamental component:
On Monday and Tuesday, there were no important news and events in the UK, but the pound sterling was still in demand. No interesting data is expected from the UK today. Therefore, all attention is not paid to the results of the Fed meeting, which should also affect the pound/dollar instrument. However, if the Fed does not make any important decisions, and Jerome Powell does not make any important statements, then the market reaction may not follow.
General conclusions and recommendations:
The pound/dollar pair continues to build an upward wave, nothing changes. Therefore, at this time, I recommend buying the instrument for each MACD signal “up” with targets located near the level of 1.2990, which equates to 100.0% Fibonacci level.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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