EUR/USD
On July 23, the EUR / USD pair gained about 20 basis points. Thus, the rise in the instrument quotes as part of the construction of wave 3 to 5 in C to B continues, and the wave itself takes a very extended form. The current wave counting has not undergone any changes in recent days, because the euro is constantly growing. A successful attempt to break through the 200.0% Fibonacci level indicates that the markets are ready for new purchases of the euro.
Fundamental component:
The euro continues to experience rise demand in the Forex market. Although we can say that this dollar is in extremely low demand now, which allows the Euro / Dollar instrument to continue to rise. Even this week, a fairly large number of important events took place in the European Union. Not everything can be described as positive for the EU and the euro. However, despite everything, the euro continues to grow. Thus, the conclusion suggests itself. Markets were not particularly impressed by the results of the EU summit, nor the altered allocation of 750 billion euros, which will go to the reconstruction of the countries most affected by the crisis, nor the subsequent comments of Christine Lagarde, David Sassoli, Angela Merkel and other EU officials.
The EU can block all reached agreements as it desires and wishes were not met in the final documents of the budget for 2021-2027 and the Recovery Fund. Business activity indices in the eurozone and separately in Germany, which came out today in the first half of the day, also did not impress the markets too much, although all 6 indices (services, manufacturing, composite indices) were significantly better than expected. But instead of continuing to rise, the instrument began a systematic decline, which is very suitable for Friday, when many traders are closing individual positions, which leads to corrective waves.
Probably something similar will happen today. Soon there will be more indexes of business activity in the services and manufacturing sectors in the US, but I believe that they will not have any effect on the markets either. The only thing that continues to excite the markets is the coronavirus epidemic in the United States.
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 1.1827 mark, 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
The GBP / USD pair on July 23 gained only a few basic points at the end of the day. Despite the fact that for several days in a row the pound sterling has not been able to rise by the end of the day, the wave counting does not undergo any changes and still suggests building an upward wave 3 to 5. If this is true, then the increase in quotes will continue with targets located at about 76.4% and 100.0% Fibonacci. Wave 5 can become quite extended.
Fundamental component:
In the UK, there were also indices of business activity in the areas of manufacturing and services. The first turned out to be significantly better than the forecast – 56.6 against 51.1, the second – slightly, 53.6 against 52. Nevertheless, both indices show that business activity is growing, and the areas of production and services began to recover, as this is evidenced by the index values are above 50. However, the markets were not impressed by this data either. The pound stands still and does not even adjust.
General conclusions and recommendations:
The Pound-Dollar tool has complicated the current wave counting, which now suggests building an upward wave. Therefore, I recommend at this time to buy the instrument for each MACD signal “up” with targets located near the levels of 1.2816 and 1.2990, which equates to the peak of wave 3 or C and 100.0% 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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