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Forecast for EUR/USD and GBP/USD on August 7, 2019; A new exchange of courtesies between London and Brussels
EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair fell to the Fibo level of 76.4% (1.1180), after the formation of a bearish divergence at the MACD indicator. However, the rebound of the euro/dollar pair from this level of correction has worked in favor of the euro and the resumption of growth. Despite the growth of the pair in the last 3 days by more than 200 points, there were few macroeconomic grounds for this. There were no important economic reports that could cause such a reaction of the forex market, the reports that took place often had to support the US dollar, not the euro. Thus, I believe that traders are now at the stage when profit is fixed on previously opened deals, new strategies for the coming weeks are being developed. The minimum from August 1 may be the bottom for the EUR/USD pair. The trade war between China and the US is gaining momentum, and this may lead to the need for the Fed to reduce the rate by one time, and much more. It is this factor that keeps traders from new powerful sales of the euro currency. Also, the fact that the pair is around 2-year lows plays a role. And psychologically at these levels, it is very difficult to actively sell. If the news will continue to contribute to the fall of the euro, then the market will certainly continue to buy the dollar, but over the past 8 months, the EU currency fell by only 5 cents.
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
The EUR/USD pair performed the rebound from the correction level of 76.4% (1.1180). I recommend buying the euro/dollar pair today with the targets of 1.1260 and 1.1296, with the stop-loss order below the level of 1.1224, if the level of 61.8% is overcome. Recommend to sell the pair with targets 1,1180 and 1,1107 and with a stop-loss order above the level of 1.1224 if a rebound from the correction level of 61.8% is performed.
GBP/USD – 4H.
Just yesterday, I wrote about the prospects of Brexit and their impact on the pound sterling in the next three months. Today, it became known that the European Commission first reported that “it sees no reason for new negotiations on the terms of Brexit”, and later, there was a message from Michael Gove, the minister responsible for preparing for Brexit without a deal, saying that the government “is deeply disappointed that the EU does not want to enter into new negotiations.” And at this point, there is one very interesting question: for what reason, in fact, the European Union should want new negotiations with London? It was Britain that expressed its desire to withdraw from the Alliance three years ago. Negotiations with Theresa May took a long time, but their results did not satisfy the British Parliament. Now that the government has changed, Boris Johnson wants to renegotiate the contract with Theresa May. Any question of any concessions from the UK is not possible. Johnson just wants to remove from the agreement the point of “backstop”, a mechanism that will regulate relations between Ireland and the UK on the border. But just as he may want to remove the item on the payment of 50-billion compensation for leaving the EU. Why should the European Union make such serious concessions, and even in such fundamental issues? Further, it is not clear how Boris Johnson is going to seek approval of Brexit “No Deal” in Parliament on the vote? There is no answer to any of these questions. And the pound sterling just froze in one place, the market simply does not know in which direction to move on? While the pound/dollar pair is trading under the correction level of 127.2% (1.2180), keeping the chances of further decline in the direction of the next correction level of 161.8% (1.1853).
The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.
GBP/USD – 1H.
As seen on the hourly chart, the pound/dollar pair generally continues to move between the correction levels of 200.0% (1.2227) and 261.8% (1.2057), after the formation of a bullish divergence in the MACD indicator. There is a slight upward slope. More important now is the 4-hour chart, which has a pronounced retreat, bearish divergence and the second unsuccessful attempt of traders to close above the level of 127.2%.
The Fibo grid is based on the extremes of June 18, 2019, and June 25, 2019.
Forecast for GBP/USD and trading recommendations:
The GBP/USD pair may resume the process of falling. Thus, I recommend selling the pair with the target of 1.1853, with the stop-loss above the level of 1.2180, if the rebound from the correction level of 127.2% (4-hour chart) is executed. I recommend buying the pair with the target of 1.2334 and with the stop-loss order below the level of 200.0%(hourly chart) if the closing is performed above the level of 1.2180.
The material has been provided by InstaForex Company – www.instaforex.com
