Daily Market Analysis From Forexmart

Technical analysis recommendations on EUR/USD and GBP/USD for June 22, 2022

EUR/USD

Higher timeframes

The area 1.0539 – 1.0582, which united many significant resistances of the higher timeframes, continues to hold back the development of the upward movement. To gain new targets, bulls should eliminate the daily death cross (1.0501 – 1.0522 – 1.0573 – 1.0624), enlist the support of the weekly short-term trend (1.0583) and enter the daily cloud (1.0558). For bears, the targets remain the same, which are the local lows 1.0339 and 1.0349.

H4 – H1

Bulls are still having a hard time developing their advantage on the lower timeframes. For several days now, they have been interacting with key supports, being in their zone of attraction. Consolidation below and reversal of the moving average (1.0500—weekly long-term trend) will change the current balance of power, and then bullish interests may be replaced by opportunities for strengthening bearish sentiment.

GBP/USD

Higher timeframes

Bulls fail to develop a rebound. As a result, the pair continues to consolidate in the zone of attraction of the daily Ichimoku cross (Tenkan 1.2225 – Kijun 1.2300). The most significant resistance of this section is now at the level of 1.2388 (the final level of the daily cross + weekly short-term trend). The reference points for a bearish trend are 1.2000 (psychological level) – 1.1933 (local low). Overcoming these levels may change the current balance of power.

H4 – H1

Bulls had been in possession of the key levels of the lower timeframes for a long time, but failed to develop their advantage. Today, an attempt is being made to change the balance of power, perhaps the opponent, having seized the key levels 1.2232–79 (central pivot point of the level of the day + weekly long-term trend), will be more effective.

 

Trading plan for EUR/USD and GBP/USD on June 23, 2022

US President Joe Biden asked Congress to introduce a gas tax holiday for only three months, which is far less than expected. He also requested to try to avoid cuts to the highway fund, adding that the fuel tax will continue to finance the construction and maintenance of roads. This is worrying because the budget deficit is already almost $ 1.6 trillion, and Biden's proposal will certainly push it higher. Congress has not responded, but they accepted the proposal for consideration. Unsurprisingly, dollar demand fell because, given November's congressional and Senate elections, there is little doubt that this measure will be taken.

In terms of euro, there is a high chance that it will decline during the European trading session because preliminary estimates of business activity indices are down. In particular, the manufacturing index is expected to fall from 54.6 points to 54.0 points. The service index is also projected to dip from 56.1 points to 55.8 points, and the composite PMI to decrease from 54.8 to 54.2.

Composite PMI (Europe):

Similarly, preliminary estimates to business activity in the UK also show a decrease. The manufacturing index is expected to fall from 54.6 points to 54.2 points, while the service index is projected to go down from 53.4 points to 52.8 points. The composite index is also likely to decrease from 53.1 points to 52.3 points.

Composite PMI (UK):

But during the US trading session, the market will return to the levels hit at the opening of the trading day. After all, the US is also expected to report declines in all its indices of business activity. The manufacturing index will drop from 57.0 points to 56.0 points, while the services sector will decrease from 53.4 points to 53.0 points. The composite index will fall from 53.6 points to 52.8 points.

Composite PMI (United States):

In short, the market will fluctuate throughout the day, but close with zero result.

EUR/USD rushed up, prolonging the current corrective move. 1.0600 serves as a variable resistance on the way of buyers, relative to which a short-term stagnation-rollback has occurred. For the subsequent upward move, the quote needs to hold above 1.0600 in the four-hour TF.

Despite the strong buying pressure, GBP/USD remains within 1.2170/1.2320. In this situation, traders must first overcome one or another boundary of the established range, and only then talk about the direction. Signals will occur in the four-hour TF.

 

Tips for beginner traders in EUR/USD and GBP/USD on June 24, 2022

Details of the economic calendar from June 23
Preliminary data on business activity indices were published in Europe, the UK, and the United States, which had a strong impact on financial markets.

Europe's manufacturing PMI fell significantly stronger than the forecast from 54.6 to 52.0 points. Meanwhile, things are even worse for the services PMI, which fell from 56.1 to 52.8 points.

The European currency at this time was under a strong division of sellers.

As for the UK, things are a little better. The manufacturing index fell from 54.6 to 54.2 points against the forecast of 53.4 points. In the services sector, the indicators remained unchanged, although the index was expected to decline from 53.4 points to 52.8 points.

The pound sterling was under less pressure, but due to a positive correlation with the euro, it still lost value.

During the American trading session, weekly data on jobless claims in the US were first published, where a slight increase in the overall indicator was recorded. This is a negative factor for the labor market.

Statistics details:

The volume of continuing claims for benefits increased from 1.310 million to 1.315 million.

The volume of initial claims for benefits decreased from 231,000 to 229,000.

The main figures for the US were published a little later. The manufacturing index of business activity decreased from 57.0 to 52.4 points, with a forecast of 52.4 points. Meanwhile, the services sector decreased from 53.4 to 51.6 points, with a forecast of 53.5 points.

Negative statistics on the United States had a negative impact on the dollar.

Analysis of trading charts from June 23
The EURUSD currency pair once again reduced the volume of short positions around the support level of 1.0500. This led to a slowdown in the downward cycle and, as a result, a price rebound.

The GBPUSD currency pair has been moving within a wide range of 1.2150/1.2320 for a week now. This price fluctuation indicates a slowdown in the corrective move from the area of the psychological level of 1.2000, while at the same time signaling a characteristic uncertainty among traders.

Economic calendar for June 24
Today, since the opening of the European session, data on retail sales were published, where the rate of decline slowed down from -5.7% to -4.7%. This is a positive factor if it were not for the revision of the previous indicators for the worse from -4.9% to 5.7%. A stronger slowdown in the rate of decline to -4.1% is also predicted.

The bottom line shows bad statistics, which negatively affects the British currency.

Trading plan for EUR/USD on June 24
The price movement within the range of 1.0500/1.0600 attracts a lot of attention of speculators, which corresponds to the process of accumulation of trading forces. As a result, the closed loop will complete the formation, which will lead to acceleration and indicate the subsequent path relative to the range. A signal to action will appear at the moment when the price stays outside one or another border in the daily period.

Trading plan for GBP/USD on June 24
The price movement within the flat is still relevant in the market, so another price rebound from its upper border cannot be ruled out. As the main strategy, traders consider the tactics of breaking through one or another frame of the established range.

Trading recommendations are based on the breakout tactics:

Buy positions on the currency pair are taken into account after holding the price above the value of 1.2325 in a four-hour period with the prospect of a move to 1.2400.

Sell positions should be considered after holding the price below 1.2150 in a four-hour period with the prospect of a move to 1.2000.

 

Trading plan for EURUSD on July 04, 2022

Technical outlook:
EURUSD dropped through the 1.0380 lows on Friday before reversing sharply. The single currency pair is seen to be trading close to 1.0430 at this point in writing and is expected to target close to 1.1100 in the next few weeks. Bulls are required to hold prices above the 1.0350 interim support to keep the proposed structure intact.

EURUSD has been dropping from the 1.2350 high since January 2021, carving lower lows and lower highs. The recent downswing could be seen between 1.2266 and 1.0350 as marked on the daily chart. Ideally, prices should retrace the above recent boundary at least until the 1.1086-1.1100 area, which is the Fibonacci 0.382 retracement level.

EURUSD further produced a lower-degree upswing between 1.0350 and 1.0786 in May 2022. Since then, it has remained subdued oscillating broadly between 1.0380 and 1.0600 and needs to breakout. A push above 1.0600 will be quite encouraging for the bulls to come back in control and push through 1.1100 going forward.

Trading plan:
Potential rally towards 1.1100 against 1.0350

Good luck!

 

King dollar tightening its grip across board. EUR to reach parity level soon?

The euro traded quietly on the first day of the week amid the holiday-thinned market. On Tuesday, the euro again came under selling pressure. EUR/USD dropped to 1.0300, the lowest level sinceDecember 2002. In this connection, speculations on its parity level with the US dollar resurfaced among traders. There are a few reasons behind the euro's fall.

The major reason was the fact that the EU reported a deficit in its trade balance. On Monday, Germany unveiled the first deficit for more than 30 years in the trade balance in May in monthly terms. Energy imports sharply increased whereas trade with Russia and China was disrupted. A worse trade balance in Germany drags the whole euro block down.

Currency strategists consider downbeat trade results the most plausible explanation for the euro's decline. Indeed, it means a crucially different macroeconomic environment for the euro block. A double proficit turned into a double deficit.

Therefore, the Eurozone driven by the largest economy of Germany becomes a net importer which creates fundamental pressure on the euro. Apparently, Europe's prospects don't look rosy. Experts at Commerzbank reckon that EUR/USD could slump even below the parity level for a variety of reasons, including gas issues. The crisis in petroleum imports is likely to leave its imprint on theEU economy. In turn, EUR/USD will be able to develop a steady rally provided that the gas crisis is settled.

ECB and euro

Lately, the ECB comes up with hawkish remarks, but it is not enough to support the euro. The regulator is acting sluggishly in normalizing its monetary policy Even if the ECB ventured into the first rate hike and raises the key policy rate to positive values, it is still lagging behind other major central banks. They have already made some moves towards tighter monetary policies. In this context, the euro lacks an advantage over other currencies compared to the period until 2013.

The ECB's obvious hawkish stance has been spotted by analysts and priced in. Later this month,the regulator is expected to raise interest rates by 25 basis points. Market participants are anticipating the same rate hike in September. What will happen next? Further policy decisions will depend on how the central banks manage to tame inflation and how CPIs will slow down in the coming months.

Most experts hardly believe in more aggressive tightening by the ECB. By and large, it doesn'tmatter a lot bearing in mind the US dollar's stunning rally.

US dollar

The US dollar index is trading at the highest level in almost two decades, aiming to settleabove 106.00. The greenback finds support from cautious market sentiment followingthe long weekend in the US. The king dollar has been reigning on Forex for quite a while. Nevertheless, the US dollar cannot extend its rally indefinitely. Sooner or later, the US dollar is set to reach a peak and retrace downward. Nobody has predicted the level when the US dollar index will level off.

Historically, the greenback used to grow amid three fundamental factors: global inflation of more than 5%, a slowdown in the global economic growth, and joint monetary tightening by influential central banks. The last time when these three factors came together was in 1980.

On the back of the ongoing macroeconomic situation in the world's economy, namely, weak economic growth and soaring inflation, the US dollar is set to flex its muscles. A lot of reputable analysts are poised to predict the euro's slump to 1.0200 against the US dollar later this year.

Pound sterling

On Tuesday, the British currency was also weighed down by the firm US dollar, though thesterling was not as bruised as the euro. GBP/USD went to around 1.2000. However, the pair is unlikely to break this level at present. Currency strategists at UOB Group rejected this scenario today. They believe the odds are against that GBP/USD will make another test of 1.1970. The currency pair is expected to consolidate between 1.2080 and 1.2170. Notably, the lower border of the expected trading range has been already broken today.

Meanwhile, GBP/USD is following the overall bearish trend. Suggesting their bearish forecastson the sterling, experts at JPMorgan underpin their argument with the fact that inflation in the UK is the highest in G10. Moreover, the UK economic growth would be below the GDP figures of most advanced economies. Domestic jitters are denting the outlook for the pound sterling. The Bank of England will hardly succeed in reducing downward pressure on the British pound.

Among other gloomy prospects for the UK economy is that inflation is unlikely to reach its peak until October. JPMorgan experts reckon that the CPI will approach 11% on year in the autumn. The Bank of England signaled that it is ready to speed up rate hikes and raise the key policy rate by 50 basis points at the nearest meeting. On the other hand, some analysts suggest weighty reasons why the central bank will retain its gradual pace of monetary tightening. In other words, the pound sterling has not a single factor for a gradual recovery. For the time being, the US dollar is extending its stunning rally. So, it is unclear when exactly it will top out.

 

Hot forecast for EUR/USD on 06/07/2022

The first full-fledged trading day of the current week began with a strong fall in the single European currency. To the lowest values since 2002. Of course, one can try to explain this by the fears of investors about the inevitability of a recession around the world, but it looks like a farce. After all, they have been talking about the possibility of a recession for more than a day. So this is nothing new. Moreover, the final data on business activity indices turned out to be somewhat better than preliminary estimates. In particular, the index of business activity in the service sector fell from 56.1 points to 53.0 points, while the forecast was 52.8 points. The composite index, which was supposed to fall from 54.8 points to 51.9 points, fell to 52.0 points. However, even the final data on the index of business activity in the manufacturing sector showed that investors now, in principle, do not look at these data.

Composite PMI (Europe):

Therefore, the reasons for such a noticeable drop must be sought in somewhat different ways. It's all about the European Central Bank. As early as Monday, the head of the Bundesbank, Joachim Nagel, urged the ECB to be extremely cautious in terms of tightening monetary policy, as higher interest rates would increase the cost of borrowing for the weakest economies in the euro area. Thus, putting them on the brink of bankruptcy. In principle, this statement intersects with the words of the representatives of the ECB themselves that one must be careful when tightening monetary policy, otherwise the result will be completely opposite. And instead of improving the economic situation, it may worsen. Immediately there were rumors that the central bank would very slowly raise the refinancing rate, which would not be enough to slow down inflation. This is what caused the sharp weakening of the euro. And the fact that this happened on Tuesday, and not on Monday, is explained by a non-working day in the United States.

So the market confidently returned to the long-lasting trend for the strengthening of the dollar. But after such an impressive fall, a correction is inevitable. That's just the European macroeconomic statistics somehow does not favor any growth of the single European currency. After all, the growth rate of retail sales in Europe should slow down from 3.9% to 3.1%. A decrease in consumer activity only confirms fears about the inevitability of a recession.

Retail sales (Europe):

Apparently, the reason for the rebound will be the data on open vacancies in the United States, the number of which should decrease from 11.4 million to 11.3 million, which indicates a slight deterioration in the situation in the labor market. But after such an impressive movement as yesterday, even this is enough for a local rebound. The final data on business activity indices, as shown by the experience of recent publications of similar data, will be left without attention, and will not affect investor sentiment in any way.

Number of open vacancies (United States):

During the inertial movement, the EURUSD currency pair updated the local low of the medium-term downward trend, as a result of which the quote turned out to be at the level of 2002.

Due to such a rapid descent, the RSI H4 technical instrument entered the oversold zone, which indicates that short positions are overheated. RSI D1 is still moving in the lower area of the 30/50 indicator, indicating continued downward interest among traders.

The moving MA lines on the Alligator H4 and D1 indicators are directed downwards, this is a sell signal.

Expectations and prospects

In this situation, the speculative hype is going through the roof on the market, which can lead to ignoring the signal about the euro being oversold. As a result, the downward move may accelerate towards the value of 1.0150-1.0000.

It should be noted that sooner or later short positions will be consolidated, which will lead to a technical correction.

Complex indicator analysis has a sell signal in the short, intraday and medium term due to the downward cycle.

 

Analysis and trading tips for EUR/USD on July 7

Analysis of transactions in the EUR / USD pair

EUR/USD tested 1.0244 on Wednesday. At that time, the MACD line was just starting to move below zero, so the pair fell by more than 50 pips. It hit 1.0198, where buyers became active again, but the increase was only brief. The pair continued to decline after some time.

The Euro area's retail sales data for May, along with economic forecasts for the region, disappointed traders as they were relatively weaker than expected. Meanwhile, the business activity report from the IHS Markit exceeded expectations, strengthening the demand for dollar even further.

Ahead are key events that could drive the market, such as the release of ECB protocol, speeches of ECB representatives and the publication of industrial production data in Germany. Later in the afternoon, the US will post reports on the labor market, particularly the change in the number of people employed in the non-farm sector and the number of first-time claims for unemployment benefits. The two may provide more buying pressure to dollars. US trade surplus figures and speeches by FOMC members are unlikely to have a strong impact on the market.

For long positions:

Buy euro when the quote reaches 1.0228 (green line on the chart) and take profit at the price of 1.0268 (thicker green line on the chart). There is a chance for a rally today, but only after strong statistics in the Euro area and hawkish statements from the ECB. Also, make sure that when buying, the MACD line is above zero or is starting to rise from it. Euro can also be bought at 1.0195, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0228 and 1.0268.

For short positions:

Sell euro when the quote reaches 1.0195 (red line on the chart) and take profit at the price of 1.0151. Pressure will return if upcoming data in Germany and the Euro area are weak and if reports in the US, especially about the labor market, exceed expectations. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Euro can also be sold at 1.0228, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0195 and 1.0151.

 

Tips for beginner traders in EUR/USD and GBP/USD on July 8, 2022

Economic calendar for July 8
The main macroeconomic event of the outgoing week is the report of the US Department of Labor, which predicts that the unemployment rate should remain unchanged, while 268,000 new jobs can be created outside of agriculture, which is noticeably less than 390,000 in the previous month. This indicates a loss of recovery momentum and the appearance of signs of the beginning of a deterioration in the situation in the labor market.

If expectations coincide, the US dollar may be under pressure from sellers.

Time targeting

US Department of Labor Report - 12:30 UTC

Trading plan for EUR/USD on July 8
There are only a few points left before parity, which means that the speculative hype is increasing. It is worth considering that the initial convergence with such an important psychological level can provoke traders to chaotic price jumps. This may lead to a reduction in the volume of short positions, which will lead to a technical pullback.

At the same time, holding the price below the control level may cancel a number of technical signals, which will lead to an inertial move towards the value of 0.98.

Trading plan for GBP/USD on July 8
The pound sterling rushed down through a positive correlation with the eurodollar. With the current mood of speculators, updating the local low of the downward trend is not excluded.

 

Tips for beginner traders in EUR/USD and GBP/USD on July 11, 2022

Details of the economic calendar from July 8
The report of the US Department of Labor was considered the main macroeconomic event of the past week, where unemployment remained at the same level of 3.6%. At the same time, 372,000 new jobs were created outside of agriculture, while the forecast was 268,000. US labor market data came out noticeably better than expected, but, at this time, the dollar was already heavily overbought.

Analysis of trading charts from July 8
During the inertial movement, the EURUSD currency pair came close to parity, which led to a massive fixation of short positions. As a result, the market experienced a technical pullback.

The daily trading chart shows a gradual euro depreciation since June 2021. The scale of the decline is 2,150 points, which is about 17%.

The GBPUSD currency pair, despite many attempts to resume the downward cycle, still fluctuated along the psychological level of 1.2000 (1.1950/1.2000/1.2050). This indicates an overheating of short positions, which are trying to regroup the trading forces in the stage of a change of turbulence.

On the daily timeframe, the pound sterling has been losing 16.5% of its value since June 2021, which is about 2,300 points.

Economic calendar for July 11
Monday is traditionally accompanied by an empty macroeconomic calendar. Important statistical indicators in Europe, the United Kingdom, and the United States are not expected.

Trading plan for EUR/USD on July 11
In this situation, the descending mood remains among traders. For this reason, keeping the price stable below 1.0150 increases sellers' chances for a subsequent decline (towards parity).At the same time, traders are considering the scenario of a transition from a pullback stage to a complete correction if the price holds above 1.0220 in a four-hour period.

Trading plan for GBP/USD on July 11
In this situation, all of the traders' attention is focused on the deviation levels of 1.1950 and 1.2050 since the stable holding of the price outside of one or another value, at least in a four-hour period, may indicate a subsequent price path.

 

Tips for beginner traders in EUR/USD and GBP/USD on July 12, 2022

Details of the economic calendar from July 11
Monday was traditionally accompanied by an empty macroeconomic calendar. Important statistics in Europe, the UK, and the United States were not published.

Analysis of trading charts from July 11
The EURUSD currency pair, ignoring the oversold signal, continued to decline, indicating a high interest of speculators in the current market situation.

The GBPUSD currency pair, following the euro, resumed its decline. The vicious cycle along the psychologically important level of 1.2000 was interrupted, and the market saw an increase in the volume of short positions. As a result, the pound sterling has updated the local low of the downward trend.

Economic calendar for July 12
Tuesday is not much different from Monday in terms of the macroeconomic calendar. Important statistics in Europe, the UK, and the United States are not expected. Thus, traders have to keep track of the information flow and work based on the technical picture.

Trading plan for EUR/USD on July 12
Traders are now watching a historical event: the quote has come close to parity with the intention of breaking it. Holding the price below it can lead to a local acceleration of the downward cycle. After that, a sharp change in trading interest is possible, caused by an increase in the volume of long positions, which will provoke a technical pullback in the market. Variable and high volatility will remain in the market indefinitely.

Trading plan for GBP/USD on July 12
In this situation, everything points to a subsequent downward move towards the values of 1.1700–1.1500. In the work, it is worth considering that at this time, the EURUSD pair is the leading pair, and GBPUSD is the slave pair. Thus, in the event of a sharp change in trading interests in the euro, through a positive correlation, it will pull the pound sterling along with it.