EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a sharp reversal in favor of euro and closing above the Fibonacci level of 100.0% (1.1107). The surge in activity of traders on Friday is easily explained by a speech at the symposium in Jackson Hole by Fed Chairman Jerome Powell. Powell managed not to tell the market anything. His rhetoric, compared with previous speeches, has not changed. He did not declare his readiness to reduce the rate in the coming months but did not say that the situation has normalized and now there is no reason to soften monetary policy. His speech still contained theses about "threats of global recession and trade wars," low inflation, and increased risks of uncertainty. As a summation, Powell said that the Fed is on the pulse and is ready to intervene as soon as it is required. What does this performance mean for the US dollar? In the short term, nothing. But in the long term, a possible decline in demand. It seems that the Fed is still on course to ease monetary policy and will slowly reduce the key rate. And if so, then sooner or later, it will affect the exchange rate of the US currency.
What to expect from the currency pair on Monday?
Although the euro has leaped up, it is hardly necessary to say that the bulls woke up and now the euro/dollar pair is in their hands. Most likely, some of the bears left the market, considering it dangerous for further sales of the pair at levels close to 1.10. The last 4 closed candles show the absence of a pronounced mood among traders in the Asian session and at the beginning of the European one. Based on this, it is difficult to imagine continued growth on Monday. Nevertheless, the release of reports on orders for durable goods in the USA can remove another part of the bearish position from the market, but only if these reports are weak. The consolidation of the rate under the Fibonacci level of 100.0% (1.1107) will work in favor of the US currency and the resumption of falling towards the correctional level of 127.2% (1.1025).
The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend buying a pair today with a target of 1.1224 if traders manage to close above the correction level of 76.4% (1.1180) since earlier there were several rebounds from this level, which indicates its strength and importance.
I recommend selling the EUR/USD pair with a target of 1.1025 if a close is performed under the correction level of 100.0% (1.1107). This will return the bear's confidence in the weakness of the euro.
GBP/USD – 4H.
In the British Kingdom, everything is in limbo. Of the latest news regarding Brexit, I note only the statement of Prime Minister Boris Johnson that the UK can refuse to pay 39 billion pounds to the European Union as compensation for the termination of the Treaty on EU membership. This is Johnson's logic: since there is no deal, then there are no other agreements. For Great Britain, this can be said good news, since, in the difficult times for the country's economy, you can save a decent amount of money. On the other hand, will this amount become the subject of lengthy litigation between the EU and Britain? It is unlikely that somewhere in the documents, there is a clause on the legality of refusing to pay compensation in the case of Brexit "No Deal". However, Johnson is pressing at this point, as there is no more pressure. Also, Boris Johnson believes that it is the possibility of losing 39 billion pounds that brings Britain closer to signing an agreement with the European Union. Also, the British Prime Minister is in full view of suspending parliament. It is in this way that he can achieve the implementation of Brexit "No Deal", as most parliamentarians will refuse to vote for such an option. Johnson wants to suspend Parliament for 5 weeks and is now studying the legality of such a procedure.
The pound has fulfilled the closure above the correction level of 127.2% (1.2180) on the latest news and now has the chance to grow towards the Fibonacci level of 100.0% (1.2437).
What to expect from the currency pair on Monday?
Since we have a frankly corrective growth after a long fall, the pound/dollar pair on Monday can continue it. At the same time, the news can both prevent this and support the correction. Also, you should closely monitor any news from the UK regarding Brexit. I believe that the growth of the pound will continue today.
The Fibo grid is based on the extremes of January 3, 2019, and March 13, 2019.
Forecast for GBP/USD and trading recommendations:
I recommend buying a pair with a target of 1.2437, with a stop-loss order below the level of 1.2180, since a fixation above the Fibo level of 127.2% was performed.
I recommend selling a pair with the target of 1.1853 and with a stop-loss order above the level of 127.2% if the closing is closed at 1.2180.
