EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair continues the process of falling in the direction of the correction level of 127.2% (1.1025). Nothing interesting is happening in the European Union now. There is a political crisis in Italy, however, even from the dynamics of the movement of the euro/dollar pair, it is clear that it does not worry the traders too much. There have been very few economic reports this week, and the euro/dollar has been sliding sluggishly since last Friday. This is a logical scenario since no information has been received that could trigger euro purchases in the markets. Based on what traders can decide to buy the euro? It turns out that traders can only wait for the ECB rate cut, the Fed rate cut, other changes in the monetary policy of the EU and the US, as well as important economic reports. Today, at first glance, interesting reports will be possible. On August 29, inflation in Germany for August and US GDP data for the second quarter will be published. Unfortunately, the status of these reports will not be marked "high" since August is not yet completed, and therefore, final estimates of inflation in Germany cannot yet be made. The same applies to GDP in America, this is only a preliminary value.
What to expect from the currency pair on Thursday?
Since all economic reports of the day will not have the status of "final", I do not expect a special reaction of traders to them. Most likely, traders will read the reports, take them into account and do nothing. There must be a serious mismatch between the forecasts and the actual values for the preliminary values to trigger the opening of new trades. Based on this, I expect a further systematic decline of the euro/dollar pair towards the level of 1.1025. Divergence is not evident today. The closure of the pair above the Fibonacci level of 100.0% (1.1107) can be interpreted in favor of the single currency and to count on some growth in the direction of the correction level of 76.4% (1.1180).
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 the pair with a target of 1.1180 if traders manage to close above the correction level of 100.0% again.
On August 29, I recommend selling the EUR/USD pair with the target of 1.1025, since a close was performed under the correction level of 100.0% (1.1107).
GBP/USD – 4H.
The most interesting news is still coming from the UK. Yesterday, it became known that Prime Minister Boris Johnson appealed to Queen Elizabeth II of Great Britain to stop the work of Parliament for more than a month. The Queen approved this request, although, given her status as a non-meddling monarch, she could not disapprove. However, according to many experts, Elizabeth II approved not a pause in the work of Parliament, but Brexit "No Deal". Because it is for Brexit through Parliament and Johnson asked to suspend the work of this very Parliament. Thus, the second session of Parliament will now begin on October 14, about two weeks before the Brexit deadline. Will that be enough time for Jeremy Corbyn and the opposition to do anything? Unknown. Opponents of Brexit "No Deal" will have a few more days before the "new holiday." The only thing the opposition can do now is to declare a vote of confidence in the Prime Minister. But even this option does not guarantee anything. A vote of confidence, if supported by Parliament, is a call for the Prime Minister to resign. That is, Johnson may well refuse to resign from his post. And knowing his odium and some similarities with US President Donald Trump, who also do not accept rigid frameworks and rules, with a 95% probability we can assume that Johnson will not resign. Thus, 2 months before the date X, it is possible to assume with a 95% probability that the UK will finally leave the EU. But what will happen next, nobody knows. The UK economy may fall into a serious crisis, but its scale is now impossible to predict. One thing is clear more or less accurately, Boris Johnson signed the "death sentence" of the pound.
What to expect from the currency pair on Thursday?
All economic reports from the UK and the US are irrelevant now. Only Brexit and any information related to it matters. I expect the opposition to respond in the coming days, as it is unlikely that Jeremy Corbyn and his followers will surrender without a fight. It is this information that interests traders, not preliminary reports on GDP and jobless claims in America. At the moment, the pair performed a rebound from the correction level of 127.2% (1.2180) but did not move far up. Closing quotations of the pair under the correction level of 127.2% will increase the chances of further decline towards the correctional level of 161.8% (1.1853).
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 the pair very cautiously (or not buying at all) with the target of 1.2437 with a stop-loss order below the level of 1.2180 since a rebound 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 under the level of 1.2180.
