EUR / USD – 4 H.
On September 12, the pair EUR / USD on a 4-hour chart worked out all kinds of scenarios at a time. In yesterday’s article, I said that the US inflation report could have no less impact on the movement of the couple than the outcome of the ECB meeting. In practice, it turned out that the inflation report was even more important. The actions of the European Central Bank were 100% expected by traders. In short, the regulator lowered the deposit rate by 0.1% (the mildest option) and announced the launch of the incentive program in November 2019, which, like the previous program, will consist of buying out bonds and flooding the economy with cash. The QE program is designed to spur inflation in the eurozone, which in recent months is around 1.0%. However, the decline in inflation in America was an unpleasant surprise for traders, especially in anticipation of the Fed meeting on September 18. The recent speeches of Jerome Powell did not answer the question, is the American regulator set to cut rates in September? But weak inflation could be a good reason to soften the Fed rate. If you add to this the next batch of criticism of the Fed’s actions by Donald Trump (immediately after the publication of yesterday’s decisions to soften the ECB’s monetary policy), the probability of a Fed rate cut becomes very high.
Thus, the euro-dollar pair fell to the correction level of 161.8% – 1.0918 yesterday. A reversal in favor of the EU currency and strong growth in the upper region of the downward trend channel with fixing at the Fibo level of 127.2% – 1.1024. Further growth of the pair is now limited by the upper line of the channel, to which it remains to go just a little bit.
What to expect today from the euro-dollar currency pair?
On September 13, I expect the markets to calm down a bit after a busy Thursday. The information background today will be much weaker than yesterday. Thus, I am waiting for a “technical” solution to the question: where does the euro-dollar pair move on? More so, a rebound in the pair’s exchange rate from the channel’s line will work again in favor of the US currency, and we can expect a third drop in the direction of the correctional level of 161.8% – 1.0918. Closing quotes over the trend channel will work in favor of the EU currency and significantly increase the chances of the growth of this currency in the coming weeks.
The Fibo grid was built at the extremes of May 23, 2019 and June 25, 2019.
Forecast on EUR / USD and recommendations to traders:
I recommend selling the pair with the target of 1.0927 if another consolidation is performed below the level of 1.1024. Stop Loss – Over 1.1029.
You can buy a pair after closing above the level of 1.1106 with the target of 1.1164. Stop Loss – below the level of 100.0% Fibonacci.
GBP / USD – 4 H.
“Even Michel Barnier, who is negotiating with London, does not believe in concluding a deal with Great Britain.” This is the name you can give the section of this article devoted to the British pound. “I can’t tell you whether our contacts with the government of Boris Johnson will lead to the signing of an agreement before the summit to be held on October 17-18. I have no reason to be optimistic,” said Barnier to the representatives of the European Parliament. If the EU’s chief negotiator does not believe in an agreement with Johnson, then … Although EU leaders have never sung praises to Johnson and did not hide skepticism about his policies and persona. Given the fact that the British Prime Minister has not proposed a single real option how to solve the problem of “back-up”, the words of Barnier look absolutely logical. Opposition leader Jeremy Corbin spoke about this earlier. He argued that Johnson did not conduct any negotiations with the European Union, contrary to Johnson’s regular statements that “a deal with Brussels is still possible” or “negotiations can yield results”.
The European Parliament is ready to offer Brexit’s postponement to London if Brexit’s “No Deal” can be avoided in this way. And the position of Boris Johnson, meanwhile, is slowly “going under the water.” Overall, Johnson and his government have not yet implemented a single important point from their election program. Brexit “No Deal” has not yet been implemented. The parliament has been sent on vacation, but the court ruled that Johnson’s action was unlawful, parliamentary elections were rejected, and the European Parliament is ready to postpone Brexit to a later date. These are the results of Johnson’s almost two-month work. Thanks to all these defeats, the pound has come to life in recent weeks.
What to expect today from the pound-dollar currency pair?
The pound-dollar pair has consolidated above the level of 1.2308. However, in recent days, it has been squeezed into a tapering triangle. Now, I am waiting for the pair to leave the course, which will determine the trend for the next few days. I still count on the growth of quotations in the direction of the correctional level of 100.0% – 1.2437. On the other hand, upcoming divergence is not observed in any indicator today. Consolidation of the pair under the bottom line of the triangle will work in favor of the US currency and a slight decline in the direction of the correction level of 127.2% – 1.2180.
The Fibo grid was built at the extremes of January 3, 2019 and March 13, 2019.
GBP / USD Forecast and recommendations for traders:
I recommend supporting the pair’s already open purchases with the target of 1.2437 and Stop at 1.2308, but I do not recommend opening new purchases due to two bearish divergences, which are still valid.
I recommend selling a pair with the target of 1.2180, if closing is performed under the bottom line of the triangle.