Forecast for EUR/USD and GBP/USD on July 18. Reports on European and British inflation caused weak growth in European currencies

Source: Forex Analysis

EUR/USD – 4H.

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As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the euro currency and returned to the corrective level of 38.2% (1.1238). The rebound of quotations on July 18 from this level of Fibo will allow counting on a turn in favor of the US dollar and the resumption of the fall in the direction of the correction level of 23.6% (1.1187). The report on inflation in the European Union, which was released yesterday, showed a value of 1.3%, which is higher than forecasts by 0.1%. However, the inflation target, at which the ECB will conclude that this indicator is all right, is 2.0%. Accordingly, the current value of the consumer price index is much lower than the target. Accordingly, even a small increase in inflation cannot be regarded as a positive phenomenon. The euro, of course, has grown a little, but, for example, no news from the eurozone is expected today, America also has nothing to offer traders today. Thus, the Forex market can return to its usual occupation – sales of the euro/dollar pair.

The Fibo grid is built on extremums from March 20, 2019, and May 23, 2019.

Forecast for EUR/USD and trading recommendations:

The currency pair EUR/USD executed a return to the retracement level of 38.2% (1.1238). I recommend selling the pair with the target of 1.1187, with the stop-loss order above the level of 1.1238, if the rebound from the level of 38.2% is executed. I recommend buying the pair with the target of 1.1278 and stop-loss level under 1.1238, if closing above the correction level of 38.2% is performed.

GBP/USD – 4H.

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The GBP/USD pair, after the formation of a bullish divergence at the MACD indicator, performed a reversal in favor of the pound and began a weak growth process. The closing of the pound/dollar pair above the Fibo level of 100.0% (1.2437) will increase the chances of further growth of quotations in the direction of the correction level of 76.4% (1.2661). Various political perturbations in the UK, which are too many in 2019, can hinder the growth of the English currency. First, Boris Johnson, who is likely to become Prime Minister, is preparing to suspend the work of Parliament to withdraw Britain from the European Union without his consent. It is difficult to say how feasible this idea is and why, for example, Theresa May did not use it. Also, the Parliament can register and adopt a bill that will prohibit the country’s exit without agreements, which will block the desire of the future Prime Minister, whoever they become. Secondly, Boris Johnson is planning parliamentary elections after the implementation of Brexit. It was after him, not before. The reason for this is called the strong fragmentation of the Laborites who are “killed by Brexit.” It is difficult to say why Conservatives are concerned about the fate of Labor. All these processes only complicate Brexit and the whole situation in the UK. The Briton continues to convulse and may quietly continue falling over the coming months, as the hard Brexit is even worse for him than the uncertainty. And the stronger the market is convinced that the country is waiting for a hard Brexit, the less desire to buy the pound sterling.

The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.

GBP/USD – 1H.

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As seen on the hourly chart, the pound/dollar pair performed a reversal in favor of the English currency after the formation of a bullish divergence at the MACD indicator and consolidation above the Fibo level of 127.2% (1.2430). As a result, on July 18, the growth process can be continued in the direction of the next correction level of 100.0% (1.2506). Closing the quotes below the Fibo level of 127.2% will work in favor of the US currency and the resumption of the fall in the direction of the correction level of 161.8% (1.2334).

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 performed a consolidation above the Fibo level of 127.2%. Thus, I recommend buying the pair today with the target of 1.2506, with the stop-loss order below the level of 1.2430. I recommend selling a pair with a target of 1.2334, if the closing is performed below the Fibo level of 127.2% and with a stop-loss order above the level of 1.2430 (hourly chart).

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