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Forex Analysis & Reviews: Forecast for EUR/USD and GBP/USD on July 26. Mario Draghi expects further slowdown in inflation in the European Union
time 26.07.2019 09:55 AM
time Relevance up to, 27.07.2019 08:56 AM

EUR/USD – 4H.

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As seen on the 4-hour chart, the EUR/USD pair fell to the correction level of 100.0% (1.1107) and growth to the Fibo level of 76.4% (1.1180) and rebound from it. As a result, on July 26, the euro/dollar pair performed a new turn in favor of the US currency and began the process of falling towards the correction level of 100.0%. All the ups and downs of the euro yesterday coincided in time with the summing up of the ECB meeting, as well as with the speech of Chairman Mario Draghi. If there is nothing special to say about the results of the meeting, since both rates, deposit and refinancing, remained unchanged, then Draghi's speech aroused great interest among traders. Most importantly, I would like to note that Draghi said that he expects a further reduction in inflation, which is still far from the target slowdown in economic growth. Draghi also believes that the period of ultra-low rates will continue at least until mid-2020, and in this wording appeared the addition or lower. That is, the ECB allows for a reduction in the deposit rate, and in the light of negative expectations and forecasts regarding the economic indicators of the European Union, Draghi openly warns the markets that at the next meeting, the monetary policy will be relaxed. At least, that is the conclusion drawn from his speech.

The Fibo grid is built on the extremes of May 23, 2019, and June 25, 2019.

Forecast for EUR/USD and trading recommendations:

The EUR/USD pair performed the rebound from the correction level of 76.4% (1.1180). I recommend selling the pair today with a target of 1.1107, with the stop-loss order above the level of 1.1180. I recommend buying the pair with the target of 1.1180 and stop-loss order under the level of 1.1107 if it will be rebounded from a correction level of 100.0%.

GBP/USD – 4H.

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The GBP/USD pair rebounded from the correction level of 100.0% (1.2437), a slight increase and a return to the level of 100.0%. A new rebound from this level will again allow traders to count on a reversal in favor of the English currency and some growth in the direction of the correction level of 76.4% (1.2661). In the UK, meanwhile, events are beginning to unfold that will greatly interest traders and world markets. They relate, of course, all the same Brexit. Yesterday, Michel Barnier – a diplomat on Brexit EU – officially said that the requirements of Boris Johnson for a new deal on Brexit are unacceptable. Earlier, the new British Prime Minister said he wanted to remove the clause on "backstop" from the agreement, that is, to completely exclude the issue of the border between Ireland and Northern Ireland after the implementation of the exit from the bloc. Probably all traders thought that this was too optimistic desire. Now, it became known for certain that the EU will not go to such "deals". Barnier believes that Johnson is trying to put pressure on the 27 EU countries and does not understand that Brexit without an agreement is disadvantageous primarily to the UK. Or understands, but does not recognize it. Earlier, Jean-Claude Juncker said that there would be no new negotiations with the United Kingdom under the terms of the agreement. Now, we are waiting for a new speech by Boris Johnson and simultaneously monitor the dynamics of GDP in the US, which will be released this afternoon.

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 pair pound/dollar fulfilled two of the rebound from the correction level of 100.0% (1.2506), which led to the reversal in favor of the US dollar and a fall towards the correction level of 127.2% (1.2430). The rebound of the pair from this level will allow traders to expect a reversal in favor of the pound and some growth in the direction of the correction level of 100.0% (1.2506). The consolidation of quotations below the level of 127.2% (1.2430) will work in favor of continuing the fall in the direction of the next 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 fell to the correction level of 127.2%. Thus, I recommend selling the pair with the target of 1.2334, with the stop-loss order above the level of 1.2430, if the closing is performed under the level of 127.2%. I recommend buying the pair with the target of 1,2506 and with the stop-loss order below the level of 127.2% (hourly chart), if the rebound from the level of 1.2430 is executed.

Samir Klishi,
Analytical expert of InstaForex
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