EUR / USD
On January 7, the EUR / USD pair lost about 45 basis points and made an unsuccessful attempt to break through the 0.0% Fibonacci level and rolled back from the highs reached, failing to resume building the upward trend section. Thus, the developing option for today is the option of building a new bearish wave, presumably y, with targets located around the 10th figure. If this assumption is correct, then the decline in quotations will continue today. Now, only a successful attempt to break through the maximum of wave x will indicate the readiness of markets to build a new rising wave, which will complicate the entire wave picture.
Fundamental component:
The news background for the euro-dollar instrument was quite interesting on Tuesday. In the eurozone, the consumer price index for December came out, which rose to 1.3% y / y. This is positive news for the euro currency and the eurozone, as inflation has left much to be desired in recent months. Now, the situation is not much better, but inflation has accelerated from 0.7% to 1.3%, which means we can hope that it will continue to accelerate in the coming months. The only question is what were the reasons for this acceleration. Perhaps, this phenomenon is unstable and in January the consumer price index will fall again and maybe we are also seeing the effect of the monthly repurchase of ECB assets from the market, as well as the consequences of easing the monetary policy that was implemented several months ago. I can also note that business activity indices in the EU services sector have grown, although they remain weak in the manufacturing sector, but also increased compared to the previous month. Thus, certain positive changes in the EU economy are still present. However, the current wave marking now implies the construction of a downward wave. At the same time, the whole world is closely watching military events in Iran, where America first struck at the airport in Tehran, after which Iran launched missile strikes at US bases in Iraq. Amid this conflict, demand for safe assets could increase.
General conclusions and recommendations:
The euro-dollar pair allegedly completed the construction of the upward trend section. Thus, I would recommend continuing to sell the instrument with targets located around the levels of 1.1034 and 1.0982, which corresponds to 76.4% and 100.0% Fibonacci, since there is now a high probability of building a bearish wave. In turn, the MACD signal down indicated the readiness of the markets to continue building the wave y.
GBP / USD
On January 7, the GBP / USD pair lost 50 basis points and made an unsuccessful attempt to break through the 50.0% Fibonacci level and rolled back from the highs reached. Thus, the alleged wave 2 is still considered completed. If this is true, then the instrument at the moment is at the stage of building wave 3 of a new downward trend, originating on December 13. Therefore, I expect a decline in quotes with targets located below the 29th figure.
Fundamental component:
The news background for the GBP / USD instrument on Tuesday was also quite interesting. Although there was no interesting news and economic reports in the UK, there was an index of business activity in the ISM services sector in America, which was much better than the expectations of the market and amounted to as much as 55.0 points. This was quite enough for the demand for the US dollar to increase slightly, which led to the resumption of the construction of the supposedly wave 3. Today, I recommend paying attention to the ADP report on the change in the number of people employed in America, which will be released after lunch. This is the only interesting report on January 8.
General conclusions and recommendations:
The pound / dollar instrument continues to build a new downward trend. Thus, I recommend continuing to sell the instrument with targets near the level of 1.2764, which corresponds to the 50.0% Fibonacci level, as another unsuccessful attempt was made to break through the 50.0% level on the small Fibonacci grid. Meanwhile, the MACD "down" signal also indicates the readiness of markets for new sales of the pound.
