Here are the details of the economic calendar from June 17:
Europe's inflation data was published yesterday, where the growth in consumer prices confirmed expectations with a preliminary estimate of 2.0%. In total, we have an increase from 1.6% to 2.0%, which means that the European Central Bank faces inflationary risks that may lead to a tightening of monetary policy.
During the US trading session, the United States released its data on applications for unemployment benefits, which was expected to further decline, but an increase was recorded instead.
- The volume of initial applications for benefits rose from 375 thousand to 412 thousand
- The volume of repeated applications for benefits rose from 3,517 thousand to 3,518 thousand.
Applications reflect the number of currently unemployed citizens receiving unemployment benefits. This indicator is considered the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth. The reduction in applications for benefits has a positive effect on the labor market.
It is worth noting that inflation data in Europe, including the data on claims for unemployment benefits in the US, came out during a speculative hype. Traders continued to work on news from the West regarding the Fed's possible action.
Analysis of trading charts from June 17:
The EUR/USD pair managed to prolong the downward trend previously set in the market, which resulted in having not just strong inertia, but also a high level of speculative interest among market participants.
From the point of view of technical analysis, traders successfully broke through the psychological area of interaction of trading forces 1.1950/1.2000/1.2050, indicating a possible change of interests among market participants.
In simple terms, the upward cycle from April and May was hit by sellers, where most of the growth has already been won back.
The trading recommendation on June 17 considered the possibility of prolonging the downward course if the price is kept below the 1.1950 mark.
The GBP/USD pair does not differ much in dynamics from its counterpart in the EUR/USD market. The pound has a similar downward cycle, which is full of speculators, which leads to inertia and a breakdown of the psychological area of 1.3950/1.4000/1.4050.
The trading recommendation on June 17 considered the subsequent decline if the price is kept below the level of 1.3950.
Trading recommendation for EUR/USD and GBP/USD on June 18, 2021
Today, the United Kingdom has already released its data on the volume of retail sales. There was growth by + 21.7% year on year, but this is a low base effect, which means that the growth rates of an economic indicator are explained its extremely low starting point.
In this case, traders were most interested in the monthly indicator, which showed a decline in retail sales in the period of May -1.4% compared to the sales growth in April +9.2%.
The pound's reaction to the retail sales data was won back negatively by the market. In simple terms, the pound continued to fall.
Looking at the EUR/USD trading chart, one can see that speculators continue to trade on a downward course, despite the oversold status and the absence of a pullback/correction in the market. The next pivot point, which could reduce the volume of short positions (sell positions) is set at 1.1860.
To simply put it, such a strong decline, similar to a vertical line, leads to a wide discussion of a technical correction. Now, many traders are trying to predict a possible point of variable support.
As for the trading chart of the GBP/USD, there is a movement within the deceleration area from the beginning of May, where a decline in the volume of short positions (sell positions) is not excluded, which will result in a technical correction. If speculative interest does not fade, and the quote manages to stay below the level of 1.3795, then one should expect the pound to further weaken, despite the high level of oversold.
