Wave analysis of EUR / USD and GBP / USD for May 16. Euro and pound have nothing to oppose the US dollar

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On Wednesday, May 15, trading ended for EUR / USD with a decrease of several base points. I still pay attention to two unsuccessful attempts to break through the 50.0% Fibonacci level, which is a strong signal that the instrument is ready to build a new downward wave with targets located under the 11th figure. All participants in the foreign exchange market are now discussing the topic of trade wars, which Donald Trump is actively unleashing. And - there are a lot of opinions. As we can see, the markets are still inclined to believe that Trump's actions may favorably affect the US economy and the dollar is in use, although moderate, but in demand. The question for the next few days is: will Trump launch a full-scale offensive against the European Union? Markets fear that Trump will announce import duties on European cars. For Europe, this will be a serious blow.

Sales targets:

1.1097 - 161.8% Fibonacci

1.1045 - 200.0% Fibonacci

Purchase goals:

1.1324 - 0.0% Fibonacci

General conclusions and trading recommendations:

The pair is still in the process of building a downward trend. The current wave counting suggests a continuation of the pair decline with the targets of 1.1097 and 1.1045, which corresponds to 161.8% and 200.0% Fibonacci. Thus, now, I recommend selling a pair with these goals and a restrictive order above the 50.0% Fibonacci level.

GBP / USD

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On May 15, the GBP / USD pair lost another 60 basis points. This time, such a decline was not caused by weak and negative news from the UK. A permanently negative news background has now developed in the country, which regularly leads to a decline in the national currency. It is not surprising that the main outsider among all currencies remains the pound. Theresa May has long been dismissed without any concrete reason. Nevertheless, the prime minister stands firmly in her position: until the parliament approves Brexit, she will not leave her post. It seems that accepting Brexit is the only chance for Theresa May to be saved, if not her political career, then at least her reputation. However, now everything goes to the fact that the whole process of Brexit can end somehow, it can even lead to a rejection of it. All these have a negative impact on the business climate inside the country.

Sales targets:

.2780 - 127.2% Fibonacci

1.2675 - 161.8% Fibonacci

Purchase goals:

1.3175 - 0.0% Fibonacci

General conclusions and trading recommendations:

The wave pattern implies a continuation of the instrument decline within the wave c. Thus, now I recommend sales with targets located near the estimated marks of 1.2780 and 1.2675, which corresponds to 127.2% and 161.8% Fibonacci. An unsuccessful attempt at any of these marks can lead to a departure of quotes from the reached minimums and even the construction of a sufficiently strong upward wave.

The material has been provided by InstaForex Company - www.instaforex.com