EUR/USD: The upcoming Non-Farm Employment Change report will set the direction of the euro. Fed minutes once again expresses

Good macroeconomic reports on the US economy continue to fuel the risk appetite of traders. However, it is important to understand that expecting a major turn in the markets is wrong, as it's still too early to be confident about it. The bulls have to keep the quotes at the lows of last week, because if there is no further bullish momentum in the charts, the pair will quickly return in the hands of euro sellers.analytics5efd80f8767cf.jpg

Yesterday, the Federal Reserve published the minutes for it's June meeting, the contents of which one again expressed that traders should not count on a very quick recovery of the US economy. It is clear that the country needs strong support from the central bank's monetary policy, so tools such as interest rates will remain at a zero level for a fairly long period of time. However, there are gaps already with regards to the need of charting a clear course for interest rates and asset purchases. Thus, the Fed is contemplating on when the current monetary policy will be corrected. Leaders of local banks are also concerned about the impact of soft policy on financial stability.

Control over the yield curve was also discussed, in connection with which it was decided that this issue will be studied to a greater extent. At the moment, short-term US bonds have a higher yield than long-term ones, even though from a fundamental point of view, this is a wrong phenomenon since longer securities have always had a higher yield than short-term bonds and bills.

Another issue that was also paid attention to was the full restoration of the labor market, which will take some time since there are uncertainties and significant risks for the economy in the future.

Meanwhile, good macroeconomic statistics continue to come out on the US economy. The report published by the ISM revealed that activity in the US manufacturing sector continues to record a slower decline in the indicator for June, mainly due to the resumption of work amid the weakening of quarantine restrictions in the country. Thus, according to the data, the final PMI for the US manufacturing sector was 49.8 points in June, almost reaching 50 points. Economists expected the figure to just be 49.7 points.

Good indicators were also recorded in the eurozone, which generally had a positive impact on the European currency. According to the ISM, the PMI for the EU manufacturing sector rose to 52.6 points in June against 43.1 points in May, mainly due to an increase in orders.

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The gradual stabilization on the number of jobs in the US private sector also pleased traders. According to the report published by the ADP and Moody's Analytics, jobs increased by 2.37 million in June, but the pace of hiring slowed down a bit. Economists expected the figure to be 2.5 million. As for the pace of hiring, 3.07 million jobs were created in May, up from the records earlier which was down by 2.76 million.

Today, latest news on the US labor market will be published, the figures of which will have significant effects on the markets.

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These reports are expected to signal the further restoration of the labor market, which recovered in June this year due to the resumption of activities of various companies. However, optimism can still be damaged if there comes another surge in coronavirus incidence in the county.

Meanwhile, the National Federation of Independent Businesses published another report yesterday which indicated a weakening labor market in US small businesses in June. According to data, small enterprises reduced 0.28 jobs in June, higher than the figure recorded in May. The main reason for this downsizing is the completion of protection programs that US authorities provided during the height of the pandemic. As noted in the report, loans that were received by many small business owners back in April are ending, and new ones cannot be obtained, which will likely lead to a reduction in the number of employees.

As for the current technical picture of the EUR / USD pair, if the quotes break out of the level 1.1290, the pair will rise to the areas 1.1350 and 1.1390. However, if the data on the US labor market turns out to be weak, signaling a slowdown in recovery, pressure on risky assets may return, in which a break of support level 1.1240 will surely bring the quotes to 1.1190. A breakout of which will open the way for the bears to push the EUR / USD pair to the lows of 1.1150 and 1.1105.

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Fractal analysis of main currency pairs on July 2nd

Forecast for July 2 :

Analytical review of currency pairs on the scale of H1:

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The key levels for the euro / dollar pair on the H1 scale are: 1.1289, 1.1254, 1.1183, 1.1154, 1.1132, 1.1071 and 1.1029. Here, we continue to monitor the formation of the descending structure of June 23. The continuation of the downward movement is expected after the breakdown of the level of 1.1183. In this case, the goal is 1.1154. The price passing the noise range 1.1154 - 1.1132 will lead to the development of a pronounced downward movement. Here, the goal is 1.1071. For the potential value for the bottom, we consider the level of 1.1029. Upon reaching which, we expect an upward pullback.

A consolidated movement is possible in the range of 1.1254 - 1.1289. The breakdown of the last level will lead to the formation of an ascending structure. In this case, the potential target is 1.1349. We expect the initial conditions for the top to be formed to this level.

The main trend is the formation of the downward structure of June 23, the correction stage

Trading recommendations:

Buy: 1.1255 Take profit: 1.1287

Buy: 1.1292 Take profit: 1.1346

Sell: 1.1183 Take profit: 1.1155

Sell: 1.1130 Take profit: 1.1080

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The key levels for the pound / dollar pair on the H1 scale are: 1.2696, 1.2630, 1.2597, 1.2547, 1.2508, 1.2456, 1.2413 and 1.2349. Here, we are following the development of the upward cycle of June 30. A short-term downward movement is expected in the range of 1.2508 - 1.2547. The breakdown of the last level will lead to a pronounced upward movement. Here, the target is 1.2597. Price consolidation is in the range of 1.2597 - 1.2630. For the potential value for the top, we consider the level of 1.2696. Upon reaching which, we expect a downward pullback.

A short-term downward movement is expected in the range of 1.2456 - 1.241. The breakdown of the last level will lead to a deeper correction. Here, the target is 1.2349. This is a key support level for the top.

The main trend is the upward structure of June 30

Trading recommendations:

Buy: 1.2508 Take profit: 1.2545

Buy: 1.2548 Take profit: 1.2595

Sell: 1.2455 Take profit: 1.2415

Sell: 1.2410 Take profit: 1.2355

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The key levels for the dollar / franc pair on the H1 scale are: 0.9497, 0.9480, 0.9468, 0.9434, 0.9407, 0.9389 and 0.9363. Here, we determine the next goals from the descending formation on June 30th. The continuation of the downward movement is expected after the breakdown of the level of 0.9434. In this case, the target is 0.9407. Price consolidation is in the range of 0.9407 - 0.9389. For the potential value for the bottom, we consider the level of 0.9363. Upon reaching which, we expect consolidation and an upward pullback.

A short-term upward movement is expected in the range of 0.9468 - 0.9480. The breakdown of the last level will lead to a deeper correction. Here, the target is 0.9497. This is a key support level for the bottom and the price passing this level will lead to the formation of initial conditions for the upward cycle. In this case, the goal is 0.9531.

The main trend is the downward structure of June 30

Trading recommendations:

Buy : 0.9468 Take profit: 0.9480

Buy : 0.9482 Take profit: 0.9495

Sell: 0.9434 Take profit: 0.9408

Sell: 0.9405 Take profit: 0.9390

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The key levels for the dollar / yen pair on the scale are : 108.86, 108.45, 108.28, 107.95, 107.57, 107.37 and 107.01. Here, we follow the development of the upward cycle of June 23. The continuation of the upward movement is expected after the breakdown of the level of 107.95. In this case, the target is 108.28. Price consolidation is in the range of 108.28 - 108.45. For the potential value for the top, we consider the level of 108.86. Upon reaching which, we expect a downward pullback.

A consolidated movement is possible in the range 107.57 - 107.37. The breakdown of the last level will lead to a deeper correction. Here, the goal is 107.01. This is a key support level for the top.

The main trend is the upward cycle of June 23, correction stage

Trading recommendations:

Buy: 107.95 Take profit: 108.28

Buy : 108.47 Take profit: 108.86

Sell: 107.55 Take profit: 107.38

Sell: 107.35 Take profit: 107.05

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The key levels for the Canadian dollar / US dollar pair on the H1 scale are: 1.3813, 1.3766, 1.3709, 1.3638, 1.3566, 1.3526 and 1.3487. Here, the price is in deep correction of June 23. A short-term downward movement is expected in the range of 1.3566 - 1.3526. The breakdown of the last level will lead to the cancellation of the downward structure and here, the first goal is 1.3487.

The continuation of the upward movement is expected after the breakdown of the level of 1.3636. In this case, the first target is 1.3709. The breakdown of which, in turn, should be accompanied by a pronounced upward movement to the level of 1.3766. For the potential value for the top, we consider the level of 1.3813. Upon reaching which, we expect a downward pullback.

The main trend is the formation of the upward potential of June 23, the stage of deep correction

Trading recommendations:

Buy: 1.3638 Take profit: 1.3707

Buy : 1.3711 Take profit: 1.3765

Sell: 1.3564 Take profit: 1.3528

Sell: 1.3524 Take profit: 1.3488

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The key levels for the Australian dollar / dollar pair on the H1 scale are : 0.7041, 0.7008, 0.6986, 0.6953, 0.6898, 0.6877, 0.6855, 0.6834 and 0.6809. Here, we are following the formation of potential for the top of June 30. The continuation of the upward movement is expected after the breakdown of the level of 0.6953. In this case, the target is 0.6986. Short-term upward movement, as well as consolidation are in the range of 0.6986 - 0.7008. For the potential value for the top, we consider the level of 0.7041. Upon reaching which, we expect a downward pullback.

A short-term downward movement is expected in the range of 0.6898 - 0.6877. The breakdown of the last level will lead to a deeper correction. Here, the target is 0.6855. This is a key support level for the top and the price passing this level will lead to the formation of a downward local structure. In this case, the target is 0.6834.

The main trend is building potential for the top of June 30

Trading recommendations:

Buy: 0.6953 Take profit: 0.6985

Buy: 0.6987 Take profit: 0.7006

Sell : 0.6898 Take profit : 0.6878

Sell: 0.6875 Take profit: 0.6857

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The key levels for the euro / yen pair on the H1 scale are: 122.47, 121.87, 121.66, 121.29, 120.64, 120.35, 120.12 and 119.74. Here, we are following the ascendant structure of June 26th. The continuation of the upward movement is expected after the breakdown of the level of 121.29. In this case, the goal is 121.66. Price consolidation is in the range of 121.66 - 121.87. The price passing the noise range of 121.66 - 121.87 will lead to a pronounced upward movement. Here, the target is 122.47. Upon reaching this value, we expect a downward pullback.

A short-term downward movement is possible in the range of 120.64 - 120.35. The breakdown of the last level will lead to a deeper movement. Here, the goal is 120.12. This is the key support level for the top.

The main trend is the local upward structure of June 26

Trading recommendations:

Buy: 121.30 Take profit: 121.66

Buy: 121.90 Take profit: 122.45

Sell: 120.64 Take profit: 120.37

Sell: 120.35 Take profit: 120.14

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The key levels for the pound / yen pair on the H1 scale are : 136.73, 135.98, 135.49, 134.68, 133.77, 133.38, 132.90, 132.41 and 131.91. Here, we are following the development of the ascending structure of June 29. The continuation of the upward movement is expected after the breakdown of the level of 134.68. In this case, the target is 135.49. Short-term upward movement, as well as consolidation are in the range of 135.49 - 135.98. For the potential value for the top, we consider the level 136.73. Upon reaching which, we expect a downward pullback.

A short-term downward movement is expected in the range 133.77 - 133.38. The breakdown of the last level will lead to a deeper correction. Here, the goal is 132.90. This is a key support level for the top.

The main trend is the upward structure of June 29

Trading recommendations:

Buy: 134.70 Take profit: 135.49

Buy: 135.52 Take profit: 135.96

Sell: 133.77 Take profit: 133.40

Sell: 133.36 Take profit: 132.90

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Dollar is declining in anticipation of the employment report; Overview of EUR and GBP

Before the publication of the US labor market report in June, APD presented a report on private sector employment, which not only did not add clarity, but further confused the situation.

In June, 2369 thousand jobs were created, and this would have been an outstanding figure in the old days. But, first, 3 million new jobs were forecast, and second, the total after the failure in April created less than a third of the level of reduction, meaning the US economy is very far from the recovery zone.

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In which areas of the economy has the recovery started? The answer to this question is discouraging – in fact, not yet in any. A small rebound is observed only in the service sector, which was able to work after the block, but in the physical economy, everything is not just bad – everything is catastrophically bad.

For example, the construction sector lost 2.499 million jobs in April-May, only 394 thousand were restored in June, or 15.8% of the pre-crisis level. Industry is even worse - 2.393 million jobs were lost, 88 thousand, or 3.8% of the pre-crisis level, were created in June. In fact, there are no signs of recovery yet, but there is only a reaction to the removal of restrictive measures.

At the same time, the ISM report states that the economy is expanding for the second month in a row after the April contraction – in June, the PMI index was 52.6%.

Only one conclusion can be drawn from published reports - the situation is extremely uncertain. Markets will wait for the publication of an employment report today, the reaction may be in any direction, depending on how much the data will differ from expectations. The dollar as of Thursday morning continues to be under pressure and so, there is no reason to expect its growth.

EUR/USD

Consumer prices rose in June by 0.3% y/y, exceeding expectations, the underlying index remained unchanged at 0.8% y/y. Low inflation is due to the significant effect of lower energy prices. Despite the weak growth rate, there are no signs of deflation, but this does not mean that the ECB does not see a threat. Last week, the ECB has already commented on this topic, recognizing that "inflationary expectations of market participants could become less reliable."

Currently, the ECB is focusing all its efforts on supporting the economy in order to quickly get out of the coronavirus crisis, which softens financial conditions, but after this task is solved, the focus will shift to inflationary expectations. There are several factors that will restrain price growth for some time - first of all, the cost of oil futures and strong growth in unemployment, but it is also worth noting the lack of clarity on how successfully the task of economic recovery is being addressed.

For example, the European Commission notes that there was a pullback from the lows in May, which, on the one hand, indicates a gradual recovery of the economy, and on the other, the pace of this recovery is too weak.

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Markit, in turn, acknowledges that sentiment in the manufacturing sector remains lower than before the pandemic, and weak demand will slow recovery. Moreover, it does not exclude the possibility of the completion of a positive impulse.

A number of large banks are already expressing concerns that reducing inflation in the euro area to the negative area has serious preconditions, and that the ECB will be forced to take measures to support inflation in the near future.

EUR/USD pair is trading sideways pending US employment data. Chances for growth remain, the nearest goal is the resistance zone 1.1340/50 and further 1.1420.

GBP/USD

The pound is winning back the growth of positive expectations, as we expected earlier, consolidating above the resistance zone of 1.2410/20. The chances of successful completion of 1.2530/40 have increased, after which the next target 1.2700/20 will open, where the upper boundary of the medium-term downward channel passes. A successful test will give the bulls a second wind, as it will improve the technical picture, but there are no fundamental prerequisites for a strong growth of the pound yet, and the growth is due to only two factors – the weakness of the dollar and the growth of positive expectations for the global economy as a whole.

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Technical Analysis of GBP/USD for July 2, 2020:

Technical Market Outlook:

After the GBP/USD pair has made a local low at the level of 1.2251 the price has temporary broken out the descending channel and tested the technical resistance seen at the level of 1.2362. After that move, the bulls pushed the price higher towards the overbalance level seen at the level of 1.2459. This overbalance level has been violated as well and currently the market is trading around the level of 1.2500. All of the technical resistance levels had been violated and the next targets for bulls are seen at 1.2542 and 1.2686. The strong and positive momentum supports the short-term bullish outlook.

Weekly Pivot Points:

WR3 - 1.2667

WR2 - 1.2600

WR1 - 1.2441

Weekly Pivot - 1.2377

WS1 - 1.2213

WS2 - 1.2143

WS3 - 1.1969

Trading Recommendations:

On the GBP/USD pair the main trend is down, which can be confirmed by the down candles on the weekly time frame chart. The key long-term technical support has been recently violated (1.1983) and the new one is seen at the level of 1.1404. The key long-term technical resistance is seen at the level of 1.3518. Only if one of these levels is clearly violated, the main trend might reverse (1.3518) or accelerate (1.1404). The market might have done a Double Top pattern at the level of 1.2645, so the price might move even lower in the longer-term.

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AUDUSD remains inside bullish channel

AUDUSD is moving higher towards the upper boundary of the short-term trading range. Medium-term trend remains bullish and as long as price remains above 0.68 we remain confident for a move towards 0.70.

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Blue lines - bullish channel

Red lines - trading range

AUDUSD bullish scenario will be confirmed on a break above and out of the trading range we are currently in. This means that price should break and stay above 0.69 resistance level. So far price respects both the lower channel boundary and the lower trading range boundary. This is important for our bullish case. Breaking below 0.68 would cancel our bullish scenario.

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GBPUSD has limited upside potential in the short-term

GBPUSD has made an upward move from 1.2250 to 1.25. This upward move is in its final stages and has limited upside potential. Although key support of this new upward move is at 1.2250, I believe bullish traders should be patient and wait for a pull back to come first.

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Red rectangle - possible reversal area

Green lines - most probable expected path of price

GBPUSD is in an short-term bounce. In order for this bounce to unfold into something bigger to the upside I believe we should soon see a pull back and the formation of a higher low. This would give bulls enough power for a move higher. The RSI is approaching overbought levels in the 4 hour chart. This by no means implies we should turn bearish GBPUSD. We remain bullish as long as price is above 1.2250.

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Hot forecast and trading recommendations for EUR/USD on July 2, 2020

The nerves of market participants are strained to the limit, and it has been impossible to be in this state for a long time now. Sooner or later, the nerves can't stand it and people will begin to behave inappropriately. What happened yesterday. The reaction of the market to the publication of US statistics was really absurd.

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At the same time, oddities already began in the morning. As soon as the final data on the index of business activity in the manufacturing sector of Europe were published, which showed an increase from 39.4 to 47.4 with a forecast of 46.9, the single European currency immediately jumped. Which in general is a logical reaction. However, the euro did not last long. Just half an hour. After which it also promptly returned to the values that it had before the publication of the index of business activity in the manufacturing sector.

Manufacturing PMI (Europe):

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But the most interesting thing happened when the ADP employment data was released. The dollar began to confidently lose its position, although the data themselves turned out to be much better than forecasts. It was expected that employment would grow by 3,000,000, but it turns out that it increased by 2,369,000. But the fact is that the results of the previous month were revised for the better, and instead of a decrease of 2,760,000, employment actually increased by 3,065,000 in May. So only the incredible nervous stress can explain the fact that market participants did not see a revision of previous data.

Employment change from ADP (United States):

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Today will be a much busier day, so the market will be much more feverish. First in Europe, data on unemployment will be published, the level of which should grow from 7.3% to 7.7%. And this in itself is an extremely negative factor for the euro. The situation may be worsened by producer prices, whose decline rate should accelerate from -4.5% to -5.2%. So, the idea is that the euro needs to decline. However, it is likely that no reaction will follow, as market participants are waiting for the report of the United States Department of Labor.

Employment change from ADP (United States):

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Today will be a much busier day, so the market will be much more feverish. First in Europe, data on unemployment will be published, the level of which should grow from 7.3% to 7.7%. And this in itself is an extremely negative factor for the euro. The situation may be worsened by producer prices, whose decline rate should accelerate from -4.5% to -5.2%. So, the idea is that the euro needs to decline. However, it is likely that no reaction will follow, as market participants are waiting for the report of the United States Department of Labor.

Unemployment rate (Europe):

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The forecasts for the content of this very report are extremely positive. Thus, the unemployment rate should fall from 13.3% to 12.3%. In addition, 2,900,000 new jobs should be created. Of course, unemployment will remain at an incredibly high level. However, the trend itself indicates a gradual recovery of the labor market, which is a remarkable factor in the current conditions. And if market participants are not covered by another panic attack, the dollar will have to significantly strengthen its position.

Unemployment rate (United States):

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From the point of view of technical analysis, we see a jump in speculative activity, where the area of 1.1180/1.1190 once again played the role of a pivot point, returning the quote to the limits of 1.1255-1.1275. The horizontal course is undeniable, but still the variable boundaries of the fluctuations are not the main platform in the existing development of the quotes.

It is worth considering that the area of 1.1180/1.1190 plays the main role of support, which means that the trading forces that are concentrated within it has a high indicator.

In terms of volatility, a high indicator is once again recorded, which exceeds the average daily level of activity.

Considering the trading schedule in general terms (daily period), you can see the process of slowing down relative to the specified clock from the area of 1.1400/1.1440.

We can assume that the quotes will slow down the upward movement within the values of 1.1275-1.1285, and short positions may appear against the background of the news flow, which will return us to the limits of the 1.1180/1.1190 area on the flow of speculation.

From the point of view of complex indicator analysis, we see that the indicators of technical instruments for minute and hour periods signal a purchase due to a local upward jump. The daily period took a neutral position.

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Dollar under pressure: US updates anti-record for the number of COVID-19 infected

The dollar index continues to weaken. Despite the fact that many macroeconomic reports are published in the green zone, thus demonstrating recovery processes, the dollar demonstrates a downward movement, "reconstructing" the picture in all dollar pairs. Yesterday's data were really surprising with their strong growth – the ISM manufacturing index, the index of business activity in the manufacturing sector and the report on the labor market from the ADP Agency were better than forecast values. But the US currency was guided by other fundamental factors. The dollar bulls are focused on the rate of spread of coronavirus in the United States, which can no longer fail to cause alarm. Only earlier, such anxious moods of traders were in favor of the dollar: any spikes in anti-risk sentiment turned in favor of the greenback. To date, the situation seems to have changed dramatically – the risk of a second wave of the epidemic in the US puts significant pressure on the currency.

It is worth recognizing that the market has recently changed its attitude to the greenback. In fact, it is not currently used as a protective asset, although last month investors were fleeing in the usual way. For example, during the escalation of tension on the Korean Peninsula or during the border conflict between India and China, dollar bulls felt confident in all key pairs.

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While agreeing with this statement, I also suggest recalling the initial reaction of the US currency to the coronavirus epidemic. As soon as the first mass cases of COVID-19 began to be registered in the United States (this happened in March), the dollar index collapsed from the February level of 99.77 to the March (and annual) low of 94.87. The greenback was sold in almost all dollar pairs. Then, when the panic in the markets turned into general hysteria, the dollar became so much in demand that the Federal Reserve had to open swap lines. But this happened in the second half of March, while the greenback was initially under the impact of the coronavirus crisis.

This background suggests that dollar bulls were not always the beneficiaries of the pandemic, so the current situation should not cause much surprise. The countries of the world are unevenly coping with the epidemic, and the United States clearly looks like an outsider in this case – for example, in comparison with China or the EU countries. The situation is getting worse every day. For example, if the daily increase of infected people in the United States fluctuated in the range of 15-25,000 from June 8 to 24 , then this sad figure began to show a stable upward trend from June 24, initially exceeding the 30,000 and then the 40,000 mark. Over the past day, 51,097 (!) cases of COVID-19 infection was registered in the United States – this is the highest daily increase since the beginning of the pandemic. The new epicenters of the disease are California, Texas and Arizona.

The White House is still phlegmatically reacting to the above dynamics. Trump attributes the increase in the number of identified patients to the increase in the number of tests performed, while promising the imminent appearance of a vaccine. It is worth noting that pharmacists in many countries around the world are developing more than ten versions of vaccines – but no company has yet passed the third stage of clinical trials. So far, only the Chinese have reached the last stage, but they will only start the final tests in the UAE in July. Therefore, it is premature to talk about the appearance of a vaccine - according to the most optimistic estimates, the drug will not appear until October or November.

Meanwhile, the chief US epidemiologist is sounding the alarm: according to him, the country has "lost control" of the epidemic. According to his estimates, if the current dynamics continue, America will soon face a 100,000 per day increase in infection. Given the fact that this figure was at the level of 15-25,000 in early June, and has exceeded the 50,000 mark just yesterday, then the forecasts of the epidemiologist sound plausible.

It is obvious that the increase in the number of infected people will continue to put pressure on the dollar, given the current attitude of investors to the US currency. Additional pressure on the greenback was exerted by the Federal Reserve, which recently published the minutes of its June meeting. Let me remind you that as a result of this meeting, the regulator left all the parameters of monetary policy unchanged, thus meeting market expectations. At the same time, members of the Fed said that they do not expect a rate hike until the end of 2022. Also, the regulator did not discuss the topic of negative rates, and Jerome Powell did not talk about plans to introduce control of the bond yield curve.

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But, as it became known from the minutes of the June meeting, members of the Fed still discussed limiting yields. They noted that this mechanism was used by the central bank during and after World War II, and is now used by the Bank of Japan and the Reserve Bank of Australia. According to the participants of the meeting, "such an approach can control the yield of government bonds and may not require large purchases of government securities by the central bank, although under certain circumstances such a need may arise." The other wording of the Fed's minutes is also worrisome: "the probability of a negative development of the situation with coronavirus, the possibility of strengthening the dynamics of the recession, and tensions in US-Chinese relations may pose short-term risks for financial markets."

Similar theses were voiced by members of the Fed earlier, but the documented position of the regulator exerted additional pressure on the dollar, thus offsetting the positive effect of yesterday's macroeconomic releases.

Thus, the downward dynamics of the dollar index is now fully justified, and if the market does not significantly change its attitude to the US currency (as it did in March), the greenback will continue to be under pressure, following the dynamics of COVID-19 distribution in the US.

If we talk directly about the Euro-dollar pair, then, oddly enough, the situation has not changed much since yesterday. Buyers of EUR/USD stormed the resistance level of 1.1260 (the average line of the Bollinger Bands indicator coinciding with the Tenkan-sen line on the daily chart), but could not gain a foothold above this target. At the time of writing, the price is located exactly at 1.1260. If the bulls continue to settle higher, the Ichimoku indicator will form a bullish Parade of Lines signal, which will open the way for them to 1.1360 (the upper line of the Bollinger Bands indicator on the same timeframe). But you are advised to only make trading decisions today after the release of the Nonfarm payrolls report, which can either strengthen the positions of EUR/USD buyers or the positions of dollar bulls.

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EUR/GBP trying to purge round level of 0.9000 on July 02, 2020

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(Disclaimer)

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Technical Analysis of EUR/USD for July 2, 2020:

Technical Market Outlook:

The EUR/USD pair has made series of Pin Bar candlesticks just above the key short-term support located at the level of 1.1185 and bounced significantly. The bulls are heading north, so any violation of the level of 1.1287 makes the rally towards the technical resistance located at the level of 1.1347 highly possible, so please keep an eye on the current developments at this market. Please notice the positive market conditions and strong momentum support the short-term bullish outlook.

Weekly Pivot Points:

WR3 - 1.1484

WR2 - 1.1410

WR1 - 1.1289

Weekly Pivot - 1.1235

WS1 - 1.1124

WS2 - 1.1056

WS3 - 1.0936

Trading Recommendations:

On the EUR/USD pair, the main long-term trend is down, but the local up trend continues. The key long-term technical support is seen at the level of 1.0336 and the key long-term technical resistance is seen at the level of 1.1540. Only if one of this levels is clearly violated, the main trend might reverse (1.1540) or accelerate (1.0336).

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EURUSD remains trapped inside triangle pattern

EURUSD continues to trade inside the triangle pattern we have showed from previous analysis. Price is bouncing off the boundaries of the triangle with no clear direction. I continue to believe that the most probable break out will be to the downside.

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For my bearish view to be confirmed we need a clear 4 hour candlestick close below 1.12. So far price has found support at 1.12 despite four attempts until now to break this support level. Each time price bounced. Price has key short-term resistance at 1.1290. As long as price is below that level I favor a move towards 1.1150-1.1080.The material has been provided by InstaForex Company - www.instaforex.com

Technical Analysis of BTC/USD for July 2, 2020:

Crypto Industry News:

Startup Blockchain Kirobo claims that its technology can prevent the loss of cryptocurrencies caused by human error when sending transactions between Bitcoin wallets, which are usually irreversible.

The Recoverable Transfer feature is to build a new layer on existing Blockchain protocols. Users can then "cancel" the transaction sent to the incorrect cryptocurrency wallet address, the Israeli company said in a press release:

"Our goal is to make Blockchain transactions as simple and secure as online banking," said Asaf Naim, CEO of Kirobo.

The logical layer of the protocol works by providing a unique transaction code that must be entered by the recipient to receive funds from the sender. Until the recipient enters the correct code, the sender can recover the funds at any time. Loss of funds can occur and occurs when the sender makes a mistake in the long string of alphanumeric characters that make up cryptocurrency addresses.

Kirobo quoted a survey that showed that 18% of respondents said they lost funds due to such sending errors. A way to reduce transaction risk can help encourage new cryptocurrency users.

The startup has said that it does not hold or store the user's private keys, and the unique code simply indicates whether the transaction will be finalized. This feature can also work offline in the event of Kirobo servers crashing.

Technical Market Outlook:

The BTC/USD pair has made a new local high at the level of $9,240, but bulls had hit the technical resistance located at the level of 9,238, so the price pulled-back towards the level of $9,138 (previous local technical support). If the intraday support located at the level of $8,971 is clearly violated, the odds for another low are high. The momentum is still weak and negative, but keeps hovering around the level of fifty, which is a neutral level for the momentum indicator. The next target for bears is seen at the level of $8,565, but in a case of an upside breakout, the next target for bulls is seen at the level of $9,290 (technical resistance level).

Weekly Pivot Points:

WR3 - $10,465

WR2 - $10,072

WR1 - $9,509

Weekly Pivot - $9,126

WS1 - $8,593

WS2 - $8,191

WS3 - 7,623

Trading Recommendations:

The larger time frame trend remains down and as long as the level of $10,791 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred until the level of $10,791 is clearly violated. The key mid-term technical support is located at the level of $7,897.

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Gold price remains inside bullish channel

Gold price has pulled back towards $1,758 from $1,788 highs. In our last analysis bulls were warned that price was at overbought levels and the RSI was giving us warning signs of a coming pull back.

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Red lines -bullish channel

Gold price remains inside the upward sloping channel. Trend remains bullish. Price has found support at the lower channel boundary and so far seems to respect it. This is important for the short-term trend. As long as price is above $1,758 we expect price to continue higher towards $1,800. If support fails to hold we should see selling pressures increase. This could lead to a pull back towards $1,740-20 area.

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Technical Analysis of ETH/USD for July 2, 2020:

Crypto Industry News:

The European Innovation Council (EIC) has allocated € 5 million to six Blockchain initiatives under the Blockchains for Social Good program. Announcing the news, the EIC noted that the award aims to promote the development of Blockchain in the areas of traceability, fair trade, financial inclusion and a decentralized circular economy.

The awarded startups are the WordProof Dutch content authentication company, the British PPP startup, the Finnish GMeRitS, the UnBlocked Cash Project OXBBU, the French electronic commerce platform CKH2020 and the Italian project PROSUME digital market. All winners presented their projects in open source, which was one of the requirements. This will allow more innovators to use advanced technological solutions developed by winners and other participants.

According to the announcement, since the opening in May 2018, a total of 176 participants have applied for the program. The applications came from 43 countries, of which 19 came from outside the European Union. The program closed on September 3, 2019, and initially aimed to allocate EUR 1 million to five projects in five different areas of social innovation. The EIC eventually decided to finance six projects, extending the scope of the prize to six different areas and dividing it equally, the organization explained.

Technical Market Outlook:

The ETH/USD pair has retraced 50% of the last wave down and made a new local high at the level of $232.20. Nevertheless, the is a another Doji candlestick pattern made at the top ot the move, which indicates a possible reversal of the local up trend. Currently, the market is testing the short-term trend line support around the level of $227, but if the intraday support located at the level of $221.31 is clearly violated, the odds for another low are high as the momentum is still weak and negative. The next target for bears is seen at the level of $209.89.

Weekly Pivot Points:

WR3 - $273.84

WR2 - $260.74

WR1 - $240.04

Weekly Pivot - $227.40

WS1 - $206.35

WS2 - $194.36

WS3 - $173.30

Trading Recommendations:

The larger time frame trend on Ethereum remains down and as long as the level of $288 is not violated, all rallies will be treated as a counter-trend corrective moves. This is why the short positions are now more preferred. The next key technical support is seen at the level of $174.82.

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Dollar continues to be strongly dependent on COVID-19 (data on employment in the US is expected to be published)

Everything is still the same in the currency market. Nothing special happens, as investors simply do not show noticeable activity due to conflicting, mutually exclusive factors that are still not going away.

First of all, this, of course, is the situation around the coronavirus pandemic in the USA, where a surge of infected COVID-19 was recorded in June as a result of protests by the Black population. This factor has supported and continues to support the dollar against major currencies. Secondly, the obvious recovery of the US economy, as well as the Chinese and European ones, in the wake of large-scale stimulus measures from the Fed and the Ministry of Finance, puts pressure on the exchange rate of the American currency. While these two factors are balanced, you should not expect noticeable changes in the market.

On the other hand, important economic data in America came out on Wednesday in a positive light. The ISM Manufacturing Sector Index (PMI) in June broke into the expansion zone, rising above 50 points to 52.6 points. The manufacturing price index also jumped to 51.3 points.

In the wake of these data, US major stock indexes closed mixed, and the dollar declined against major currencies with the exception of the yen and the franc. Such dynamics can be explained by the continuing hopes in the market that the US economy will add in the second half of the year, despite the global deterrent to coronavirus infection. Today, the focus of market players will be the publication of employment data in America. They come out on Thursday, and not traditionally on Friday because of the holiday of July 4 - Independence Day.

According to the forecast, the US economy received 3,000,000 new jobs in June compared to 2,509,000 in May. The unemployment rate is expected to drop from 13.3% to 12.3%. The average hourly wage yoy at the level of 5.3% from 6.7% will also be presented. The monthly value of the indicator should decline even further to -0.7% from -0.1%.

How can the market react to the numbers of economic statistics if they turn out to be higher than expected? The dollar can get support, but only limited, but if they are unexpectedly noticeably worse, then there is a high probability that demand for protective assets, including the dollar, will increase, but, again, its increase will be local for the reasons described at the beginning of the article.

Forecast of the day:

The USD/JPY pair is trading below the level of 107.65. Positive employment data in the United States will push the pair up to 108.15, while the negative ones will put pressure on it, and on this wave, it will rush to the level of 106.50.

The USD/CHF pair is likely to react to the publication of statistics on employment in America. On the positive side, it can grow to 0.9520. On the negative side, on the contrary, it will decline to the level of 0.9385.

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GBP/USD: plan for the European session on July 2 (analysis of yesterday's deals). Pound bulls take advantage of the moment.

To open long positions on GBP/USD, you need:

The speech of British Prime Minister Boris Johnson and his proposed bailout plan worth five billion pounds, as well as the gradual demand for risk after good fundamental statistics on the state of the US economy, supported the pound, which broke through to new highs, continuing the upward correction in the pair with the US dollar. If you look at the 5-minute chart, you will see how yesterday two signals were formed to buy the pound at once. Let's look at them in more detail. In yesterday's review for the second half of the day, I paid attention to strengthening the pound above the support of 1.2386, which was the first signal to buy. The sharp growth of GBP/USD, which took place in the second half of the day, led to a breakout and consolidation above the resistance of 1.2451. Then the top-down test of this level also formed a good entry point into purchases. At the moment, while trading is conducted above the area of 1.2451, we can expect the pound to continue growing to the high of 1.2528, consolidating above which will necessarily lead the pair to a new resistance area of 1.2607, where I recommend taking profits. In the scenario of a decline in GBP/USD in the first half of the day, forming a false breakout at the level of 1.2451 will be a signal to open long positions. If bulls are not active in this range, it is best to postpone purchases until the larger area at 1.2386 is updated, which is where all the growth occurred yesterday. Moving averages also pass at this level, which will be another incentive for traders. Let me remind you that the Commitment of Traders (COT) report for June 23 recorded another increase in short positions, which no longer reflects the current situation on the market. The new report will not be available until next Monday. There was an increase in short non-commercial positions from the level of 45,376 to the level of 48,170 during the week. Long non-commercial positions rose from the level of 29,379 to the level of 29,654 during this time. As a result, the non-commercial net position increased its negative value to -18,516, against -15,998, which indicates that pressure in the market remains after the bulls' unsuccessful attempt to reverse the downward trend.

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To open short positions on GBP/USD, you need:

Sellers of the pound tried to reverse the upward momentum at the beginning of the US session, but nothing good came of it, which caused the pound to grow once again. The bears also failed to protect the level of 1.2451, which needs to be returned to the pair today in the morning. Consolidating below this range will be a signal to open short positions while expecting the downward correction to resume to the area of a low of 1.2386, where I recommend taking profits. In the scenario of further growth of GBP/USD, it is best to postpone sales until a false breakout is formed at the level of 1.2528. But you can safely open short positions immediately for a rebound after testing the high of 1.2607, which can take place after the release of good fundamental data on the US labor market.

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Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates further growth of the pound and the formation of a new trend.

Note: the period and prices of moving averages are considered by the author on the hourly chart (H1) and differ from the general definition of the classic daily moving averages on the daily chart (D1).

Bollinger Bands

The pound's growth will be limited by the upper level of the indicator in the area of 1.2528, the breakout of which will lead to a new bullish momentum. If the pair declines, you can open long positions immediately on a rebound from the lower border of the indicator in the area of 1.2386.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial traders are speculators, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.
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Kiwi trying to test 1.3715 level, July 02, 2020

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On the 4-hour chart, we can see that USD/CAD is likely to break through the 1.3715 level, its nearest liquidity pool. This pair may also decline (Red Line). The Kiwi may grow if the pair does not drop and close bellow the 1.3545 level.

(Disclaimer)

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Trading plan for EURUSD for July 02, 2020

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Technical outlook:

EURUSD rallied yesterday to find resistance around 1.1275 level. The single currency pair is seen to be trading around 1.1250 level at the time of writing and is preparing to break below 1.1167 low. It has been drifting sideways within a potential triangle consolidation since 1.1167 low, and might terminate at 1.1275 yesterday. Immediate resistance is seen at 1.1350, followed by 1.1422, while interim support is seen at 1.1167 respectively. EURUSD is expected to drop towards 1.1000 and further as highlighted on the chart here. Trading point of view, it is good to sell on rallies, with risk above 1.1422.

Trading plan:

Remain short, stop @ 1.1422, target @ 1.1000 and lower.

Good luck!

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Forecast for EUR/USD on July 2, 2020

EUR/USD

The euro repeated the scenario of the previous day on Wednesday - it reached the range of target levels 1.1195-1.1265 with small punctures in both directions. The difference was that it ended yesterday with an increase of 18 points against a slight decline on Tuesday. This difference has somewhat strengthened the euro's growing potential. The Marlin oscillator has yet to show signs of growth on the daily chart .

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Consolidating the price above 1.1265 may entail further growth to the level of 1.1385. A more reliable price move below 1.1195 will open a bearish target at 1.1103. This market behavior is probably associated with insufficiently strong data on the US economy. In the private sector, 2,369,000 jobs were created in June against the expected 2,850,000. The US Manufacturing ISM report on business (ISM Manufacturing PMI) grew to 52.6 in June from the May reading of 43.1 points, but by the end of the day, the Dow Jones stock index fell by - 0.30%, while the S&P 500 grew 0.50%.

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The price consolidated above the MACD indicator line and the Marlin oscillator went into the positive trend zone on the four-hour chart - prerequisites are created for a price breakthrough upwards.

Data on employment and industrial orders will be released earlier since the US will be celebrating a holiday on Friday. We are expecting 3,037,000 new jobs in the non-agricultural sector in June (Non-Farm Employment Change) after 2,509,000 in May, the unemployment rate is expected to decrease from 13.3% to 12.4%. The volume of production orders (Factory Orders) for May is projected at 8.6% against the April collapse of -13.0%. If the forecasts come true, the euro can be returned under the indicator lines, because growth has not yet been formed, there are only technical prerequisites for this. If the price drops below 1.1195, we expect a further decline to 1.1103.

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Forecast for AUD/USD on July 2, 2020

AUD/USD

Due to the general weakening of the US currency, the Australian dollar closed the day by gaining 12 points, and the price was consolidated above the level of 0.6900 - the daily candle opened and closed above this level.

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But the Marlin oscillator has not yet left the negative trend zone, it is slightly turning down, which, under additional external circumstances (fundamental factors, news), could return the price to 0.6900, and the potential growth to 0.7080 will not take place. Consolidating the price below 0.6900 will make the 0.6680 target relevant again. The situation is likely to be resolved with the release of US employment data.

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The price has consolidated above the indicator lines of balance and MACD on the four-hour chart, while Marlin is in the growth zone, the trend is up. The price needs to go below the signal level of 0.6842 to reverse this trend, around 70 points. In addition to breaking up the price, you need to go above a fairly high level of 0.6976, which is 60 points from the current price. The situation is largely speculative - whether American investors would want to launch an attack on counter-dollar currencies before their national holiday, Independence Day, which is tomorrow.

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Forecast for USD/JPY on July 2, 2020

USD/JPY

The dollar lost 43 points against the yen on Wednesday, gaining a foothold at a signal level of 107.53. The 107.00/10 target opened as a range of supports on two-scale charts - the daily and four-hour: this is support for the embedded price channel line at 107.10 on the daily, and support for the MACD line at 107.00 on the four-hour.

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The price fell below the balance line on the daily chart - the price balance shifted lower, the price is above both indicator lines on the four-hour chart, but the Marlin oscillator is in the negative zone. However, the price is trying to go above the signal level of 107.53. This situation could be resolved with the release of data on employment in the United States, but the ambiguity of indicators can further confuse this situation. Investors will have to unravel it as early as next week, since tomorrow it is a public holiday tomorrow in the United States. Growth Potential - Target at 108.35.

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USDCAD testing upside confirmation, potential upside!

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Trading Recommendation

Entry: 1.3618

Reason for Entry: Horizontal pullback resistance

Take Profit :1.3716

Reason for Take Profit: The horizontal swing high

Stop Loss:1.3554

Reason for Stop loss: Horizontal overlap support

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AUDUSD holding above ascending trendline support! Further push up expected!

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Trading Recommendation

Entry: 0.69156

Reason for Entry: Market entry

Take Profit: 0.69436

Reason for Take Profit: 78.6% Fibonacci extension, recent swing high

Stop Loss: 0.69027

Reason for Stop Loss: 61.8% Fibonacci retracement, ascending trendline support, moving average support

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