Will the dollar continue to fall in August? (a local correction of the EUR/USD pair and the growth of the AUD/USD pair are

At the end of July, the US dollar lost noticeably against the main currencies, although it had already declined for two months before that against the basket of major currencies. The ICE dollar index also fell to its lowest level in September 2018 and is likely to continue its decline.

Earlier, during the outbreak of the coronavirus pandemic in the world, the dollar received support due to the demand for the US currency as a safe haven currency, as well as for gold, the Japanese yen, the Swiss franc and government bonds of economically strong countries of the world. Its increase was also stimulated by the most powerful sell-offs of risky assets in February and March of this year. But by the end of spring and summer, the situation had changed radically. However, in the hopes that COVID-19 vaccines will be invented by the fall, demand for company shares began to grow, of course, not for all, but only for those that were able to work actively during the period of self-isolation. This applies primarily to online retail, computer software manufacturers, entertainment, and the like.

The strongest blow for the dollar was the unprecedented measures taken by the US Treasury and the Federal Reserve to support the economy and citizens.

Amid these events, the dollar began to lose its function as a safe-haven currency and was transformed into a funding currency. Something similar happened to it in 2009-11, when, after the crucial stage of the crisis, the American regulator began to implement quantitative easing measures to stimulate economic growth.

In addition, news about the early introduction of vaccines against COVID-19 into mass production became negative for the dollar. It is already clear that no matter how effective they are, more effective or less, this factor will become another event that will cause failure for a strong dollar. As before, we believe that the global weakening of the US currency will continue, which in fact is quite consistent with the desire of the American authorities and the government's financial bloc, as it will help a more efficient and faster recovery of the national economy. Against the background of the "weak" dollar, American goods will be more competitive in world markets, and this is exactly what the United States needs now.

This week, the market will focus on the publication of important production data from America, the decision on the monetary policy of the RBA and the Bank of England, as well as the values of employment in the US. First of all, investors will closely follow the American statistics, since its problems are too noticeably reflected in the dynamics of world markets in general and in the currency market in particular.

Forecast of the day:

The EUR/USD pair is trading below 1.1785. It may continue to correct down 23% Fibonacci to 1.1640 if it does not rise above this level. Growth limiting factor may be the expectation of important data on employment in America, which will be published this week. At the same time, the price increase above the level of 1.1785 will stimulate local growth to 1.1950.

The AUD/USD pair found support amid strong data on the Chinese economy, which showed a rise in manufacturing business activity in July. If the pair holds above the level of 0.7180, its local growth to 0.7200 with the prospect of rising to 0.7260 should be expected.

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Analysis and trading recommendations for the EUR/USD and GBP/USD pairs on August 3

Trading recommendations for the EUR / USD pair on August 3

Analysis of transactions

The first signal for the bottom of the euro at the price level of 1.1895 did not lead to a rise, but the sell signal, which arose after the price reached the level of 1.1862, turned out more profitable since such led to a fall to the level of 1.1825, the entry points of which are clearly visible in the chart.

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The European currency declined on Friday due to a larger contraction of the Eurozone economy in the second quarter, as well as on the recently released good data on US spending, which only strengthened the position of the dollar against the euro.

  • Thus, today, open buy positions when the quote reaches the level of 1.1803 (green line on the chart), targeting a rise to the level of 1.1862. Good data on manufacturing activity in the eurozone will help raise demand for the European currency. Take profit at the level of 1.1862.
  • Sell positions after the quote reaches the level of 1.1763 (red line on the chart), targeting a drop to the level of 1.1719. But before selling, wait for the report on manufacturing activity in France and Germany, as only poor data will lead to a decreased demand for the European currency. Take profit at the level of 1.1719.

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Trading recommendations for the GBP / USD pair on August 3

Analysis of transactions

The movement towards the level of 1.3140, gave about 25 points of profit, after which the GBP / USD pair turned around and began to decline amid profit-taking of large players, which usually occurs at the end of the month.

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The main reason for the recent rise of the pound is the decreasing demand for the US dollar amid problems in the United States. Traders are not yet very concerned about the Brexit trade agreement and the likelihood of its conclusion.

  • Buy positions when the quote reaches the level of 1.3113 (green line on the chart), aiming a rise to the level of 1.3167 (thicker green line on the chart). However, such a scenario can only happen if data on manufacturing activity in the UK turns out positive. Take profit at the level of 1.3167.
  • Sell positions after the quote hits the level of 1.3070 (red line on the chart), a breakout of which will lead to a rapid intraday decline in the British pound. Weak data on manufacturing activity in the UK will also contribute to it. Take profit at the price level of 1.3023.

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Indicator analysis. Daily review on GBP / USD for August 3, 2020

The pair continued its upward movement on Friday and tested the target level of 161.8% at 1.3160 (blue dashed line). It somehow closed the day well below 1.3086. Today, the price is likely to resume its downward movement. Economic calendar news for the pound is expected at 08:30 UTC, and for the dollar at 14:00 UTC.

Trend analysis (Fig. 1).

The market may move downward from the level of 1.3086 (closing of Friday's daily candle) with the target at 1.3036 - a 14.6% pullback level (red dotted line). If this level is reached, the downward movement may continue with the next target of 1.2953 - a 23.6% pullback level (red dotted line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - down;

- Weekly chart - down.

General conclusion:

Today the price may move downward with the target of 1.3036 - a 14.6% pullback level (red dotted line). If this level is reached, the downward movement may continue with the next target of 1.2953 - a 23.6% pullback level (red dotted line).

Another possible scenario is from the level of 1.3086 (closing of Friday's daily candle) the price may move downward with the target of 1.3036 - a 14.6% pullback level (red dotted line). Upon reaching this level, an upward pullback is possible with the target at the upper fractal 1.3170 (red dashed line).

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Indicator analysis. Daily review on EUR / USD for August 3, 2020

The pair traded upward on Friday and tested the historical resistance level 1.1910 (blue dotted line) then the price went down. Today the price may continue to move down. Economic calendar news for the euro is expected at 07:55 UTC, and for the dollar at 14:00 UTC.

Trend analysis (Fig. 1).

The market may continue to move downward from the level of 1.1781 (closing of the Friday's daily candle) with the target at the support line 1.1723 (black bold line). If this level is reached, the downward movement may continue with the next target at 1.1656 - a 23.6% pullback level (red dashed line).

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly chart - down.

General conclusion:

Today the price may move downward aiming at the support line 1.1723 (black thick line). If this level is reached, the downward movement may continue with the next target of 1.1656 - a 23.6% pullback level (red dashed line).

Another possible scenario is upon reaching the support line 1.1723 (black bold line), the price may resume moving upward with the target at the upper fractal 1.1910 (red dotted line).

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The USD Index Price Movement On August 03, 2020.

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The USD Index is now trying to reach the 92.54 level, but there will be an upward retracement first before the index is heading toward 92.54. As long as the USD Index is not going up and closes above the 94.50, then the down movement will continue.

The overall bias of the USD Index is bearish.

(Disclaimer)

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Brief trading recommendations for EUR/USD on 08/3/20

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The EUR/USD currency pair has been following the rising channel for almost three weeks, changing the slope every now and then, but everything changed last Friday. For the first time in a long time, a correctional move appeared, which set a reverse movement from the level of 1.1900 towards 1.1740, that is, locally breaking through the lower border of the yellow channel.

The weakening of the European currency is associated not only with the technical fact of overbought (long-term strengthening), but also with fundamental analysis.

During the Friday afternoon, there was a wide flow of economic news from Europe, where the first estimate of an important indicator of EU GDP (Gross Domestic Product of the European Union), for the second quarter was published.

EU GDP year on year, shrinks by -15.0%

EU GDP qoq, shrinking -12.1%

This economic indicator, like GDP, expresses the value of all goods and services sold in the euro area for a specified period. They indicate the trend of economic development, its growth or contraction. The growth of the indicator indicates the strengthening of the European currency, while the decline in GDP indicates weakening.

Based on the published GDP indicators, we see that the EU economy is going through hard times, and this affects the rate of the euro.

Regarding the current development of the quote, a downward movement can be seen, where the quote managed to return within the blue trend lines, which had previously interacted with market participants in history.

For the technical analysis, in this case, we consider two possible developments of the quote at once:

The first option is based on the fact that the overbought rate of the European currency is still at a high level, which means that the corrective move can still hold on to the market. In this case, you should enter sell positions below 1.1740, in the direction of 1.1715-1.1650.

The second option considers a rebound from the blue trend lines, thereby resuming an upward trajectory. In this case, you should enter a buy position above 1.1800, in the direction of 1.1850-1.1900.

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Technical Analysis of GBP/USD for August 3, 2020:

Technical Market Outlook:

The GBP/USD pair has made a new swing high at the level of 1.3169 and is continuing to make higher highs. The up trend is developing despite some local pull-backs. The next target for bulls is seen at the level of 1.3199 and the nearest technical support is located at the level of 1.3067, 1.3047 and 1.3017. The market conditions are now extremely overbought, so the bears might push the prices towards this levels during a pull-back. The key short-term technical support is located at the level of 1.2869.

Weekly Pivot Points:

WR3 - 1.3655

WR2 - 1.3405

WR1 - 1.3252

Weekly Pivot - 1.2996

WS1 - 1.2877

WS2 - 1.2627

WS3 - 1.2492

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 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).

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Technical Analysis of EUR/USD for August 3, 2020:

Technical Market Outlook:

The EUR/USD pair has made a new swing low at the level of 1.1908, but the Bearish Engulfing candlestick pattern was made at the top of the move. The market has returned then below 61% Fibonacci retracement on weekly time frame chart (seen at 1.1822) and is now back in the ascending main channel. The momentum is neutral and the market is coming off the overbought conditions, so the next target for bears is seen at the level of 1.1655 - 1.1629. If the market hits this level, then the healthy correction is completed and the up trend might be resumed.

Weekly Pivot Points:

WR3 - 1.2175

WR2 - 1.2036

WR1 - 1.1886

Weekly Pivot - 1.1756

WS1 - 1.1625

WS2 - 1.1507

WS3 - 1.1369

Trading Recommendations:

The EUR/USD pair confirmed the up trend, so all pull-backs and corrections should be used to acumulate the EUR. The next targets in the long-term are seen at the levels of 1.2000 - 1.2089. There is no indication of any bigger correction to come, so all the dips should be bought until the level of 1.1347 is clearly violated.

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Technical Analysis of ETH/USD for August 3, 2020:

Crypto Industry Outlook:

On July 30, Twitter released a note revealing how hackers gained access to its internal network and account management tools during the recent attack.

It also gave details of the additional measures taken to improve security since the hack resulted in 12 Bitcoins being obtained by attacking the accounts of celebrities and crypto companies on the portal. The news confirms that Twitter was the victim of a social engineering attack, which led to voices that the hack may have been an internal act.

According to the report, the July 15 incident started with a spear-phishing attack to obtain network access credentials:

"Not all of the employees initially targeted were authorized to use the account management tools, but the attackers used their credentials to gain access to our internal systems and obtain information about our processes."

The attackers then used this knowledge to attack other employees who had access to the account maintenance tools.

Responding to reports where more than 1,000 employees had access to administrative tools, Twitter explained that it has employed people around the world helping with the accounts. However, access to the tools is strictly restricted and only granted for legitimate business reasons. Since the attack, Twitter has restricted access even further and will continue its ongoing education program on the dangers of phishing attacks.

During the hack, the attackers accessed 130 Twitter accounts, tweeted 45 of them, got into the message inbox of 36 users, and downloaded data from 7 Twitter accounts.

Technical Market Outlook:

The ETH/USD has fell to the level of $324.70 from the new swing high made at the level of $413.89. The reason for this drop was a Flash Crash event on BTC markets performed on various exchanges. After the Flash Crash, the market bounced towards the level of $384.88. For now the price is trading inside of a narrow horizontal range located between the levels of $355.24 - $384.88, but the up trend is still being continued. The next target for bulls is seen at the level of $500. The key short-term support is seen at the level of $300.

Weekly Pivot Points:

WR3 - $532.98

WR2 - $470.84

WR1 - $423.16

Weekly Pivot - $365.99

WS1 - $312.04

WS2 - $255.55

WS3 - $208.47

Trading Recommendations:

Due to the violation of the level of $351, Ethereum is now in the up trend on the long-term time frame. The next target for bulls is seen at the level of $500. The key long-term technical support is located at the level of $86.10, but the zone around $300 - $308 is an important technical support as well.

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Elliott wave analysis of GBP/JPY for August 3, 2020

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GBP/JPY broke above resistance at 137.85 as was nothing there to protect the upside. With the break above 137.85, we are looking for a test of the former peak at 139.80. This resistance might be able to halt the rise temporary, but it should only be a matter of time before the pair moves higher to 144.29 and to 148.32.

R3: 139.80

R2: 139.20

R1: 138.75

Pivot: 138.30

S1: 137.92

S2: 134.43

S3: 136.93

Trading recommendation:

We are long GBP from 135.48 and we will move our stop higher to 136.50

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Elliott wave analysis of EUR/JPY for August 3, 2020

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EUR/JPY continues to follow the expected bullish path higher. After a minor sideways consolidation, we should see a continuation higher to resistance at 125.58 and possibly slightly above near 125.82 before a new short term correction sets in. In the longer-term, we continue to look for a rally higher at least to 129.26.

Support is now seen in the 124.23 - 124.35 area, which ideally will protect the downside for the rally higher to 125.58.

R3: 125.82

R2: 125.58

R1: 125.06

Pivot: 124.35

S1: 124.23

S2: 123.86

S3: 123.40

Trading recommendation:

We are long EUR from 123.35 and we will move our stop higher to 123.85. We will take profit on 50% of our long position at 125.50

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EUR/USD price movement, August 03, 2020.

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EUR/USD is now trying to break through the Liquidity Pool at the 1.1909 level. However, before Fiber breaks through the Liquidity Pool at 1.1909, the pair will decline first. This scenario is likely to come true if the pair does not close bellow the 1.1699 level.

The overall bias for EUR/USD is bullish.

(Disclaimer)

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Technical Analysis of BTC/USD for August 3, 2020:

Crypto Industry Outlook:

On Sunday Bitcoin and Ethereum fell 12% and 20% respectively in about 6 minutes during Flash Crash. Over $ 1 billion in positions have been liquidated.

According to Bybt market data, over 72,422 traders have liquidated in the last 24 hours. The largest single $ 10 million liquidation occurred on BitMEX. As Bitcoin and Ether marked new heights, many of the top 20 altcoins saw impressive gains. XRP grew 19.7%, Stellar Lumens (XLM) grew 13.25% and Dogecoin (DOGE) 12.93%.

According to CoinMarketCap, the total cryptocurrency market capitalization currently stands at $ 338.3 billion. Bitcoin's domination index is 61.5%.

Technical Market Outlook:

The BTC/USD pair has dropped from $12,035 to $10,494 during the Flash Crash and then bounced to the level of $11,317. The level of $12.035 is the new yearly ATH, so the market sentiment is clearly bullish. Currently, the market trades around the level of $11,000 in a narrow zone located between the levels of $10,895 - $11,317. Any violation of either of those levels will indicated a possible direction for the nearest future. Please notice the neutral momentum that support the sideways view for the market during the next 24 hours.

Weekly Pivot Points:

WR3 - $14,325

WR2 - $13,003

WR1 - $12,116

Weekly Pivot - $10,976

WS1 - $9,784

WS2 - $8,681

WS3 - $7,717

Trading Recommendations:

Due to the level of $12,000 violation, the Bitcoin is now in the up trend on the long-term time frame. The next target for bulls is seen at the level of $13,712 and $15,000. The key long-term technical support is located at the level of $7,897, but the zone around $9,500 - $10,500 is an important technical support as well.

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Analytics and trading signals for beginners. How to trade the GBP/USD currency pair on August 3? Plan for opening and closing

Hourly chart of the GBP/USD pair.

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For the GBP/USD currency pair, the technical picture remains more clear and unambiguous. There is an upward trend line that continues to support traders who are trading higher. There was no attempt to go below this trend line, and all corrections of the pair occur above it. On Friday, one of these corrections began. The MACD indicator turned down (shown in the illustration with a red circle), which served as a signal to move down. We do not recommend that novice traders open trades against the trend. Thus, it will be possible to sell the pair no earlier than breaking the trend line, which will be a signal to change the trend to a downward one. At the same time, you need to wait for the completion of the current correction and the resumption of upward movement, which can again be worked out.

On Friday, as throughout the past week, there was not a single important macroeconomic report in the UK. Thus, novice traders could only analyze information coming from America. On Friday, there was also little such information. Reports on personal income and spending of Americans are not important reports, as is the report from the University of Michigan on consumer confidence, and in the current situation, when markets often do not pay attention to statistics at all, there was no chance of being worked out. In general, so far, the markets continue to get rid of the dollar on the basis of the epidemiological crisis in America, which may further worsen the economic crisis (-33% of GDP in the second quarter), slow down the economic recovery in the third and fourth quarters. In addition, we would like to draw the attention of novice traders to the fact that mass riots in many cities continue in the United States, as well as there is a serious political crisis caused by the desire of Donald Trump (US President) to be elected for a second consecutive term and an unwillingness to pay attention to more important, national issues. Thus, despite the reversal of the EUR/USD pair down, the pound continues to have an upward trend. Therefore, we continue to consider trading for an increase.

On August 3, the following scenarios are possible:

1) If today during the day the MACD indicator gives a new buy signal (and this may happen in the next few hours), we will recommend buying the pound/dollar pair again with the nearest targets at the levels of 1.3143 and 1.3206. When this signal is generated, the price should be located strictly above the trend line.

2) HOwever, sales, from our point of view, can be considered only after fixing the price below the trend line. In this case, the trend will change to a downward trend and the initiative will go to the sellers. The targets for sales will be the support levels of 1.3008 and 1.2945. The correction against the upward trend is currently continuing, so in general, we can not completely exclude the option of a further fall in the price. On Monday, important events are not included in the US and UK news calendar.

We also recommend that you familiarize yourself with the analysis, trading signals and analysis of transactions for the EUR/USD pair.

What's on the chart:

Price levels of support and resistance – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.

Red lines – channels or trend lines that display the current trend and indicate which direction it is preferable to trade now.

Up/down arrows – show when you reach or overcome which obstacles you should trade up or down.

MACD indicator – a histogram and a signal line, the intersection of which is a signal to enter the market. It is recommended to use it in combination with trend lines (channels, trend lines).

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp reversal of the price against the previous movement.

Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

Analytics and trading signals for beginners. How to trade the EUR/USD currency pair on August 3? Plan for opening and closing

Hourly chart of the EUR/USD pair.

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The EUR/USD currency pair returned to the ascending channel during the last trading day (last Friday), which showed its desire to resume the upward trend, but later resumed the downward movement and again left its limits. We talked about the fact that if the pair return to the channel, a possible new purchase. In principle, a few dozen points could be earned. The first MACD signal down, marked with a circle in the illustration, showed that the pair is again preparing for a downward movement. And after the quotes were again fixed at the end of the hour under the channel, it was possible to re-open short positions with the nearest goals. At the moment, new levels of support and resistance have been formed, which will only operate during today.

On Friday, novice traders should have paid attention to two important reports from the European Union. The first is GDP for the second quarter. Despite the fact that the value of this indicator was inconclusive, that is, it will still be corrected in the future, as practice shows, the final value is unlikely to differ much. Thus, -12.1% compared to the first quarter, this is the figure that we can rely on when analyzing the state of the EU economy at this time. We remind you that in the US, the GDP report showed a drop of 33% in the second quarter, that is, in fact, the economic crisis in the US is three times stronger than in Europe. Immediately everything falls into place. It is immediately obvious why the dollar has been falling in recent weeks. The second important report – the inflation report showed that this indicator accelerated slightly in July, which is a positive factor for the euro currency, as both the ECB and the Fed are aiming for 2% inflation. However, in general, traders did not react to these statistics, because technical factors remain in the first place. After such a long growth of the pair, a correction was necessary and, as we said earlier, on Fridays and Mondays, the markets often trade "against the trend". Based on all of the above, we believe that the downward correction may continue in the coming days. Moreover, there are no really important reports scheduled for Monday.

On August 3, the following scenarios are possible:

1) Purchases are no longer relevant, as the price has left the ascending channel. Thus, in order to trade the euro/dollar pair for an increase, new technical constructions are now needed (trend lines, channels, triangles, and others). Since none of this is currently available, we do not recommend buying the euro currency or doing so at your own risk. A reversal of the MACD indicator up (marked with the second circle) can give a buy signal with the goal of 1.1871.

2) Sales of the currency pair are now much more promising, but the same MACD indicator is preparing to turn up, which means that the pair can start an upward movement in the next few hours. Thus, for new sales of the pair with the goals of 1.1724 and 1.1669, we recommend waiting for the completion of this round of upward correction and using the new MACD signal to sell the pair down.

We also recommend that you familiarize yourself with the analysis, trading signals and analysis of transactions for the GBP/USD pair.

What's on the chart:

Price levels of support and resistance – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.

Red lines – channels or trend lines that display the current trend and indicate which direction it is preferable to trade now.

Up/down arrows – show when you reach or overcome which obstacles you should trade up or down.

MACD indicator – a histogram and a signal line, the intersection of which is a signal to enter the market. It is recommended to use it in combination with trend lines (channels, trend lines).

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp reversal of the price against the previous movement.

Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

Forecast for EUR/USD on August 3, 2020

EUR/USD

The euro fell 67 points last Friday, which formed a divergence with the Marlin oscillator on the daily chart. Apparently, this is the reversal of the single currency, which we have been waiting for several days. The nearest target for the euro is 1.1620. The second target is 1.1490 (March high), the third target is 1.1420 (May high).

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A double divergence has already formed on the 4-hour Marlin chart. The signal line of the oscillator is fixed on the territory of the bears. If the price moves under the MACD line (1.1740), it opens the way to a decline to the first target of 1.1620.

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Forecast for GBP/USD on August 3, 2020

GBP/USD

The pound sterling showed the first black candlestick in the last ten sessions on the daily chart last Friday. It is known from practice that this pattern - a black candlestick after the previous ten white ones (and vice versa) - is often a reversal signal - either to a deep correction or to a trend change. The Marlin oscillator showed a reversal from the overbought zone. This is probably the desire to reach the target level of 1.2912, which coincides not only with the Fibonacci level of 76.4%, but also with the low on December 23, 2019.

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It is noticeable that since the price reached the 1.2912 level on the 4-hour chart, this will result in the price moving under the MACD line, which will become an additional technical factor for a further decline, and the next target at 1.2725 is the 100.0% Fibonacci level, correlating with the February 28 low. We are waiting for confirmation of the British pound reversal. And although the trend is steady upward, it is dangerous to buy.

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Forecast for AUD/USD on August 3, 2020

AUD/USD

The Australian dollar made the last rush to the upper border of the target range of 0.7190-0.7225 and, having turned down, closed the day by losing 50 points last Friday, July 31. The triple price divergence with the Marlin oscillator has fully formed on the daily chart. Now we are waiting for the price to fall to the MACD line, to the 0.6960 level. Pinning the price under the MACD line will launch a medium-term downward trend.

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There is a pronounced price divergence with an oscillator on the four-hour chart. The price consolidated below the balance (red) and MACD (blue) indicator lines - the trend is completely down. We are waiting for the price to break the nearest target level of 0.7070, then we observe the price behavior at the key level 0.6960.

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Forecast for USD/JPY on August 3, 2020

USD/JPY

The dollar jumped 113 points against the yen last Friday. Trading volumes were high - the highest since June 10. The US stock index S&P 500 rose 0.77% on Friday. Visually, it is preparing to storm the pre-crisis high of 3393. It seems that there is not much time left to wait until the S&P 500 resolves the situation, both in the event of a real growth, and in case of a reversal from the area of current levels to a new four to eight-week fall.

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But the dollar-yen pair is growing, the price has already gone above the embedded line of the price channel, the Marlin oscillator has turned vertically upward. The growth target is the price channel line around the 106.80 mark. Here the price will fight the resistance of the MACD line.

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The price has consolidated above the balance and MACD indicator lines on the four-hour chart. The Marlin Oscillator is growing, and it has formed, albeit unexpressed, a triple convergence. We are waiting for further price growth.

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Hot forecast and trading signals for the GBP/USD pair on August 3. COT report. Major players preparing for a strong downtrend.

GBP/USD 1H

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The GBP/USD pair also started to adjust on Friday. However, the correction was very weak, and the upward trend line continues to signal an upward trend. At the moment, the pair has not even managed to get close to the trend line or the Kijun-sen line. Thus, it is extremely early to talk about a change in the trend. By and large, everything remains the same as it was. Buyers continue to dominate the market, and bears continue to rest. Thus, it is still not recommended to consider selling the British currency, since all technical factors indicate that the upward trend is continuing at the moment.

GBP/USD 15M

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Both linear regression channels are still directed upwards on the 15-minute timeframe, so there are no prerequisites for changing the trend direction at the moment. New Commitments of Traders (COT) report on the British currency. Recall that the last COT report for July 15-21 showed that non-commercial traders opened more Sell-contracts than Buy-contracts, however, the British pound continued to grow throughout the reporting period. Friday's COT report showed roughly the same pattern. The "non-commercial" category opened 2,700 Sell-contracts and closed 8,700 Buy-contracts. Thus, the net position for this category of traders has fallen even further, which means that the bearish mood has increased. And we are thinking about the prospects of the British currency for the second consecutive week, since the most professional group of traders have not been buying the pound all this time, and the British currency is growing. We are still inclined to the option that professional traders are preparing for a serious fall in the pound, but will the fundamental background allow it to do so? On the other hand, the fundamental background is not a secret, so we believe that non-commercial traders who enter the market for the purpose of making a profit from trading know what they are doing.

The fundamental background for the GBP/USD pair also remains the same. No important messages have been received from the UK in the past week. The only positive event for the pound is the start of preliminary negotiations on free trade between Washington and London. However, it is already known that the discussion of the deal is just beginning and it is unlikely for the talks to last "a couple of months". Thus, we are still waiting for the moment when traders will remember that the situation in the UK is no less bad than in the United States. We believe that a group of non-commercial traders is already beginning to prepare for a new fall in the British pound. And we recommend that our readers also prepare for a new downward trend. But at the same time, as usual, fundamental hypotheses and assumptions need to be confirmed by technical signals, which are not yet available. The UK is set to publish the index of business activity in the manufacturing sector on Monday. However, this report, as well as a similar American one, is unlikely to cause a serious market reaction. Business activity recovered fairly quickly in all developed countries of the world, even in the United States, where the coronavirus continues to rage. At this time, these are not indicators of the state of the economy. On the other hand, business activity may start to deteriorate again in America, although this will most likely concern the service sector, not manufacturing. Thus, in the near future, we will be very interested in the meeting of the Bank of England and the report on UK GDP for the second quarter.

There are two main scenarios as of August 3:

1) Buyers are still the dominant traders in the pound/dollar market, but at the moment there is a correction. The last target was almost reached, the pair did not have enough to hit it just a few points. Thus, in the event of a rebound from the trend line or the Kijun-sen line, we recommend buying the pound again with the goal of 1.3174. All target levels will be updated today. The potential Take Profit in this case will be about 150 points.

2) Sellers are advised to start considering the possibility of opening short positions with the goal of the Senkou Span B line (1,2707) after overcoming the Kijun-sen line (1,3000) and, accordingly, the upward trend line. Sellers will have a good chance of forming a downward trend below these two barriers. The potential Take Profit in this case is about 250 points.

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Hot forecast and trading signals for the EUR/USD pair on August 3. COT report. Bulls give bears a chance to make money in

EUR/USD 1H

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The euro/dollar pair finally started a more or less noticeable downward movement on the hourly timeframe of July 31. We have specially built a new ascending channel that shows that the pair's quotes have left it. At the same time, buyers released the pair below the critical Kijun-sen line, so we have two factors at once at this time, speaking in favor of a certain downward movement. However, it is premature to conclude that the bulls are completely sated with the pair's purchases. The pair can return to the area above the Kijun-sen line at any time, which will mean the resumption of the upward trend. Thus, traders will have to decide on their further actions and strategies in the coming days.

EUR/USD 15M

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The lower channel of linear regression turned down on the 15-minute timeframe, the correction began, and there are also signs of a downward movement starting on the hourly timeframe. A new report from the Commitments of Traders (COT) report showed a very telling change in the mood of professional traders. The category of non-commercial traders opened 36,000 new Buy-contracts during the reporting week (July 22-28). This category has opened only 3,700 Sell contracts. Thus, the net position increased by 32,000 at once, which is a signal of a firm strengthening of the bullish mood. In principle, we made similar conclusions with you over the past week, as the euro currency continued to grow non-stop. As for other categories of traders, they do not matter now. For example, commercial traders opened 48,000 Sell-contracts, but the euro continued to sharply grow! In total, all major players opened more Sell-contracts, but, as we can see, this factor did not significantly affect the pair's movement during the week. Thus, the report data completely coincided with what is happening in the market.

The fundamental background for the EUR/USD pair did not change at all on Friday. We believe that the euro started to fall solely due to the technical need to adjust and the desire of traders to take part of the profit on long positions. Although a large number of important statistics were published on Thursday and Friday in the United States and the EU. However, it was a failure in every sense of the word in America, and let's say, tolerant in the EU, as for the crisis. Therefore, the fundamental background has not changed in the long term, but we still believe that market participants could already take into account all the current factors and will also be satisfied with the pair's purchases. The European Union, Germany and the United States are set to publish business activity indices for July on Monday, August 3. All these indicators should reach more than 50, and we have no doubt that they will exceed the forecasts. However, in any case, these reports are not extremely important at this time, so it is unlikely to expect a serious market reaction. We believe that technical factors will still come first on the first trading day of the week. Therefore, the correction may continue. However, do not forget to keep track of news on the most important topics. These are the topics of the political, epidemiological, social and economic crisis in the United States. For example, a new increase in the number of daily coronavirus infections in the US could negatively affect the demand for the US currency.

Based on all of the above, we have two trading ideas for August 3:

1) Buyers finally gave the bears a chance to take a breath. Buy orders remain relevant for the target resistance level of 1.1996, but now the bulls need to wait for the pair's quotes to return to the area above the Kijun-sen line (1.1797), which will mean the resumption of the upward trend. The potential Take Profit in this case is about 150 points.

2) Bears have a chance to form a more or less strong downward movement for the first time in a long time. Formally, even now it is possible to open short positions while aiming for the Senkou Span B line (1.1575), but we recommend doing this in small lots, as well as placing a short Stop Loss. The potential Take Profit in this case is about 190 points.

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Overview of the GBP/USD pair. August 3. UK GDP may shrink by 20% in the second quarter. London and Washington have started

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 98.7842

The British pound continues to react to what is happening in the world with much less eagerness than, for example, the euro/dollar pair. We have repeatedly said that if there is no openly failed and negative fundamental background in the European Union, then there is one in the UK. However, the pound has grown no weaker than the euro in recent weeks and has grown by 8 cents since July 1. Just as in the case of the euro, there were almost no corrections over the past month, and last Friday the pullback began, but so far it does not exceed the scale and size of the meager corrections that were in July. So, for now, we can't even say that the pair has started to adjust. Returning to the fundamental background, over the past week, no macroeconomic reports were published in Britain, there was not a single news item on the Brexit negotiations, there was not a single important message from Boris Johnson. Complete calm. However, the lack of news is not generally a positive thing. If the United States has so-called "4 crises", then the UK has its own "3 economic crises". At the very least, they were able to cope with the "coronavirus" in Foggy Albion, although new waves are expected with the arrival of autumn and winter. But while this is not the case, we can only focus on economic problems. And here the situation is not much different from the American one. If in the United States GDP decreased in the first quarter by 5%, and in the second by 33%, then in the UK GDP has been losing billions of pounds in the last 4 years, in the first quarter this figure decreased by 2.2%, and in the second it may lose 20.4%. You will agree that this is also a very large figure, although not as huge as in the United States. But at the same time, we should not forget that the fate of the American economy is in the hands of the White House. If the US government makes the right decisions, the epidemic can be stopped and the economy restored. But this judgment cannot be applied to the UK. Since there will be no "deal" with the European Union with almost 100% probability, and not because Boris Johnson or David Frost are bad diplomats, but because London simply does not want to sign a comprehensive agreement with Brussels. London does not want to make mutual concessions. London does not want to remain dependent on the European Union. Thus, Boris Johnson, who was initially ready to take the country out of the EU through a "hard" Brexit, has not changed his position at all now. Personally, the Prime Minister is not afraid of this option, but he is afraid of the Bank of England, Andrew Bailey and all the economists and businessmen of the Foggy Albion. Because everyone understands that if the UK suffers losses of 70-100 billion pounds annually since 2016 due to Brexit, then after December 31, 2020, when Brexit will be officially completed, and there will be no trade deal with either the European Union or the US, this will be another stronger blow to the British economy. Thus, from our point of view, the British economy will certainly begin to recover in the third and fourth quarters, but the recovery will be weak, and in 2021, there may be a slowdown in the growth rate of the economy. And this is all in a favorable epidemiological situation in the country. If there is a second "wave" of the pandemic, then a new quarantine, a new "lockdown" will be possible. And if the British government is as selfish as in the US, and does not introduce a new quarantine, then this will not save the economy much. An example is America at this time.

At the same time, the situation across the ocean does not change at all. The pandemic in America is slowing down a little, but we can not yet say that the wave of the epidemic is coming to an end. Every day, at least 60,000 cases of diseases are recorded in the United States. Donald Trump, on whom much depends now, continues to conduct polemics and try to "whiten" his reputation. In particular, the US president announced this weekend that China is to blame for high unemployment. "Pelosi and Schumer blocked the necessary unemployment payments. This is so terrible, especially given that they know for sure that it's not the fault of the workers, it's the fault of China!"- Donald Trump wrote on Twitter, not forgetting to "take a ride" on the Democrats. At the same time, there were 14 cases of "coronavirus" among US congressmen and senators.

Based on all the above, it follows that the British pound should stop rampant growth in the near future, because the fundamental background in the UK is now no better than in the United States. At the same time, technical factors also remain extremely important. and they do not yet indicate in favor of changing the trend to a downward one. Thus, we still recommend considering trading for an increase until the pair's quotes are fixed below the moving average.

This week, an important event will finally happen in the UK - the meeting of the Bank of England. However, as with the Fed, no changes in monetary policy parameters are expected by traders, so it is unlikely that the reaction to this event will be strong. However, the speech by Bank of England Governor Andrew Bailey may have an impact on market sentiment. In any case, do not lose sight of this event. Also recently, we often talk about the publication of the report on GDP in the UK for the second quarter, but it is planned only for August 12, that is, not even for this week. As for the United States, the topic of "coronavirus" will continue to be in the first place, which will be supplemented by data on mass riots. Also on Monday and Tuesday, British Foreign Trade Minister Liz Truss plans to meet with US trade representative Robert Lighthizer and hold talks on a future free trade agreement, but, as Truss says, no one is going to rush the negotiations, and there is no clearly set schedule.

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The average volatility of the GBP/USD pair continues to remain stable and is currently 114 points per day. For the pound/dollar pair, this value is "high". On Monday, August 3, thus, we expect movement within the channel, limited by the levels of 1.2967 and 1.3195. Turning the Heiken Ashi indicator upward will indicate the resumption of the upward movement of the pair.

Nearest support levels:

S1 – 1.3062

S2 – 1.2939

S3 – 1.2817

Nearest resistance levels:

R1 – 1.3184

R2 – 1.3306

R3 – 1.3428

Trading recommendations:

The GBP/USD pair started a correction cycle on the 4-hour timeframe. Thus, today it is recommended to wait for the completion of the correction and resume trading for an increase with the goals of 1.3184 and 1.3306. Short positions can be considered no earlier than fixing the price below the moving average with the first goal of the Murray level of "1/8" - 1.2817.

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Overview of the EUR/USD pair. August 3. "American circus" in action. Trump is trying to shift the electorate's attention

4-hour timeframe

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Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 31.4677

The US currency has fallen into the abyss in recent weeks at the rate of almost free fall. Such strong growth of the euro and the pound against the dollar has not happened for a long time. And given the fact that there has been no optimistic news in the European Union and the UK recently, then, as we have repeatedly said, the reason for the fall of the dollar is only the "4 crises" that are raging now in the United States. We have already written about them many times, as well as about the fact that the upward trend can be interrupted at any time. Last Friday, buyers took the first step towards completing the upward trend. A powerful pullback followed and now it is unknown whether traders will want to start buying euros and selling the dollar again? After all, despite the fact that it is now very difficult to find a sphere of life in America where everything would be in order, the euro currency has already risen quite significantly against the dollar. The American currency cannot fall forever! Therefore, we will not be surprised if the dollar rises this week, even though there are no fundamental reasons for this now.

By and large, the past trading week ended as expected. The most interesting macroeconomic report on Friday was GDP in the Eurozone for the second quarter. It turned out that GDP declined by 12.1% in quarterly terms, which is approximately equal to the forecast of -12%. So we can't even say that the numbers were much worse than traders' expectations. The second most important report of the day – EU inflation for July – was even better than forecasts. Core inflation was 1.2% y/y with a forecast of +0.8%, and overall inflation was + 0.4% y/y with a forecast of +0.2%. Thus, we would even conclude that the euro currency had no fundamental or macroeconomic reasons to fall on this day. However, the euro/dollar pair absolutely needed to adjust. And this correction has been brewing for a long time.

The chief newsmaker of recent months and years, Donald Trump, again came under massive criticism from the media. After it became known that the American economy shrank by 33% in the second quarter, which has never happened in the history of the United States, the American president immediately came under a barrage of criticism. In principle, this is logical when the head of state not only rests on his laurels when everything is good in the country, telling people left and right that it is his merit, but also takes responsibility for what is happening when the country is in crisis. Trump, of course, is unlikely to take responsibility for all the types of crises that now exist in the United States, however, the Americans have put the responsibility for what is happening on Trump and the government as a whole. And this is normal and logical. The government is to lead the country. If the results are bad, then the government needs to change. At least in democratic countries, this is true, and the US proclaims itself a democratic country. Thus, the conclusion is self-evident. Trump needs to go. And a chain of inferences, which now sits in the minds of Americans is as simple as ever: Trump has a fight with China - China "took revenge" on the United States with a "coronavirus" - even if there was no targeted revenge, the US government has "missed" all the preparations for the epidemic and are unable to respond effectively - in Europe, they managed to stop the first "wave" - in the United States, no - the EU GDP (for example) decreased by 12% in the second quarter - in America, by 33% - unemployment in the EU increased just a few percent - in the United States, at 7-8% by conservative estimates - the new "wave" of COVID-2019 may lead to new consequences for the economy, even more finishing it - who is responsible for all this? The answer is obvious.

But even this is not the most interesting thing. The most interesting thing is how Trump is trying to "whitewash" himself, to prove to the American people that he is not to blame for everything that is happening, and most importantly – to be re-elected for a second term. Some respected media outlets with a global reputation have noticed interesting patterns in Trump's behavior. As soon as any significant event happens in the United States that "casts a shadow" on the president, the president himself immediately makes a loud statement to distract the attention of the people from negative news. For example, Trump got in touch with a proposal to postpone the presidential election 19 minutes after the Bureau of Statistical Information published -33% of GDP. Earlier, Trump began to inflate the baseless case of "Obamagate", accusing Joe Biden, Barack Obama and other Democrats of dishonest play in the 2016 election, saying they did not want his victory and put all their forces "sticks in the wheels", despite the fact that no evidence of their words. Then, the number of deaths from the "coronavirus" crossed the 80,000 mark. And even if this is a pure coincidence, and Trump's proposal to postpone the election is serious, it does not add points to the president's karma, because his proposal was immediately criticized by everyone, even Republicans, who said that never before in the history of the United States has a presidential election been postponed. In general, "American circus" continues and it is unclear how it can end.

Thus, at the moment, we would say that the US currency has no prospects. Nevertheless, they are there. First, the technical ones. Almost non-stop growth continued on July 1, that is, exactly a month. During this time, the euro rose by 7 cents. For comparison, for the entire 2019 year, with a favorable fundamental background for the dollar, this currency has grown by 2 cents. Thus, traders can expect 200-300 points of correction. Then, secondly, all the current negative fundamental and macroeconomic background has already been played out. It is clear that the longer the epidemic persists in the US, the longer the mass riots continue, the more Trump will "bury" his chances of reelection thanks to absolutely opaque actions and statements, the more likely it is that the fall of the US currency will continue. However, we still believe that first there should be these very reasons for new sales of the US currency. Thus, as long as the price is above the moving average line, we continue to recommend trading on the trend no matter what. It is recommended to consider seriously selling the pair only after overcoming the moving average. But at the same time, we must understand that a correction of 200-300 points down is now very likely. So we must be ready for this option.

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The volatility of the euro/dollar currency pair as of August 3 is 105 points and is now characterized as "high". Thus, we expect the pair to move today between the levels of 1.1673 and 1.1883. The upward reversal of the Heiken Ashi indicator signals the end of the downward correction within the ascending trend.

Nearest support levels:

S1 – 1.1719

S2 – 1.1597

S3 – 1.1475

Nearest resistance levels:

R1 – 1.1841

R2 – 1.1963

Trading recommendations:

The EUR/USD pair has started a long-awaited round of corrective movement. Thus, at this time, it is recommended to continue to consider the possibility of opening purchases with the goals of 1.1841 and 1.1883, but to do this, you need to wait for the Heiken Ashi indicator to turn upward. It is recommended to open sell orders no earlier than when the pair is fixed below the moving average line with the first target of 1.1597.

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Dollar expected to strengthen at the start of the week

Last week EURUSD ended on Friday after profit taking by bulls and some Dollar buying as price pulled back from 1.19 to 1.18. After the break out at 1.14 EURUSD has risen more than 400 pips. There are signs of a coming Dollar bounce EURUSD pull back.

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Yellow rectangle - consolidation range -now support

EURUSD is expected to pull back. Our first pull back target is at the 38% Fibonacci retracement at 1.1620. A sign, that will increase the chances of reaching 1.1620, is if price breaks below 1.17-1.1740 short-term support area. Medium-term trend remains bullish as long as price is above the consolidation area. This gives us hopes of a longer-term upward move above 1.2510.

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USDCAD tests weekly support

USDCAD ended last week around 1.34 finding some support buyers at the end of it moving off the lows at 1.3330. Looking at the weekly chart we observe similar price action the last times USDCAD was trading between 1.33-1.34.

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Yellow rectangle -weekly support

USDCAD has reacted bullishly three times to far at 1.33-1.3350 area. The second time the upward move was smaller than the first time. Last week we saw another weekly long-tail candlestick at 1.33-1.34 area. Expecting this week to start on a positive note for the Dollar, it is important to see if price breaks above 1.35-1.36 area for a bigger bounce. Failure to hold above .13330 will open the way for a move towards 1.30-1.2950.

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Weekly EURUSD analysis

EURUSD ended last week right on top of the major long-term resistance trend line and at important Fibonacci retracement level. As we explained in previous analysis when we were giving 1.18-1.1850 as target for the bounce, we also explained that this would be the most probable area to see the rally pause.

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Green line - major resistance trend line

EURUSD is at a major inflection point. An initial rejection and pull back towards 1.17 is justified. However recovering 1.19 price and staying above 1.18 would be a major win for bulls that could put 1.2130 into play. Trend is bullish. There is no sign of a trend reversal. There are some signs that point to a corrective pull back and another buying opportunity but not at a major top. For now we consider each pull back as a buying opportunity as we could next see 1.2130 before breaking above 1.2510. 1.12 remains key support for the bullish scenario.

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Weekly analysis of Gold

Gold price ended the week at new all time highs at $1,974. Trend is clearly bullish as price is rising in a parabolic shape. It is not wise to go against this trend, but also I would be wise not to get overconfident. A pull back will come, but the long-term weekly break out is real.

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Red line - parabolic rise

Green line - expected path

Gold price is breaking every resistance level it tests and continues to make higher highs and higher lows. Our last bullish signal was given at $1,830 and both $1,925 and $1,964 targets have been achieved. Our next target is at $2,010. The RSI is at overbought levels. A pull back is justified but I would not expect to see a major top forming. The upside in Gold has lots of potential as price has just broken to new all time highs. Unless we see a violent reversal below $1,600, I expect this up trend to continue over the coming months.

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