Fractal analysis for major currency pairs on August 6

Forecast for August 6:

Analytical overview of currency pairs on the H1 scale:

analytics5f2b9e39f2c76.jpg

The key levels for the euro / dollar pair on the H1 scale are: 1.2066, 1.1983, 1.1915, 1.1842, 1.1800, 1.1768 and 1.1693. Here, the price has canceled the development of the descending structure for now and at the moment, we are watching the potential for the top of August 3. The continuation of the upward movement is expected after the breakdown of the level of 1.1915. In this case, the target is 1.1983. There is consolidation near this level. We consider the level of 1.2066 as a potential value for the top. Upon reaching which, we expect a downward pullback.

A retreat into correction is expected after the breakdown of the level of 1.1842. In this case, the target is 1.1800. The range of 1.1800 - 1.1768 is the key support for the top and its passage by the price will encourage the development of a downward trend. In this case, the potential target is 1.1693.

The main trend is the formation of an upward potential from August 3

Trading recommendations:

Buy: 1.1915 Take profit: 1.1980

Buy: 1.1985 Take profit: 1.2060

Sell: 1.1840 Take profit: 1.1800

Sell: 1.1766 Take profit: 1.1705

analytics5f2b9e4f82f69.jpg

The key levels for the pound / dollar pair on the H1 scale are: 1.3299, 1.3226, 1.3175, 1.3104, 1.3066, 1.3036 and 1.2981. Here, the price forms a local potential for the upward movement from August 4. The continuation of the upward movement is expected after the breakdown of the level of 1.3175. In this case, the target is 1.3226. There is consolidation near this level. The breakdown of the level of 1.3226 will lead to a pronounced upward movement. Here, the target is 1.3299. There is consolidation near this level.

A short-term downward movement is possible in the range of 1.3104 - 1.3066. The range of 1.3066 - 1.3036 is the key support for the top and the price passing this level will lead to the cancellation of the upward structure. In this case, the potential target is 1.2981.

The main trend is the local structure for the top from August 4

Trading recommendations:

Buy: 1.3175 Take profit: 1.3224

Buy: 1.3228 Take profit: 1.3297

Sell: 1.3102 Take profit: 1.3066

Sell: 1.3035 Take profit: 1.2981

analytics5f2b9e65b9418.jpg

The key levels for the dollar / franc pair on the H1 scale are: 0.9240, 0.9168, 0.9123, 0.9095, 0.9047, 0.9002, 0.8978 and 0.8903. Here, the price canceled the development of the upward structure and at the moment, we are watching the formation of the potential for the downward movement from August 3. The continuation of the downward movement is expected after the breakdown of the level of 0.9047. In this case, the target is 0.9002. Price consolidation is in the range of 0.9002 - 0.8978. For the potential value for the bottom, we consider the level of 0.8903. The movement to which is expected after the breakdown of the level of 0.8978.

A short-term upward movement is possible in the range of 0.9095 - 0.9123. The breakdown of the last value will lead to a deep correction. Here, the target is 0.9168. This is a key support level for the downward structure.

The main trend is the formation of potential for the bottom from August 3

Trading recommendations:

Buy : 0.9095 Take profit: 0.9121

Buy : 0.9124 Take profit: 0.9166

Sell: 0.9045 Take profit: 0.9010

Sell: 0.8978 Take profit: 0.8905

analytics5f2b9e80745df.jpg

The key levels for the dollar / yen pair on the scale are : 107.99, 107.51, 106.78, 106.19, 105.61, 105.33, 104.91 and 104.21. Here, the price is forming a potential for the July 31 upward cycle. The continuation of the upward movement is expected after the breakdown of the level of 106.19. In this case, the target is 106.78. There is consolidation near this level. The breakdown of the level of 106.80 will lead to the development of a pronounced upward movement. In this case, the target is 107.51. We consider the level of 107.99 as a potential value for the top. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 105.61 - 105.33. The breakdown of the last value will lead to a deep correction. Here, the target is 104.91. Upon reaching which, we expect consolidation and its breakdown will lead to the cancellation of the upward structure from July 31.

The key trend: building capacity for the top from July 31

Trading recommendations:

Buy: 106.20 Take profit: 106.74

Buy : 106.80 Take profit: 107.50

Sell: 105.60 Take profit: 105.35

Sell: 105.30 Take profit: 104.94

analytics5f2b9e9d1845a.jpg

The key levels for the Canadian dollar / US dollar pair on the H1 scale are: 1.3338, 1.3307, 1.3285, 1.3248, 1.3230, 1.3189 and 1.3160. Here, we are following the development of the downward structure from July 30th. The continuation of the downward movement is expected after the price passes the noise range 1.3248 - 1.3230. In this case, the target is 1.3189. For the potential value for the bottom, we consider the level of 1.3160. Upon reaching which, we expect consolidation and an upward pullback.

A short-term upward movement is possible in the range 1.3285 - 1.3307. The breakdown of the last value will lead to a deep correction. Here, the target is 1.3338. This is a key support level for the downward structure.

The main trend is the downward cycle from July 30

Trading recommendations:

Buy: 1.3285 Take profit: 1.3306

Buy : 1.3309 Take profit: 1.3338

Sell: 1.3230 Take profit: 1.3190

Sell: 1.3187 Take profit: 1.3160

analytics5f2b9eb769c01.jpg

The key levels for the Australian dollar / US dollar pair on the H1 scale are : 0.7371, 0.7306. 0.7283, 0.7255, 0.7181, 0.7158, 0.7117 and 0.7078. Here, the price canceled the development of the downward structure, and in this case, we are watching the upward potential from August 3. The continuation of the downward movement is expected after the breakdown of the level of 0.7255. In this case, the target is 0.7283. There is consolidation near this level. A price pass through the noise range of 0.7283 - 0.7306 will lead to a pronounced upward movement. Here, the potential target is 0.7371.

A short-term downward movement is possible in the range of 0.7181 - 0.7158. The breakdown of the last value will lead to a deep correction. Here, the target is 0.7117. This is a key support level for the top.

The main trend is the formation of potential for the top from August 3

Trading recommendations:

Buy: 0.7255 Take profit: 0.7283

Buy: 0.7306 Take profit: 0.7370

Sell : 0.7180 Take profit : 0.7158

Sell: 0.7156 Take profit: 0.7120

analytics5f2b9ee71a0ff.jpg

The key levels for the euro / yen pair on the H1 scale are: 126.32, 125.80, 125.54, 125.11, 124.81, 124.37 and 123.82. Here, we are following the upward structure of July 24. A short-term upward movement is expected in the range of 125.54 - 125.80. The breakdown of the last value will lead to a movement to the potential target of 126.32. Upon reaching which, we expect a downward pullback.

A short-term downward movement is expected in the range of 125.11 - 124.81. The breakdown of the last value will lead to a deep correction. Here, the target is 124.37. This is a key support level for the top.

The main trend is the upward structure from July 24

Trading recommendations:

Buy: 125.55 Take profit: 125.80

Buy: 125.82 Take profit: 126.30

Sell: 125.10 Take profit: 124.84

Sell: 124.78 Take profit: 124.40

analytics5f2b9f15e1e01.jpg

The key levels for the pound / yen pair on the H1 scale are : 140.25, 139.65, 138.95, 138.15, 137.73 and 137.29. Here, we are following the July 17 upward structure. The continuation of the upward movement is expected after the breakdown of the level of 138.95. In this case, the potential target is 139.65. There is consolidation near this level. For the potential value for the top, we consider the level of 140.25. Upon reaching which, we expect consolidation, as well as a downward pullback.

A short-term downward movement is possible in the range of 138.15 - 137.73. The breakdown of the last value will lead to a deep correction. Here, the target is 137.29. This is a key support level for the top.

The main trend is the upward structure from July 17

Trading recommendations:

Buy: 138.95 Take profit: 139.60

Buy: 139.70 Take profit: 140.25

Sell: 138.15 Take profit: 137.80

Sell: 137.70 Take profit: 137.30

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

Indicator analysis. Daily review on GBP / USD for August 6, 2020

The pair traded upward on Wednesday and tested the level of 1.3161 (blue dotted line). Today the price may roll back downward, but much will depend on the news that comes out at 08:30 and 11:30 UTC for the pound, and at 12:30 UT for the dollar.

Trend analysis (Fig. 1).

The market may roll back down from the level of 1.3117 (closing of yesterday's daily candle) with the target of 1.3034 - a 14.6% pullback level (red dotted line). In case of breaking through this level, the downward trend may continue with the next target of 1.2953 - a 23.6% pullback level (red dotted line).

analytics5f2b9d22dc9c9.jpg

Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger lines - down;

- Weekly chart - up.

General conclusion:

Today the price may roll back down with the target of 1.3034 - a 14.6% pullback level (red dashed line). In case of breaking through this level, the downward trend may continue with the next target of 1.2953 - a 23.6% pullback level (red dotted line).

Another possible scenario is after reaching the price level of 1.3161 (blue dotted line) the upward trend may continue with the next target of 1.3287 located at the upper border of the Bollinger line indicator (purple dashed line).

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

Indicator analysis. Daily review on EUR / USD for August 6, 2020

Trend analysis (Fig. 1).

The market may continue to move upward from the level of 1.1865 (closing of yesterday's daily candle) with the target at the historical resistance level of 1.1912 (blue dotted line). There is a possibility that the price may continue to move upward from this level with the next target at 1.2104 - a 76.4% pullback level (blue dashed line).

analytics5f2b96ba2b00a.jpg

Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - down;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly chart - up.

General conclusion:

Today, the market may continue to move upward from the level of 1.1865 (closing of yesterday's daily candle) with the target at the historical resistance level of 1.1912 (blue dotted line). There is a possibility that the price may continue to move upward from this level with the next target at 1.2104 - a 76.4% pullback level (blue dashed line).

Another possible scenario is upon testing the historical resistance level of 1.1912 (blue dashed line) the price may move downward with the target of 1.1801 - a 14.6% pullback level (red dashed line).

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

Analysis and trading signals for beginners. How to trade the GBP/USD pair on August 6? Plan for opening and closing deals

Hourly chart of the GBP/USD pair

analytics5f2ba3b8e9c1c.jpg

The technical picture continues to get confusing for the GBP/USD pair. After the quotes broke the upward trend line, everything spoke in favor of the fact that a new downward trend would begin. Following a series of upward corrections, we expected a downward turn around the 1.3100 level yesterday morning. However, instead, the British pound continued to appreciate as planned. The most interesting thing is that the current situation for the pound is very similar to the euro's situation. Despite the pair's growth in the last two days, a new downward trend is still the most likely option. And this will continue to be the main option until the price overcomes the July 31 high at 1.3169. The pair stopped its growth from the day before around this level.

Today is a very important day for the British currency since the Bank of England (BoE) is set to hold its meeting – the central bank of Great Britain. We remind novice traders that there are only eight such meetings during the year. And each is potentially very important, since the central bank can change certain parameters of monetary policy that affect the entire economy and financial system of the country. At the moment, the BoE key rate is equal to 0.1% - that is, it is at the lowest value. The volume of bond purchases from the open market is 745 billion pounds (quantitative stimulus program). These are two key parameters of monetary policy and traders do not expect any of them to change tomorrow. Thus, we believe that the pound has an excellent chance of falling tomorrow if: 1) the BoE eases monetary policy (lowers the key rate or increases the volume of assets to be repurchased); 2) if the BoE notes a deterioration in the economic situation, it will worsen its GDP forecasts for the next year or two; 3) if BoE Governor Andrew Bailey hints of easing monetary policy during his press conference. If nothing like this happens, this event will have a very indirect impact on the course of trading. At the same time, most traders can begin to work with their assumptions about what actions the BoE can take and what Bailey can say. Therefore, in the morning, the pound/dollar pair can be traded in accordance with the expectations of most traders. We still believe that it is more likely that the pound will fall.

The following scenarios are possible on August 6:

1) Despite the fact that the pound/dollar pair resumed its upward movement, we believe that buying near five-month highs is not the right thing to do. Nevertheless, if the price manages to close for an hour above the 1.3167 level, which passes through the last two price peaks, it will be a signal for new small purchases with targets at 1.3212 and 1.3265.

2) Selling, from our point of view, can already be considered, since the pair rebounded off the resistance level of 1.3162, and the MACD indicator turned down (marked with circles on the chart). Stop Loss order can be placed above the 1.3167 level in case traders ignore the BoE meeting today, all potential bad news from it, or if it presents any pleasant surprise.

What's on the chart:

Support and Resistance Price Levels - Levels that are targets when buying or selling. You can place Take Profit levels near them.

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

Arrows up/down - indicate when you reach or overcome which obstacles you should trade up or down.

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

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a 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 price reversal 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

Analysis and trading signals for beginners. How to trade the EUR/USD pair on August 6? Plan for opening and closing deals

Hourly chart of the EUR/USD pair

analytics5f2ba37233832.jpg

The EUR/USD pair made no attempt to resume its downward movement during the past trading day. We expected a rebound from the 61.8% or 76.4% Fibonacci levels, but instead the upward movement continued, which ended almost near the July 31 high. Therefore, at this point, we can even conclude that the option for a downward movement has been canceled. However, oddly enough, this isn't the case. The downward movement is still almost the main option, since the pair will try to turn around near the July 31 high at 1.1909. Formally, a Double Top pattern can even form (a pattern with two almost identical peaks, after which a downward trend begins). Thus, now, as long as the price does not confidently break the 1.1909 level, we still believe that the option for the pair's fall is working.

From a fundamental point of view, the recent events on the currency market do not fit into any picture for the EUR/USD pair. We have already said that the euro cannot grow forever on the news of the coronavirus epidemic in the United States. Yesterday, the single currency began to strengthen during the night, so all the macroeconomic data that were published during the day did not have much impact on the pair's movement. Of course, we can assume that a very weak ADP report, which reflects how the number of workers in the US private sector has changed (the opposite indicator of unemployment), caused new sales of the dollar, but how can we explain the lack of reaction of traders to the ISM business activity index, marked red in all news calendars, which means a high degree of significance? Thus, we are still inclined to the option that the reasons for the euro's growth on August 3 and 4 do not depend on fundamental factors. Important news was not expected from either the US or the European Union on August 5. Technical factors are much more significant for the pair, namely overcoming or not overcoming the 1,1909 level. If it is overcome, then it will be possible to think about other fundamental events that can support the euro.

The following scenarios are possible on August 6:

1) Purchases are no longer relevant, as the price has left the ascending channel. However, since the euro grew in the last two days, it is possible for the upward trend to resume. Therefore, we recommend novice traders to buy the euro if the price closes at the end of the next hour above the 1.1903 line, which passes through the last two highs. The targets in this case will be the resistance levels of 1.1966 and 1.2026.

2) Selling the currency pair is still more promising now. The price failed to overcome the 1.1903 level, and the MACD indicator turned down (shown by red circles in the illustration), so we already have a sell signal with targets at 1.1802 and 1.1742. Stop Loss order can be placed above the 1.1903 level.

What's on the chart:

Support and Resistance Price Levels - Levels that are targets when buying or selling. You can place Take Profit levels near them.

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

Arrows up/down - indicate when you reach or overcome which obstacles you should trade up or down.

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

Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a 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 price reversal 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

Technical Analysis of ETH/USD for August 6, 2020:

Crypto Industry Outlook:

The launch of the Ethereum Medalla test network, scheduled for 1pm, did not go as smoothly as expected. While the network was successfully launched and offered a sufficient number of blocks at its supposed time of construction, the participation rate was only 57% - well below the expected 80%.

This means that only 57% of the rate is implemented for network validation. This is a serious problem because block finality cannot be achieved until the network starts cutting off validators that are offline. Finality means that the block history is irreversible, which is equivalent to the block confirmation threshold in Ethereum 1.0. According to the developers, this could be because many validators signed up by paying 32 ETH without running the validation software. However, customer issues with Nimbus and Lodestar could account for around 10% of that participation gap, said Danny Ryan of the Ethereum Foundation.

The network is expected to fix the problem on its own as inactive validators are kicked out, however it may take at least several hours to restore the finality. Meanwhile, developers investigate customer issues.

Technical Market Outlook:

The ETH/USD pair has broken out from the narrow range located between the levels of $379.59 - $392.79 and made a new local high at the level of $407.03. For now the price is trading close to the recent ATH, around the level of $400 again and the up trend is still being continued. The next target for bulls is seen at the level of $414 and $425.25. The key short-term support is seen at the level of $300. The momentum is still strong and positive, which supports the short-term bullish outlook.

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.

analytics5f2ba21351e3a.jpg

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

Technical Analysis of BTC/USD for August 6, 2020:

Crypto Industry News:

The Russian Federation has banned anonymous contributions to online wallets as part of an action that will affect 10 million users nationwide.

Online wallets through services such as Yandex, WebMoney, PayPal and Kiwi are very popular in Russia. These services support approximately 10 million users who use their accounts anonymously, topping them up with cash. Some people use these anonymous wallets to buy cryptocurrencies, although the exact numbers are unknown.

Economist Antonina Levashenko, quoted by RBK, believes that these measures will not initially affect the Blockchain space. However, as Russia tightens up anti-money laundering procedures, the existing ban may ultimately also apply to virtual currencies.

Maria Stankevich, EXMO's cryptocurrency exchange business development manager, believes the ban could only affect exchanges that do not take compliance seriously and that would have cause a decline in demand for such services.

Technical Market Outlook:

The BTC/USD market sentiment is clearly bullish as the price has broken out from a narrow zone located between the levels of $10,895 - $11,317. The local high was made at the level of $11,738 on increasing momentum, so bulls are showing their strength. The next target for bulls is of course the last yearly high seen at the level of $12,035. The immediate support for the intraday traders are seen at the levels of $11,646, $11,395 and $11, 317. The volatility is now quite subdued, but it might increase again once any important technical level is tested and broken.

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.

analytics5f2ba0d01bffa.jpg

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

Technical Analysis of EUR/USD for August 6, 2020:

Technical Market Outlook:

The EUR/USD pair has moved away from the 61% Fibonacci retracement seen at the level of 1.1822 and might soon test the recent swing high located at 1.1908. The momentum is strong and positive and the market is coming off the oversold conditions, so the local up trend might be continued for quite some time. In a case of a clear and strong breakout higher, the next target for bulls is seen at the level of 1.2000. The key technical support is still seen at the level of 1.1655 - 1.1648 and the last swing high is located at the level of 1.1908.

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 accumulate 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.

analytics5f2b9f076a33f.jpg

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

Technical Analysis of GBP/USD for August 6, 2020:

Technical Market Outlook:

After the bulls had broken through the short-term trend line resistance located around the level of 1.3080, the GBP/USD pair moved higher towards the recent swing high that was made at the level of 1.3169. Any clear violation of this level will lead to another wave up towards the next target seen at the level of 1.3199 and 1.3282. On the other hand, only a sustained breakout below the level of 1.2980 would change the short-term market sentiment and deepen the correction towards 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).

analytics5f2b9e0de5f30.jpg

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

BCH/USD price movement, August 06, 2020

analytics5f2b7c432e33c.jpg

The Bitcoin Cash vs USD is now moving in a narrow range between 239.80 and 335.88. BTC may try to test the 283.01 level. if this level is broken, the BCH/USD pair will continue to decline. It will test test 239.80. This scenario will come true if BTC does not rise and close above 305.50.

(Disclaimer)

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

Bitcoin Price Movement On August 06, 2020

analytics5f2b7688252ce.jpg

If we look at the 4-hour chart for Bitcoin, we see that the cryptocurrency has been trading sideways in a narrow trading range, although the bullish pressure is still prevailing. This is confirmed by the fact that the price is now moving above the Moving Average. However, there is a potential for BTC to go down as a retracement. This is indicated by the Stochastic Oscillator which has been already at the overbought level. As long as the downward movement does not go lower and the price does not close below the 10,943.80 level, Bitcoin still has prospects to continue its upward movement aiming to test the 12,035.80 level.

(Disclaimer)

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

Elliott wave analysis of EUR/GBP for August 6, 2020

analytics5f2b92356d4e4.jpg

EUR/GBP dipped below support at 0.9001 to test support near 0.8980 and started to take off again. We need a break above minor resistance at 0.9063 to confirm that a corrective low is in place for the next impulsive leg higher through the former peak at 0.9148 to rally towards 0.9193 and ideally closer to the 0.9298 target.

Support is now seen at 0.9021 and again at 0.8980.

R3: 0.9108

R2: 0.9080

R1: 0.9063

Pivot: 0.9034

S1: 0.9021

S2: 0.9006

S3: 0.8980

Trading recommendation:

Our stop at 0.9000 was hit for a nice profit of 354 pips and we are looking to buy EUR again at 0.9025 or upon a break above 0.9063 and we will place our stop at 0.8975 in both cases.

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

Elliott wave analysis of EUR/JPY for August 6, 2020

analytics5f2b8fe16deb7.jpg

EUR/JPY tested a high of 125.52 and should still see a little more upside into the 125.58 - 125.82 resistance area. From this area, the wave iv correction is expected towards 124.65 and maybe even closer to support at 124.29 before turning higher again towards the next upside targets at 127.255 and ideally closer to 129.26.

As long as minor support at 125.12 is able to protect the downside, a final push higher into the 125.58 - 125.82 area is still expected. However, from here or upon a break below the minor support at 125.12, the wave iv correction should be in motion.

R3: 126.13

R2: 125.82

R1: 125.58

Pivot: 125.12

S1: 124.65

S2: 124.29

S3: 123.98

Trading recommendation:

We took profit of 50% of our long position at 125.50 of 215 pips and we will move our stop higher to 125.10 for the final 50% or take profit on the final 50% at 125.75.

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

USDCAD testing downside confirmation, possible drop!

analytics5f2b7e8217d08.jpg

Trading Recommendation

Entry: 1.3258

Reason for Entry: 50% fibonacci retracement, horizontal overlap support,

Take Profit :1.3221

Reason for Take Profit: Horizontal swing high

Stop Loss:74.88

Reason for Stop loss: Horizontal swing low

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

Forecast for EUR/USD on August 6, 2020

EUR/USD

The euro reached a July 31 high on Wednesday, which is also a signal level for continued growth in the 1.2040/55 range. But this scenario - an increase in the price after breaking above the signal level, is complicated by the presence of a reversal divergence with the Marlin oscillator - it could turn double, that is, the signal line will touch the generating line until the price reaches the target range, after which a reversal will occur.

analytics5f2b7dca8e494.jpg

But at the moment, Marlin is already slightly moving down. The probability of the price dropping under the 1.1806 level with a subsequent movement to 1.1620 is higher here.

analytics5f2b7ddd2a188.jpg

The situation is increasing on the four-hour chart - the price is above both indicator lines, Marlin is in no hurry with a reversal. Investors' expectations are clear - after yesterday's weak data on employment in the private sector, investors are waiting for Friday's non-farms for July. The latest ADP Nonfarm Employment Change reached 167,000. In the non-agricultural sector, 1,550,000 jobs are expected to be created.

So, before the release of tomorrow's key indicators for employment in the US, the sideways movement of the euro is likely in the range of 1.1806-1.1909.

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

Forecast for AUD/USD on August 6, 2020

AUD/USD

No matter how hard the Australian dollar tries to break out and grow, it remains constrained within the triple divergence with the Marlin oscillator. The price showed a new high yesterday in the trend from March 19, quickly pulled back from it to support 0.7190 and today, (according to the main scenario) it is ready to go below it with a potential development of the target level of 0.7070. A price break above 0.7240 will extend the rally towards 0.7296 (January 2019 high). This price exit will not prevent a triple divergence, therefore, such a final episode before a turning into a medium-term decline is possible.

analytics5f2b7d3608533.jpg

The price is above the MACD line (indicator blue) on the four-hour chart. To form a primary signal to decline, the price must consolidate below it, that is, go below 0.7175. The signal line of the Marlin oscillator is trying to return to the bears territory, which, of course, will help the price decline further according to the main scenario.

analytics5f2b7d48b1ff1.jpg

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

Forecast for USD/JPY on August 6, 2020

USD/JPY

The dollar against the yen attacked the support of the embedded price channel line on Wednesday, but was only able to pierce it with the lower shadow (daily). It started Thursday above the trend line, which reinforces the bulls' positions. The Marlin oscillator slightly moving up. We can assume that the correction from the July 31-August 3 growth is completed and now the price will head towards the upper target of 106.80.

analytics5f2b7c5fa2aa0.jpg

The price found strong support from the MACD line on the four-hour chart. Growth is coming from it now. The Marlin oscillator is still in a neutral situation - it is moving along the trend line. As soon as the price goes up by another 10-15 points, the signal line of the oscillator turns up. We are waiting for the pair to grow.

analytics5f2b7c71e0eda.jpg

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

Hot forecast and trading signals for the GBP/USD pair on August 6. COT report. Bank of England meeting results may become

GBP/USD 1H

analytics5f2b65aca890d.jpg

The GBP/USD pair also resumed its upward movement on August 5 instead of continuing its downward movement. Thus, consolidating the price below the upward trend line, which we all witnessed, turned out to be a false signal. Things happen. At the moment, the upward trend has resumed, and the pair has reached its five-month highs. It is good that there was no rebound from the Kijun-sen line from below, as this would have been another false signal to sell. Instead, the bulls calmly passed the critical line and are now moving towards the first resistance level of 1.3240. However, the bulls also failed to overcome the previous local high at the 1.3169 level. Therefore, further upward movement is under great question.

GBP/USD 15M

analytics5f2b65c0cf32b.jpg

Both linear regression channels turned up on the 15-minute timeframe, a signal for an upward trend in the most short-term plan. The latest Commitments of Traders (COT) report for the British pound was even more suspicious than the previous one. The 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 during this period. The COT report for July 22-28 showed approximately the same picture. The non-commercial category of traders, which is considered the "engine" of the market, 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 generally means that the bearish mood has increased. It turns out that professional traders have been getting rid of Buy-contracts or opening Sell-positions for two weeks, and the pound has been falling for only a few days and has already managed to win back all the losses. We believe that this behavior of non-commercial traders still indicates that the market is preparing for a new and prolonged fall in the British currency. By and large, this discrepancy between the actions of professional traders and what is happening in the market is called a divergence, which usually warns of a possible change in the trend.

The fundamental background for the GBP/USD pair remained the same on Wednesday, August 5. Great Britain is now completely calm, but today there will be a summing up of the meeting of the Bank of England, which might interest traders. If the British central bank makes it clear that the forecasts for the economy have deteriorated, or the regulator itself is waiting for a slower economic recovery, or is afraid of a new wave of coronavirus, or is seriously considering the option with negative rates, this can all have a very negative impact on the British currency's positions and could push after which the pound/dollar pair will still begin a new long fall. It is also very noteworthy that the pound is growing in the run-up to the BoE meeting, and not, for example, frozen in place, waiting for the results. However, the euro is also growing, so once again we can conclude that the dollar is falling, and so the single currency is not strengthening. However, we still believe that the British currency has completely exhausted its growth potential. Do not lose sight of BoE Governor Andrew Bailey's speech, since he can also tell the markets a lot of interesting things. In general, today will be a kind of judgment day for the pound.

There are two main scenarios as of August 6:

1) Buyers quickly returned the initiative to their own hands. However, they failed to leave the area above the previous high of 1.3169. Thus, we recommend opening new purchases of the British currency no earlier than 1.3169 with the goals of 1.3240 and 1.3400 resistance levels. The potential Take Profit in this case is from 40 to 200 points.

2) Bears missed their chances, but still have the opportunity to start moving down. It is recommended to open new short positions on the pound/dollar pair while aiming for the Senkou Span B line (1.2908) and the support level of 1.2850 in case of price taking below the Kijun-sen line (1.3073). The potential Take Profit in this case is from 120 to 170 points.

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

Hot forecast and trading signals for the EUR/USD pair on August 6. COT report. ADP report: US labor market recovers at a

EUR/USD 1H

analytics5f2b6444b66ad.jpg

The euro/dollar pair broke the scenario that we expected on the hourly timeframe of August 5 and also implied that a new downward trend will form. Instead, the bulls became active again and started active purchases of the euro. The pair has not managed to overcome the support area of 1.1702-1.1727, and so at the moment we can state the resumption of the upward trend. However, not everything is so simple. The upward movement has ended near the resistance level of 1.1911. So now bulls need to overcome this level in order to satisfy their ambitions with that in the near future. A new round of downward correction will begin without this, and at most a new downward trend will begin.

EUR/USD 15M.

analytics5f2b64587a6f1.jpg

Both channels turned back up on the 15-minute timeframe, so now we can talk about the absence of any signs of a new downward trend emerging. The latest Commitments of Traders (COT) report showed a significant increase in bullish sentiment among major 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 (the difference between purchases and sales) increased by 32,000, which indicates a sharp strengthening of the bullish mood. However, this was obvious even without the COT report, since the euro continued to grow non-stop over the past four weeks. As for other categories of traders, their actions in the currency market do not matter much now. Mostly commercial traders opened Sell positions, which did not affect the pair's chart in any way. The most interesting thing now is what will be the actions of professional traders according to a new report that will be released this Friday. The euro began to decline at the beginning of the trading week and it even seemed that a downward trend would begin now. However, on Wednesday, the pair recovered all the losses of the previous days and reached its local and at the same time two-year highs around $1.19. Thus, logically, the mood of professional traders should not have changed. Recall that the next COT report will include data for July 29-August 4. In other words, the rest of this week will not be counted in it.

The fundamental background for the EUR/USD pair remained unchanged on Wednesday. Several new discouraging statements by US President Donald Trump did not cause any market reaction, since participants have long been accustomed to unsubstantiated insinuations of the head of the White House. But there was a fairly important report from ADP in America, which showed that the labor market is recovering at a fairly slow pace. The number of employees in the private sector increased by only 167,000 in July, although traders expected 1.5 million. But fans of the US currency were pleased with the data on business activity in the US services sector. The Markit index was 50 in July (higher than forecasts), and the ISM index, which is considered more important, was 58.1 (higher than forecast). However, the US dollar just passed by these two positive reports. The greenback continued to fall during almost the entire trading day. There will be no important publications in America on Thursday, August 6. The report on applications for unemployment benefits is important, in our opinion, but it is unlikely that the same opinion is now held by the majority of market participants who continue to actively get rid of the dollar. There will be no significant publications in the European Union.

Based on all of the above, we have two trading ideas for August 6:

1) Buyers returned the initiative to their hands again and reached the 1.1911 level. Now, in order to continue making purchases, you need to wait for the price to consolidate above this level. Then we will recommend new purchases while aiming for the 1.2043 resistance level. The potential Take Profit in this case is about 100 points.

2) Bears failed to take their chances. Now the key level for them is the same 1.1911. The downward movement may resume if the bulls fail to overcome it. However, for greater confidence, we recommend waiting for the price to consolidate below the critical line (1.1803) and only then should you open the shorts with the first goal of the support area of 1.1702-1.1727. It is possible to make more sales after overcoming the Senkou Span B line (1.1667). The potential Take Profit in this case is about 50 points.

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

CADJPY looking for short term push up above trendline!

analytics5f2b61d302306.jpg

Trading Recommendation

Entry: 79.522

Reason for Entry: Ascending trendline support, moving average support, 38.2% Fibonacci retracement

Take Profit: 79.905

Reason for Take Profit: 61.8% Fibonacci extension

Stop Loss: 79.364

Reason for Stop Loss: 61.8% Fibonacci retracement

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

Overview of the GBP/USD pair. August 6. The Bank of England is preparing to ease monetary policy this autumn and fears a

4-hour timeframe

analytics5f2b49ab1da9a.jpg

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 93.5062

The British pound also resumed its upward movement yesterday, also failing to overcome the moving average line. And although we still believe that both euro currencies are not growing quite fairly at the moment, nevertheless, the upward trends for both major pairs remain. Therefore, it is necessary to continue trading on the increase now. All doubts about the validity of the growth of the European currency apply to the British pound. To the British currency even more. If things have been relatively calm and good in the European Union recently, there has been no reason to be happy in the UK. Yes, the British economy is unlikely to suffer as much from the "coronavirus" as the American one, however, it will be the most affected among all EU countries. According to experts, the GDP indicator for the second quarter, which will be published next week, will decrease by 20.4% q/q. This is quite enough for the British pound to start experiencing serious pressure on itself. However, while traders frankly ignore this fundamental background, preferring to continue to believe that everything is bad in the United States, in the UK - it does not matter how things are, and continue to get rid of the American currency.

On Wednesday, August 5, the UK published the index of business activity in the service sector, which, as in most European countries, was worse than the forecast value, but significantly higher than the 50.0 mark. Thus, this report did not bring much pessimism to the mood of traders. But the statistics from overseas were completely disappointing. The ADP report on changes in the number of people employed in the private sector showed that in June, their number increased by only 167 thousand, instead of the projected 1.5 million. Thus, the report was extremely weak and could cause additional sales of the dollar, which by the time the report was published had already begun a new round of decline. Indices of business activity in the US services sector no longer played a special role.

Meanwhile, more and more traders are focusing their attention on the Bank of England meeting, the results of which will be known today. According to market expectations, the Bank of England will not change the key parameters of monetary policy. If so, the meeting risks becoming a "walk-through". And only the speech of BA head Andrew Bailey can give traders important information on the basis of which it will be possible to trade and adjust their strategies. Meanwhile, experts from other banks believe that the Bank of England will not make any "body movements" until the beginning of autumn. In the autumn, the second "wave" of the epidemic may begin in the UK, respectively, a new economic downturn will follow, followed by a new increase in unemployment. In addition, in the second half of 2020 and in the first half of 2021, the British economy will face such a problem as a complete break of all trade ties and existing agreements with the European Union. Consequently, this will put additional pressure on the economy, businesses, workers and consumers, and the Bank of England will also be under additional pressure. Thus, in the autumn, according to most bankers, the British regulator may announce the expansion of the asset purchase program by another 100 billion pounds and even lower the key rate.

Many economists also express serious concerns about the "V-shaped" recovery of the British economy. The reason for this is possible new waves of "coronavirus", possible new quarantine restrictions that will again reduce business and economic activity in the country. This can be stated today by the monetary committee of the Bank of England, which can seriously reduce the attractiveness of the pound in the eyes of investors. If additional doubts and concerns about the future of the economy come out of the accompanying statement or from the mouth of Andrew Bailey, this may cause the British pound to fall. The Bank of England's forecasts for GDP, inflation and unemployment for 2020-2021 will also be of great importance. If they are lowered, it will also be bearish factors for the pound.

In America, only the report on applications for unemployment benefits is scheduled for publication today, which in the light of recent weeks, when a high number of new coronavirus diseases were recorded, is again becoming quite important. According to forecasts, the number of initial applications will grow in the week to July 31 by 1.415 million. The number of secondary applications for the week to July 24 will be 16.839 million. Thus, if these forecasts come true, we can conclude that the unemployment rate is slowly decreasing. However, the complex epidemiological situation in the United States may cause a new increase in unemployment in America. Not to mention a new economic downturn.

What do we have in the end? The fundamental picture does not change. Only today, when the results of the Bank of England meeting will be known, it will be possible to hope that the mood of traders will change slightly. However, at the moment, the upward trend has resumed, as evidenced by all technical indicators. The outlook for the currency pair is as follows. We still believe that the upward movement may continue for some time for a banal reason: traders continue to buy the pound and sell the dollar. This cause could theoretically bring a few wherever you go. But if we are realistic, the problematic pound cannot grow against the US dollar on the same fundamental factors for so long and so much. Thus, you need to be ready for the end of the upward trend at any time, but do not try to act ahead of the curve, but wait for specific technical signals.

analytics5f2b49c091c37.jpg

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 Thursday, August 6, thus, we expect movement within the channel, limited by the levels of 1.3004 and 1.3232. Turning the Heiken Ashi indicator downward will indicate the beginning of a new round of corrective movement.

Nearest support levels:

S1 – 1.3062

S2 – 1.3000

S3 – 1.2939

Nearest resistance levels:

R1 – 1.3123

R2 – 1.3184

R3 – 1.3245

Trading recommendations:

The GBP/USD pair resumed its upward movement on the 4-hour timeframe, which may end near the level of 1.3169. Thus, today it is recommended to stay in the longs with the goals of 1.3184 and 1.3232 while the Heiken Ashi indicator is directed upwards. Or close longs around the 1.3169 level. Short positions can be considered no earlier than fixing the price below the moving average with the first goals of 1.2939 and 1.2878.

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

Overview of the EUR/USD pair. August 6. The head of the White House surprises again. Donald Trump said that Beirut was attacked,

4-hour timeframe

analytics5f2b4958b67a6.jpg

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - upward.

Moving average (20; smoothed) - upward.

CCI: 122.8411

Two attempts to overcome the moving average line were not enough for traders of the EUR/USD currency pair. Two rebounds and as a result – the resumption of the upward trend. Thus, the US currency is again in the risk zone, despite the fact that it has already fallen quite significantly in the last three months. But since the sellers of the pair are now extremely weak and have not been able to break through the moving, the upward trend continues. We are still very skeptical about the further growth of quotes, as we believe that only one of the currencies can not constantly become cheaper. And oddly enough, at this time, this judgment applies specifically to the dollar. The main factors that we have already listed several times can not always put pressure on the US currency, since in this case, in a couple of months, we will see a pair around the level of $ 1.5. Thus, we still believe that the hike to the top is nearing its end, as there is no new information from the US that could greatly disappoint traders. However, as before, we warn that any hypotheses must be supported by specific signals and technical analysis. While this is not the case, you can assume anything.

On Wednesday, August 5, a lot of different macroeconomic information was published in the European Union and the United States. Although most of the reports are still ignored by market participants, however, we cannot pass these reports by. Quite unexpectedly, the indices of business activity in the services sectors of the EU countries were worse than the forecast values, but all showed values much higher than 50.0 points. Thus, even if market participants expected more, this data is still not weak. Yes, in the current conditions, they are not important, since the service sector is the most affected area in each country due to the "coronavirus crisis". It is logical that with the lifting of the quarantine, this area began to recover quickly, so business activity has grown significantly. Retail sales in the Eurozone increased by 1.3% m/m in June and, although this value is higher than experts' forecasts, we still believe that this value is too low, since before that sales fell by 9.2%, 19.6% and 5.1%, and now we see a recovery of only 1.3%. This is very small. So the seemingly optimistic report is, in fact, extremely weak. Thus, in general, we can draw the following conclusion: statistics from the Eurozone could not support the euro currency, but it still grew after it failed to overcome the moving average. That is, technical factors are at work.

Meanwhile, the leader of the United States Donald Trump has made another "amazing" statement. This time, the President said that the explosion in the Lebanese capital, Beirut, could have been an attack. Trump offered his condolences and said: "I have met with some of our great generals, they believe that this was not a production explosion. They seem to think it was an attack, some kind of bomb." That is, the American President, referring to "some generals", with whom it is unknown when the US leader had time to talk, says that "someone's bomb" exploded in Beirut. Most experts immediately concluded that in this way, Trump is trying to distract the attention of Americans from what is happening in America itself. The logic of Trump is simple, and we just recently wrote that as soon as there is some discouraging event in the United States that is unfavorable to Trump and his political ratings, then Trump himself makes a loud statement. So it seems that Trump's comments about Beirut are just out of this opera. Well, the most interesting were the statements of representatives of the Pentagon, which denied the "suspicions" of Trump, saying that they do not understand what the President was talking about. Defense Ministry officials said there were no signs of a targeted attack on Beirut. Moreover, if there were such signs, then American troops would immediately be raised in the region to protect US property, which again is not observed.

In general, there was little news on Wednesday, August 5. No important information has been received from the European Union for a long time, although all market participants are waiting for the end of the European Parliament's reluctance to approve the budget for 2021-2027, which was agreed at the EU summit, as well as the 750 billion euro economic recovery fund. It seems that the European Parliament is currently negotiating with the European Commission and the European Council to make the necessary changes to the document. There is also little news from America recently. Most of them concern "coronavirus" again. No sooner had the US President declared that "the virus began to recede" than the virus began to advance again. Yesterday, more than 60 thousand cases of diseases were again recorded in America. There was no information about rallies and protests in American cities that have been going on for several months, but there was information about new rallies, this time among teachers who refuse to reopen schools in September, as Trump wants. Teachers believe that with the current "uncontrolled" spread of the epidemic, it is impossible to return students to school, and require that classes be held remotely.

In general, the situation in the United States does not change, and only worsens. In the Eurozone, everything is quiet and calm and traders do not even have anything to analyze now. The euro/dollar currency pair resumed its upward movement, and now sellers can only wait for the price to fix below the moving average line. All trend indicators at this time continue to be directed upwards, so there are no signs of a trend change on the 4-hour timeframe. Lower timeframes gave certain signals to the beginning of a downward trend, but, as we can see, they turned out to be false for the most part. Despite the fact that it is quite dangerous to buy the euro around the two-year highs, we have to admit that the upward trend persists, which means that purchases should be considered at this time. The latest COT report showed a new strengthening of the upward mood among professional traders, perhaps the situation will change slightly in favor of bears this Friday, when the new COT report is released.

analytics5f2b496da1466.jpg

The volatility of the euro/dollar currency pair as of August 6 is 105 points and is characterized as "high". Thus, we expect the pair to move today between the levels of 1.1765 and 1.1975. The reversal of the Heiken Ashi indicator downwards signals a new round of downward correction within the framework of the still continuing upward trend.

Nearest support levels:

S1 – 1.1841

S2 – 1.1719

S3 – 1.1597

Nearest resistance levels:

R1 – 1.1963

Trading recommendations:

The EUR/USD pair resumed its upward movement. Thus, at this time, it is recommended to continue to stay in long positions with the goals of 1.1963 and 1.1975 until the Heiken Ashi indicator turns downward. The pair may also bounce back from the previous high of 1.1909. 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.

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

GBP/USD. Don't buy the pound on the eve of Super Thursday

The pound-dollar pair has recently shown increased volatility, but it cannot determine the direction of movement in the medium term. For example, the GBP pair fluctuated within the 100-point range yesterday and the day before yesterday, then falling to the bottom of the 30th figure, then rising to the borders of the 31st price level. Today, buyers were able to overcome the 1.3100 mark again and even rose to the middle of the 31st figure. Intraday price growth looks confident and "peremptory " – such an impulse price dynamics, as a rule, encourages many traders to open trading orders. And if we consider the short-term time period (within the framework of today), then longs are really a priority. But if we talk about the medium-term period, the prospects for the pound look less transparent.

The fact is that today's growth is only due to the US dollar's weakness, while the British currency will also come into play tomorrow: the pound will have to survive the so-called "Super Thursday". Let me remind you that the results of the August Bank of England meeting will be announced tomorrow, secondly, a report on monetary policy will be released; and thirdly, BoE governor Andrew Bailey will hold a press conference. Traders will focus their attention on all of these events, especially if the members of the central bank touch on the most painful topic for investors - negative rates.

analytics5f2b51a8bbe05.jpg

For the first time, rumors that the Bank of England may introduce a negative rate appeared in early May, when macroeconomic indicators first reflected the scale of the economic disaster. At first, these conversations seemed to be just conversations - after all, Bailey himself had previously rejected this idea. But that was back in March, when Britain only "got acquainted" with the coronavirus. And when COVID-19 actually closed the country for a month and a half, Bailey's position changed dramatically. Speaking to members of the British Lower House of Parliament, he said that the central bank "is actively considering the option of reducing the rate to zero."

Since then, the issue of introducing a negative rate has been constantly looming on the horizon, fulfilling a peculiar role of the Sword of Damocles, which hovered over the heads of GBP/USD buyers. After the weakening of quarantine measures and the appearance of the first signs of recovery processes, this topic was forgotten. But recent events suggest that Committee members could raise this issue again at tomorrow's meeting - and some of them may even vote for a rate cut. In this case, the pound will be under rather strong pressure, and along with the dollar, at least it will retreat to the bottom of the 30th figure. According to a number of experts (in particular, currency strategists at Scotiabank, which is the third largest bank in Canada), there are certain prerequisites for the implementation of this scenario, given the situation with the coronavirus in the country.

Let me remind you that the latest macroeconomic data reflected the recovery of key macroeconomic indicators. The monthly consumer price index rose above zero for the first time since March, ending up at +0.1%. In annual terms, inflation also showed positive dynamics, rising to 0.6%. Core inflation also increased: the main consumer price index exceeded the forecast values and reached 1.4%. The labor market also pleased market participants: the unemployment rate fell to 3.9%, and the average wage rose to 0.7% (excluding bonuses).

It would seem that against the background of such rosy reporting, buyers of GBP/USD have nothing to worry about. But the catch is that the British data are released with a long delay: for example, the latest data on inflation were published in June, and on the labor market – in May. By the way, it was in May that Britain began to gradually relax the quarantine restrictions, which explains the decrease in unemployment – people began to return to their jobs. The quarantine almost completely disappeared in June, and, accordingly, British consumer activity increased. The flywheel of economic activity began to unwind, positively affecting the dynamics of the main macro indicators.

But, as you know, the situation with the coronavirus in the UK has deteriorated at the end of July: 846 new cases of infection were registered in the country (this is the highest increase in a month). Against the backdrop of such trends, British Prime Minister Boris Johnson said that he would postpone the next phase of quarantine easing for at least two weeks. Quarantine measures were tightened for many regions of the country at the beginning of this month: new strict restrictive measures affected the entire county of Greater Manchester, parts of Lancashire and West Yorkshire. According to experts, the second wave of the pandemic could be twice as bad in consequence as the initial outbreak in the UK.

analytics5f2b51bb3f088.jpg

Given these trends, we can assume that forecasts will be updated at tomorrow's BoE meeting, reflecting the prevalence of downside risks. It is also possible that Bailey will mention negative interest rates at his press conference. Even if this topic is discussed in a hypothetical context, the pound will still be under pressure.

Thus, tomorrow's so-called "Super Thursday" is able to bring the GBP/USD pair back to the bottom of the 30th figure. The BoE has few reasons for optimism, but there are plenty of reasons for concern. Therefore, in the medium term, you are advised to make trading decisions on the pair after Bailey's press conference (it will take place three hours after results of the August meeting are announced). In this case, one should not rely only on further weakening of the dollar, since the topic of negative rates is too painful for GBP/USD traders.

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