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23.07.2019 10:00 AM
Forecast for EUR/USD and GBP/USD on July 23. Changes in the UK Parliament are inevitable

EUR/USD – 4H.

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As seen on the 4-hour chart, the EUR/USD pair resumed the process of falling towards the correction level of 23.6% (1.1187). All thoughts of the foreign exchange market are now still revolving around the upcoming ECB meeting and the press conference of Mario Draghi. For the euro/dollar pair, this is certainly the main event of the week. Plus, in the first two days of the week, no economic reports are planned in the European Union and America. Thus, the theme of the ECB meeting is still the only one that affects the behavior of the pair. Possible actions of the ECB and Mario Draghi's rhetoric have been described many times. Almost all of them predict monetary policy easing to some extent. The question is also about the timing of this easing and its volumes. However, the issue of mitigation has almost been resolved. Thus, the pressure of the forex market on the euro is not accidental. The dollar continues to be in high demand, which is likely to remain until next week when the Fed will hold a meeting, at which a rate cut may also be announced. Today, the euro can get support only from the rebound from the correction level of 23.6% (1.1187) and the possible formation of bullish divergence from the MACD indicator, which will allow traders to expect some growth in the direction of the correction level of 38.2% (1.1238).

The Fibo grid is built on extremums from March 20, 2019, and May 23, 2019.

Forecast for EUR/USD and trading recommendations:

The EUR/USD pair performed fall to the correctional level of 23.6% (1.1187). I recommend selling the pair with the target of 1.1107, with the stop-loss order above the level of 1.1187, if the closing is performed under the level of 23.6%. I recommend buying the pair with the target of 1.1238 and stop-loss order under the level of 1.1187, if it will be rebounded from a correction level of 23.6%, especially in conjunction with bullish divergence.

GBP/USD – 4H.

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The GBP/USD pair, after the bearish divergence, continues to fall in the direction of the correction level of 100.0% (1.2437). The rebound of the pound/dollar pair from this level will allow traders to count on a reversal in favor of the English currency and some growth in the direction of the correction level of 76.4% (1.2661). However, today, the situation with the pound will depend entirely on the results of the election of the Prime Minister in the UK. According to many experts and traders, the victory will be won by the former mayor of London Boris Johnson, who won all the previous rounds of voting. Tomorrow, the new Prime Minister will take up his duties. For the English currency, it is not so important who will be the new Prime Minister. What matters more is what vector Brexit gets with the new Prime Minister. As I said, the hard Brexit will now be very difficult for Boris Johnson to hold, as Parliament has taken measures in this regard. Such actions have already been taken by parliamentarians during the reign of Theresa May. If there is no hard Brexit, then what? The new Prime Minister should answer this question. The English currency, from my point of view, will continue to sell out to traders until the situation with Brexit becomes clear. And in the near future, it is unlikely to happen. The new Prime Minister will probably dismiss several Ministers, there will be political changes, there will be new "loud" statements, perhaps there will be new attempts to put "pressure" on Brussels.

The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.

GBP/USD – 1H.

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As seen on the hourly chart, the pound/dollar pair continues to fall in the direction of the Fibo level of 127.2% (1.2430). Today, the bullish divergence of the CCI indicator is brewing. Its formation will allow counting on some growth of the pound. The rebound of quotations from the level of 127.2% will work similarly in favor of the English currency. However, fundamental factors are in the first place today, and we should pay more attention to them.

The Fibo grid is based on the extremes of June 18, 2019, and June 25, 2019.

Forecast for GBP/USD and trading recommendations:

The pair GBP/USD completed closing below the level of 100.0%. Thus, I recommend continuing to be in sales of the pair with a target of 1.2430, with a stop-loss order above the level of 1.2506, to rebound from the level of 127.2% (or the formation of bullish divergence) or 100.0% on the 4-hour chart. I recommend buying a pair with the target of 1.2506 if it will be rebounded from the level of 1.2430, and with a stop-loss order under the level of 127.2% (hourly chart).

Samir Klishi,
Analytical expert of InstaForex
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