EUR/USD – 4H.

As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the euro after the formation of a bullish divergence at the CCI indicator and an increase to the correction level of 50.0% (1.1278). Of course, not only the bullish divergence caused the growth of the European currency. Yesterday, July 10, Jerome Powell spoke to the Financial Services Committee with a semi-annual report. The main points of his speech concerned weak inflation, trade wars that create tension in the world and threaten to slow down world growth rates, as well as affect the US economy. Powell also said that the current wage growth is not enough to disperse inflation while noting the excellent state of the labor market. Markets may conclude that the trade war against China continues to affect America's economy. Economic indicators in June fell sharply, so the Fed intends to begin to soften monetary policy. And this factor is absolutely not in favor of the US dollar, and this currency may lose its undeniable advantage over the euro and the pound. Today will be another speech by Powell in Congress, we recommend not to miss it. The rebound of the euro/dollar pair from the Fibo level of 50.0% will allow traders to expect a turn in favor of the US currency and a slight drop in the direction of the correction level of 38.2% (1.1238). Maturing bearish divergence increases the probability of rebound.

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 has fulfilled the growth to the correction level of 50.0% (1.1278). I recommend selling the pair with the target of 1.1238, with the stop-loss order above the level of 1.1278, if the rebound from the level of 50.0% is executed, especially in conjunction with the bearish divergence. I recommend buying the pair with the target at 1.1318 and stop-loss order under the level of 1.1278 if the closing is above the level of 50.0%.

GBP/USD – 4H.

The GBP/USD pair performed a reversal in favor of the English currency, also after the formation of a bullish divergence. The pound sterling began to rise in the direction of the corrective level of 76.4% (1.2661), as Jerome Powell gave specific signals to the market about the intention to soften monetary policy. So far, the pound does not show too zealous a desire to grow. All the fault is the same Brexit, as well as its consequences for the UK economy. By the way, there are already consequences, but there is still no Brexit itself. The main hope now lies with Boris Johnson, who is determined to complete the process on October 31. Perhaps, a tough Brexit is not the best solution, but the Parliament had enough time to develop the best option, to agree with the European Union is not possible. Members of the Conservative Party understand that another transfer of Brexit will cause a storm of indignation, and in the next parliamentary elections, the number of conservatives will be greatly reduced. Thus, both the party and the country need a new strong leader who is ready for decisive action. Johnson could not be better suited for this position. Even if in the short term Brexit will cause a new fall of the pound.

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

GBP/USD – 1H.

As seen on the hourly chart, the pound/dollar pair performed a reversal in favor of the pound also after the formation of a bullish divergence at the MACD indicator and closed above the Fibo level of 100.0% (1.2506). As a result, the growth of the pair can be continued in the direction of the correction level of 76.4% (1.2571). The strengthening of the pair under the Fibo level of 100.0% can be interpreted as a reversal in favor of the US dollar and expect the resumption of the fall of the pair.

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

Forecast for GBP/USD and trading recommendations:

The GBP/USD pair has consolidated above the Fibonacci level of 100.0%. I recommend buying the pair with the target at 1.2571, with a stop-loss order under the level of 1.2506, but in very small amounts. I recommend selling the pair with the target of 1.2430 if the consolidation is performed under the Fibo level of 100.0% and with the stop-loss order above the level of 1.2506 (hour chart).