Daily Market Analysis from ForexMart

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GBP/USD. June 18, 2020 – Sterling continues to decline in anticipation of the Bank of England meeting 

On Thursday, the GBP/USD pair continues to decline, following the dynamics of yesterday. The current quotation of the pair is 1.2475. The pressure on the sterling was exerted by weak macroeconomic data from the UK: the consumer price index (CPI) in May rose by only 0.5% after rising by 0.8% in April. At the same time, the target level of the Bank of England is at around 2%.

Such a sharp decline in inflation may force the British Central Bank to introduce additional monetary incentives, which will negatively affect the exchange rate of the national currency. Today, a meeting of the Board of the Bank of England will take place, from which market participants expect the interest rate to remain at 0.1% and increase the QE program.

An additional source of pressure on the pound remains uncertainty around Brexit. And if today the regulator decides on a new round of monetary easing, the British currency could fall to the level of 1.2400.

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EUR/USD. June 19, 2020 – The euro is growing slightly from the level of 1.12

Yesterday's trading ended with a decrease in the euro to around 1.1180. The dollar rose in price to its main currency competitors amid sales of the euro and the pound, as well as amid growing investor appetite for defensive assets. The probability of the potential occurrence of the second wave of the coronavirus epidemic puts pressure on the entire spectrum of risky assets.

However, today the EU summit took place, during which the head of the European Parliament, David Sassoli, called on the heads of state to approve a plan for the restoration of the EU economy by €750 billion and a draft next seven-year budget for 2021-2027. At the same time, he recognized the presence of many disagreements on important issues and the need for another summit in the future. Such news provided some support to the European currency, and today we will see a weak growth of the euro from the level of 1.12.

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EUR/USD. June 22, 2020 – Euro fluctuates slightly near the level of 1.12

The EUR/USD pair continues to trade near the level of 1.12, fluctuating slightly on both sides of it. Today, the macroeconomic calendar is almost empty, so the dynamics of the instrument will not differ in activity.

At the end of last week, market participants drew attention to the speech of US Federal Reserve Chairman J. Powell, who noted that economic recovery would be long and difficult. These comments put pressure on the dollar, which led to the pair growing to the level of 1.1230.
 
Today, you should pay attention to data on home sales in the US secondary market. The indicator may show growth of 1.6%, which will provide some support to the US dollar. On Thursday, important statistics on the final estimate of GDP will be released: experts predict confirmation of a preliminary estimate of the economic decline by 5%.

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EUR/USD. June 23, 2020 – Euro could not overcome the level of 1.13

Yesterday, trading on the euro ended with an increase to the level of 1.1300. The reason for the growth of the EUR/USD pair was made by the statements of the White House economic adviser Larry Kudlow. The politician noted that in the USA there is no second wave of coronavirus diseases, which led to an increase in demand for risky assets.

Today, the eurozone countries have submitted their reports on business activity in the manufacturing sector and the services sector. Eurozone PMI rose from 39.4 to 46.9 points, better than forecast. The index of business activity in Germany also showed growth: from 36.6 points to 44.6, which was higher than analysts' forecasts either. Such figures provided strong support for the European currency.

In the afternoon, the US will publish business activity indexes in the manufacturing sector and services for June. Experts forecast growth from 39.8 to 48.0 points. You should also pay attention to data on new home sales in the USA for May: the forecast assumes an increase from 623 thousand to 640 thousand.

The RSI indicator pushed off the resistance level and turned towards the neutral zone. This signals that the euro is limited by the level of 1.13, and during the day we can expect a corrective decline in the pair to the level of 1.1270.

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Brent. June 25, 2020 – Oil declines amid expectations of the second wave of coronavirus in the world

On Thursday, Brent quotes continued to be under pressure, fluctuating slightly at $40 per barrel. Concerns about a new outbreak of the coronavirus infection pandemic have a negative effect on the asset. WHO has announced a significant increase in the number of new diseases in the United States, China and Latin America. As a result, concerns about the slowdown in global economic recovery and lower demand for hydrocarbons returned to the market.

An additional factor in lowering oil prices was also data on changes in US oil reserves. Yesterday, the US Energy Information Administration (EIA) announced a 1.4 million barrels increase in raw material inventories in a week, while experts forecast a decrease of 100 thousand barrels. Stock growth has been observed for the third week in a row.

Today, attention should be paid to data on US GDP and durable goods orders. If statistics support the US dollar, oil will have another factor for further decline.

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EUR/USD. June 26, 2020 – Euro is under pressure near the level of 1.12

The European currency continues to remain under pressure paired with the dollar amid growing demand for safe assets. Investors fear the second wave of Covid-19, as more and more new cases of coronavirus infection are recorded in the world. The current quotation of the EUR/USD pair is 1.1225.

Additional pressure on the euro was exerted by reports that the White House administration is considering options to introduce new and increase existing tariffs on imports of products from the European Union and the UK worth $7.5 billion.

At the same time, the US dollar received support from data on the volume of orders for durable goods: the indicator in May showed an increase of 15.8% m/m after a month earlier decline of 17.7% m/m. Today, you should pay attention to the publication of statistics on personal income and expenses of Americans for May.

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GBP/USD. June 29, 2020 – Sterling down to 1.23

The British sterling continues to decline at the beginning of a new trading week. The current quotation of the pair is 1.2300. Last Friday, the United States presented macroeconomic data that signaled in favor of further strengthening of the US currency. In particular, personal expenses of US citizens in May grew by 8.2% mom after a decrease of 12.6% mom in April. Analysts expected an increase of 8% m/m. Revenues, on the other hand, decreased by 4.2% m/m after rising by 10.8% m/m in April. Investors expected a decrease of 6% m/m.

In addition to statistics, the dollar was supported by reports from the Fed that the regulator suspended cash injections into financial markets and launched the reverse process. Thus, the balance of the Federal Reserve for the week decreased by $ 75.5 billion, and a week earlier – by $ 28 billion.

At the same time, pressure on the sterling continues to exert uncertainty on Brexit. Last week, Britain’s chief negotiator, David Frost, accused the EU of creating a deadlock in the negotiations. And EU negotiator Michel Barnier expects a breakthrough in resolving the issue only in October. Negotiations on Brexit will start today, however, the participants are skeptical in advance about its effectiveness. Thus, a further decline in the pound to the level of 1.23 seems quite probable.
 

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EUR/USD. June 30, 2020 – Euro consolidated at 1.12

On Tuesday, the EUR/USD pair continues to decline, breaking the level of 1.12. The euro was pressured by weak macroeconomic data from the eurozone: the consumer and business confidence index in June recovered from 67.5 to 75.7 points, which was worse than analysts' forecasts, expecting the indicator to rise to 80 points.

In the United States, on the contrary, economic statistics provided substantial support to the US dollar: pending sales in the secondary housing market in May rose to 44.3% m/m compared to a decline of 21.8% in April.

Today, the eurozone has presented preliminary data on the consumer price index for June: annual inflation accelerated from the May level of 0.1% to 0.3%. According to preliminary estimates, core annual inflation this June was 0.8%.

In the evening hours, attention should be paid to the speech by the head of the US Federal Reserve, J. Powell, which will help market participants understand the regulator's further actions to stimulate the US economy.

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EUR/USD. July 02, 2020 – Euro rose to the level of 1.1300, but failed to overcome it

The pair EUR/USD yesterday managed to grow to the level of 1.13, however today the quotes turned down to the level of 1.1275. Pressure on the euro was exerted by statements by German Chancellor Angela Merkel that EU members are far from an agreement on a restoration fund and budget. An additional negative brought data on the producer price index in the eurozone for May, reflecting an insufficient recovery of the indicator (-0.6% against the forecast -0.5%).

Yesterday, the USA presented data on the labor market from ADP: in June, the number of jobs increased by 2.369 million, which significantly exceeds the «failure» in May by 3.065 million. The forecast assumed a recovery of the indicator by 2.850 million. Today we should pay attention to unemployment statistics and the number of people employed in the non-agricultural sector in June. The dollar is likely to receive significant support after publication.

However, one should also take into account the fact that a certain appetite for risky assets has returned to the market, so the euro will feel confident during the day. Moreover, unemployment data in the eurozone turned out to be better than expected (7.4% against the forecast of 7.7%), which will also support the European currency.

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Brent. July 03, 2020 – Potential for rising oil prices is almost exhausted

Oil prices on Friday continue to trade above $42 per barrel. The current Brent quote is $42.60. Support for the asset this week was provided by data from the American Petroleum Institute (API) and the US Department of Energy on crude oil reserves in the country, reflecting a decrease in reserves of 8.1 million and 7.1 million barrels, respectively.

However, despite a local recovery, Brent quotes may go down already in the near future amid a general deterioration in market sentiment due to the aggravation of the epidemiological situation in the world, which poses a threat to global hydrocarbon consumption.

Additional pressure may come from comments by Russian Energy Minister Alexander Novak that he hopes to achieve a balance or deficit in the global oil market in July. Market participants saw in these comments a hint of Russia's unwillingness to participate in the further extension of the OPEC ++ energy deal. Thus, in the short term, oil prices may begin to decline to the area of $42 per barrel or lower.
 

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EUR/USD. July 06, 2020 – The euro strengthened to 1.13, but failed to gain a foothold above this level

At the beginning of the new trading week, the European currency showed strengthening to the level of 1.13, but could not rise higher. The euro was supported by signs of economic recovery in Germany, as well as hopes for additional incentives in the near future.

In particular, the volume of production orders in Germany grew in May by 10.4% after quarantine restrictions were relaxed in the country. Since this country is Europe's strongest economy, its restoration gives hope to other European countries.

In addition, market participants are waiting for a decision to create a restoration fund in Europe. On Thursday, a meeting of EU finance ministers will take place, and on July 17-18, a summit of regional leaders is planned.

Today is not rich in publishing important macroeconomic data. One should pay attention only to business activity indices in the construction sector throughout Europe: all indicators showed growth. Additional support for the euro today was provided by data on retail sales in the eurozone in May. Sales in the region grew by 17.8% compared with April -12.1%.

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GBP/USD. July 07, 2020 – Sterling is trying to gain a foothold above the level of 1.25

The British currency continues to stay in the area of local maximums – above 1.25. The GBP/USD pair is under the influence of multidirectional news, which does not allow sterling to decide on the movement vector.

On the one hand, the pound received support from data on business activity in the country's construction sector: the indicator unexpectedly rose to 55.3 points against 28.9 points a month earlier. Experts predicted growth to 47 points.

At the same time, the currency is under pressure amid growing tensions between the UK and China. In June, Britain announced its readiness to offer citizenship to nearly 3 million Hong Kong residents whose civil liberties are threatened by a new national security law. The British authorities also thought about introducing a ban on the participation of the Chinese company Huawei in the deployment of fifth-generation networks (5G). China also promised to take action in response.

Thus, the UK may be drawn into a trade war with China, which will inevitably lead to a deterioration in the country's economic condition, already undermined by the protracted negotiations on Brexit.
 

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Brent fundamental analysis for July 8th

Brent crude oil continues to trade above $43 a barrel. Market participants are waiting for data on US crude oil inventories from the US Department of Energy. Also, the absence of a certain dynamics of quotes is explained by the reluctance of traders to take risks amid the deteriorating epidemiological situation in the world.

The number of new Covid-19 diseases in the USA continues to grow, exceeding 50 thousand per day. Experts note that concerns about the second wave of the epidemic could provoke the reintroduction of restrictive measures, which will slow down the global economic recovery and again reduce the demand for hydrocarbons.

Moreover, the economic crisis in China casts doubt on the ability of the Celestial Empire to fulfill its obligations under a trade deal with the United States. According to the latest data, oil exports from the US to China in May amounted to only $2 billion. If relations between countries continue to deteriorate, the risk of a new round of trade war will be another threat to global economic growth.

Today, attention should be paid to data on stocks, as well as oil production in the United States. Analysts forecast a 3.1-million-barrel reduction in stocks. If recent data show growth, Brent quotes will return to the level of $43 per barrel.

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GBP/USD. July 09, 2020 – The sterling rushed to the level of 1.27

The British currency continues to grow steadily on Thursday, approaching 1.27. The growth is primarily due to the weakening US dollar amid growing demand for risky assets. At the same time, the sterling itself received support after the British government announced its latest economic recovery plan after the pandemic in the amount of 30 billion pounds ($38 billion).

The plan includes a reduction in taxes on the purchase of housing, discounts in restaurants for all citizens, as well as a cash bonus for employers who do not fire their employees.

At the same time, the growth potential of the sterling is limited, since the main driver of the growth of the British currency today are the trade negotiations between the European Union and the UK, and they still look rather uncertain.

Thus, the growth of the GBP/USD pair may be limited by the level of 1.27. The RSI indicator is growing slightly from the neutral zone, which confirms this scenario.

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EUR/USD. July 10, 2020 – The dollar is strengthening after the release of labor market data

The pair EUR/USD on Friday shows a recovery to the level of 1.13 after falling to 1.1250. Yesterday, it became known that the US Supreme Court allowed the New York attorney to receive D. Trump's financial statements, which poses certain risks for him on the eve of the presidential election.

Market participants also drew attention to the growing number of cases of new coronavirus diseases in the United States. In some states, the country reintroduces quarantine restrictions.

Yesterday, the States presented data on the labor market: the number of claims for unemployment benefits for the week amounted to 1.314 million, a decrease of 99 thousand, better than the forecast. Today, attention should be paid to data on producer prices, the decline rate of which should slow down from -0.8% to -0.6%. If the forecasts are confirmed, the US currency will be able to complete the week on a major note.

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Brent. July 20, 2020 – Oil is moderately reduced

At the beginning of the week, Brent crude oil shows a moderate decline to $42.76 per barrel. The asset is under pressure from the OPEC+ decision to increase oil production, as well as an increase in the number of new cases of Covid-19 infection in the world. According to Johns Hopkins University, the total number of confirmed cases of coronavirus infection in the world has exceeded 13.6 million.

Last week, OPEC+ countries agreed to cut their supply caps in August from 9.7 million barrels to 7.7 million barrels per day. At the same time, countries that did not fulfill their obligations in May and June, on the contrary, will have to cut production in August even more.

The dynamics of Brent are also affected by the likelihood that in August, the growth of oil supply will provide American oil producers. According to a report from Baker Hughes, the total number of oil rigs in the US last week decreased by only 1 unit, from 181 to 180. It is quite possible that only an increase in the number of installations will follow, and this will be an extremely negative factor for Brent quotes.

EUR/USD. July 20, 2020 – Euro growth was suspended at 1.1460

The euro suspended its growth at 1.1465. Earlier, the currency was supported by the continuing interest in risky assets and the expectations of the results of negotiations of the EU leaders on the formation of a fund for the recovery of the European economy in the amount of $750 billion. Market participants are sure that politicians will be able to reach an agreement one way or another, but so far they have not succeeded.

Today trades promise to be calm, because the macroeconomic calendar is almost empty. On Thursday, you should pay attention to the data on the consumer confidence index: the indicator in July could improve to -12 points from the June value of -15.

On Friday, the block of preliminary statistics on the index of business activity in the service sector of the euro zone and individual EU countries for July will be of interest. Experts predict that indicators have improved in all regions.

The dynamics of the pair today will mainly depend on the final results of the meeting of the European leaders. If the agreement does not succeed, the pair will begin to decline to the 1.1400 area.

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Brent. July 21, 2020 – Oil updates local highs

Brent oil closed yesterday with growth to $43.20. Today, oil bulls continue their northern campaign, approaching $ 44.60 a barrel. The prices were supported by news of the end of the EU summit: the leaders of the EU countries have finally reached an agreement on an aid package for the countries most affected by the coronavirus in the amount of 750 billion euros.

Earlier, the pressure on oil prices was exerted by the decision of the OPEC+ countries to increase oil production from August 1, bringing the overall reduction under the energy pact to 7.7 million. In July, the volume of reduction was 9.7 million barrels per day.

Tonight and tomorrow, you should pay attention to the data on US crude oil inventories. If reports from the American Petroleum Institute (API) and the US Department of Energy reflect an increase in inventories, Brent quotes may come under pressure again.

EUR/USD. July 21, 2020 – EU summit is over, euro is up

The EUR/USD pair is trading in no specific direction on either side of the 1.1440 level. The EU summit ended tonight, following which the leaders of the EU countries agreed on the creation of a fund for the restoration of European economies in the amount of 750 billion euros.

The parties found a compromise on the issue of the donor countries' capabilities and the needs of the recipient countries. In particular, the fund's subsidies will amount to 390 billion euros, and loans – 360 billion euros, which should balance the risks. About 70% of the fund must be exhausted and used for its intended purpose during 2021-2022, and another 30% in 2023. The total debt should be repaid by the end of 2058.

The fact that agreements have been reached after the five-day summit already provides support for the European currency, so further growth of the euro with a target of 1.15 is quite likely.

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GBP/USD. July 22, 2020 – Sterling weakly corrected after morning dip

On Tuesday, the British pound sterling managed to renew its high since mid-June, hitting 1.2770. However, during Wednesday morning trading, the pair dropped to the level of 1.2640.

The growth of the sterling yesterday was promoted by the general market optimism, the reason for which was the agreement of the European fund to help the countries affected by the pandemic in the amount of 750 billion euros. In addition, the EU countries have also approved a multi-year EU budget of more than 1 trillion euros.

Today pressure on the British currency was exerted by information that the UK and the EU are unlikely to have time to agree on a trade agreement before the end of the summer. This means that negotiations may drag on until the end of the year, which casts doubt on the possibility of a soft Brexit. In this case, the UK will have to leave the European Union with the loss of access to the single European and customs markets.

Today the macroeconomic calendar is empty, the pair will grow weakly from the level of 1.2640. On Friday, the situation may change after the release of data on business activity in the manufacturing sector and the service sector. Market participants are waiting for weak statistics, and if the forecasts are confirmed, the pound will begin to decline to the area of 1.26.

EUR/USD. July 22, 2020 – Euro has reached 1.1550

Yesterday, the European currency managed to renew its high since the beginning of 2019 at 1.1550. The euro was supported by the results of the EU summit, at which it was decided to create a fund for the recovery of the European economy in the amount of 750 billion euros: 360 billion euros will be loans and 390 billion euros – subsidies. Experts note that the approval of a common fund in times of crisis is a signal of political stability in the eurozone.

Moreover, the President of the European Council Charles Michel announced the harmonization of the EU budget for 2021-2027 in the amount of 1.074 trillion euros.

Analysts predict further growth in the European currency, as the widespread spread of the coronavirus in the world, ongoing tensions between the US and China and the upcoming US elections could severely limit the appetite for high-yielding assets in the near future.
 

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GBP/USD. July 23, 2020 – Sterling falls after the release of weak economic statistics

On Thursday, the British currency came under pressure after the release of macroeconomic statistics from the UK. In particular, the index of industrial orders in July showed an increase to -46 points from -58 points a month earlier. However, the latest data turned out to be worse than forecasted, as analysts had expected the indicator to rise to -38 points. Moreover, household incomes have fallen by 4.5% since the onset of the crisis, and sharply increased unemployment remains the country's key economic problem.

At the same time, the US dollar is also under pressure following statements by US Treasury Secretary Steven Mnuchin about the likelihood of new measures to stimulate the country's economy, despite the huge budget deficit.

The growth of the pound sterling is also limited due to the uncertainty in the Brexit negotiations between the UK and the European Union. The current round of talks will end this week, and no new meetings are expected yet. At the same time, there is no visible result in the debate yet, which increases the risks of a lack of a trade agreement and, as a result, a fall in the British currency.

The current quote for the GBP/USD pair is 1.2690. The RSI indicator declines towards the neutral zone, which signals in favor of further weakening of the pound sterling.

EUR/USD. July 23, 2020 – Euro retains potential for further growth

The euro continues to trade in the area of yesterday's highs near the level of 1.1600. The European currency managed to renew the maximum from October 16, 2018 after the leaders of the EU countries agreed on the creation of a global fund for the recovery of the European economy in the amount of 750 billion.

Amid such a powerful factor supporting the European currency, the deterioration in relations between the United States and China fades into the background. However, many experts are sure that this is «for the time being». Earlier it became known that the US intends to close the Chinese consulate in Houston, to which China also promised to take retaliatory measures.

Today you should pay attention to the data on applications for unemployment benefits in the United States. Experts expect an increase in the number of applications from 1,300 to 1,360 for the first time in last weeks. If forecasts are confirmed, the dollar will receive additional impetus to weaken. Also of interest will be the data on the consumer confidence index in the euro zone for July, where the indicator may improve to -12 points from -15 earlier.

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EUR/USD. July 24, 2020 – Euro declines from highs within correction

The pair ends the week near the 1.1600 level. The euro hit a new high at 1.1625 yesterday. Today, the European currency is supported by the PMI business activity indices in France and Germany, published in the morning: the indicators were better than the market forecasts (57.8 points and 50.0 points, respectively).

The euro remains the leader in the foreign exchange market amid high demand for the currency after the leaders of the European Union have agreed on a global stimulus package for the economy. In contrast, the United States has recently faced difficulties in adopting a new stimulus program, as well as in containing the further spread of Covid-19. In addition, the United States continues to wage a trade war with China, which also puts pressure on the greenback.

However, on the H4 chart, we see that the RSI indicator reversed and headed down towards the neutral zone. The forecast for today assumes a decline in the pair within the correction to the 1.1560 area.

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EUR/USD. July 27, 2020 – The dollar is weak for many reasons

The US dollar continues to weaken against all major currencies at the start of the new trading week. The current quote for the EUR/USD pair is 1.1700. This week, market participants are likely to continue selling dollars, and there are several reasons for this.

First, the American Benefit Co-Pay program expires on Monday. Over the course of several months, more than 20 million US citizens received weekly co-payments of $ 600. Now, after the completion of the program, many enterprises and households will fully feel the negative consequences of the lack of financial assistance from the authorities.

Second, the US economy has already slowed significantly, which will be confirmed by the US Q2 GDP report on Thursday. Experts predict a 35.0% decline in the American economy.

Finally, the position of the US Federal Reserve System also does not give the dollar any incentives to strengthen. Against the background of the fact that the economic prospects are disappointing, the deadline for payments to citizens has expired, and the packages of new assistance measures may turn out to be ineffective, the regulator can only continue to adhere to the «dovish» position in its monetary policy.

Coupled with a further increase in the number of Covid-19 diseases in the United States, the above factors will only have a negative impact on the dollar exchange rate.

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EUR/USD. July 28, 2020 – Euro finishes rally

The euro suspended its strong growth and stabilized in the area of the reached highs near 1.1740. The US dollar is still under strong pressure from several factors: an increase in the number of coronavirus cases in the United States and expectations of the «dovish» rhetoric of the US Federal Reserve at a meeting on Wednesday. The regulator is likely to keep the rate unchanged around zero, as well as comment on inflation parameters.

However, having received local support from data on the number of orders for durable goods in the US, the dollar managed to recover somewhat. June orders rose 7.3% month-on-month, higher than the 7.0% growth forecast.

Today the EUR/USD pair will continue to fluctuate slightly above 1.17 in anticipation of tomorrow's results of the US Federal Reserve meeting.

Brent. July 28, 2020 – Oil rises thanks to dollar weakness

Yesterday’s day ended for Brent oil with a decline to $43 per barrel, but today quotes managed to recover to $44.25. The prices were supported by the weakening of the US dollar across the entire spectrum of the Forex market due to continuing concerns about the outlook for the US economy.

However, it should be noted that oil is growing despite a number of negative factors. First, the oil market is monitoring further plans by OPEC and Russia to increase oil production by 2 million barrels from August. Such measures are incorporated in the gradual removal of additional production restrictions imposed by the pandemic.

In addition, investors fear a further deterioration in relations between the United States and China and an increase in the number of new cases of coronavirus infection in the world.

Another factor weakening Brent may be statistics from Baker Hughes, according to which the number of oil rigs in the US last week increased for the first time since March 13, by 1 unit.

Thus, as soon as the US dollar manages to show the first signs of recovery, oil «bulls» risk losing all their positions.

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Brent. July 29, 2020 – Oil rises after the publication of the report from the API

During the trading session on Wednesday, Brent crude rose to $44.20 per barrel. Prices were supported by yesterday's report from the American Petroleum Institute (API), according to which crude oil reserves in the country fell by 6.8 million barrels per week. Analysts had forecast a reduction of only 1.2 million barrels.

Today you should pay attention to a similar report from the US Department of Energy. If the new data also reflects the decline in inventories, Brent quotes will be able to reach a maximum of $45 per barrel.

At the same time, the softening of the terms of the OPEC+ deal to reduce production by 2 million barrels per day starting from August may act as a pressure factor in the near future. Analysts have calculated that the softening of the OPEC+ deal will lead to an oversupply over the next four months.

EUR/USD. July 29, 2020 – The pair is sideways in anticipation of the results of the US Federal Reserve meeting

Today is extremely important for the dynamics of the EUR/USD pair, since the US Federal Reserve will announce its decision on the rate and share its plans for further monetary policy.

In addition, market participants are waiting for the regulator's assessment of the prospects for the recovery of the American economy. Earlier in June, the FOMC released its quarterly reports, according to which a progressive economic recovery could be expected. However, after that, the States were swept by the second wave of the coronavirus, which led to another tightening of quarantine restrictions and a decrease in business and production activity.

Additional pressure on the US dollar is exerted by the expectations of tomorrow's GDP report. Experts predict a significant decline in the economy in the second quarter, up to 35%.

At the same time, the markets are following the discussion in Congress of new measures to support the US economy in the amount of $1 trillion. It is expected that a new aid package will be adopted this week.

The current quote for the EUR/USD pair is 1.1745. The euro is clearly overbought, and it is logical to observe a downward correction. During the day, trading will be held in a calm manner, pending the results of the Fed meeting.

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EUR/USD. July 30, 2020 – US dollar strengthens moderately after the Fed meeting

Over the past week, the US dollar has been actively selling and reached lows in the 1.1800 area. Yesterday ended a two-day meeting of the US Federal Reserve, the results of which did not manage to significantly change the situation on the market – the pair EUR/USD fell only to the level of 1.1730.

The regulator noted that there are serious risks from the pandemic, and the Central Bank is ready to use its entire arsenal of tools to support the economy. Fed Chairman Jerome Powell also said during a press conference that household spending has rebounded by about 50%, but manufacturing capital investment cannot boast a similar trend. 

Moreover, rising inflation, the end of the unemployment benefit program and the second wave of coronavirus in the United States – all these factors prevent optimism from emerging in the market.

Today you should pay attention to the publication of the report on US GDP. Experts predict the worst release in the entire history of data collection: the fall of the US economy by 35%. At the same time, the European currency feels quite comfortable: the macro statistics for the eurozone continues to improve, and at the moment the forecast for GDP for the third quarter suggests an increase in the indicator.

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EUR/USD. July 31, 2020 – Euro has updated its maximum at around 1.1900

The euro continues to rally, reaching 1.1900. The US dollar again came under pressure from several factors at once: from the fresh macroeconomic data and statements by US President Donald Trump.

So, yesterday's data on US GDP showed a decline in the US economy in the II quarter by 32.9%. This was the largest decline since the Great Depression. Experts note that without the $3 trillion stimulus package, the GDP failure would have been even greater, but the current figures are impressive.

Additional pressure on the currency was exerted by the words of D. Trump, who does not exclude the postponement of the upcoming presidential elections in November due to low GDP and economic problems. Moreover, the lack of progress in talks between Republicans and Democrats in the US Congress on a new $1 trillion package of measures also does not give the US dollar optimism.

Today we should pay attention to the data on inflation for July in the eurozone and changes in the volume of GDP for the II quarter. Inflation in the region rose 0.4% on an annualized basis, while GDP fell by a record 12.1%. Such news somewhat dampened the appetite for the euro, which allowed the EUR/USD pair to fall to 1.1850.