16.06.202016:44 Forex-elemzések és áttekintések: EURUSD and GBPUSD

Optimism is starting to leave buyers of the European currency again, who were encouraged by statements from EU representatives that trade negotiations with the UK are gaining new momentum.

Let me remind you that British Prime Minister Boris Johnson and the EU leadership met yesterday. During the press conference, the parties only managed to agree on increasing the intensity of negotiations on the terms of trade after Brexit. The desire of both sides to conclude a trade deal before the end of this year is understandable, however, the key issues of the deal remain a stumbling block.

One macroeconomic statistics in the first half of the day was not enough to continue the bullish momentum. Although the data was quite bearable after the record contraction of the economy in April this year. A report from the Federal Bureau of Statistics Destatis noted that German consumer prices fell in May this year compared to April, as did growth compared to the same period in 2019. The data fully coincided with the forecasts of economists but indicated that the deflationary level was gradually approaching, which could significantly affect the Central Bank's exchange rate. The report shows that in May, compared with April, consumer prices fell by 0.1%. The harmonized index for EU standards did not change in May compared to April, which also coincided with forecasts. Compared to May last year, prices increased by 0.6%.

The bureau noted that the current indicator better reflects the situation with prices than the April value since more data was collected after the cancellation of quarantine measures.

The good indicators that were released today on the German business confidence index indicate a V-shaped dynamics and the return of the economy to the path of growth after the lifting of quarantine measures. The report also shows a trend indicating that investors are increasingly believing that the worst is over. According to data, economic expectations in Germany improved in June this year. According to the ZEW institute for economic research, the index of economic expectations in June 2020 rose to 63.4 points against 51.0 points in May, while economists predicted that it would be 60.0 points. As for the assessment of the current situation, it also increased slightly. In June, the index was -83.1 points against -93.5 points in May. Economists had predicted that the index would rise to -85.0 points. The greatest pressure and skepticism in the assessment can be seen in the export sector, as well as in the financial sector.

Data that hourly wages in the Eurozone rose strongly in the 1st quarter of this year did not come as news to analysts, as such growth was expected since many companies were cutting their staff due to the coronavirus pandemic. According to a report from the Eurozone statistics agency, from January to March this year, wages in the Eurozone increased by 3.4% compared to the same period of the previous year. However, this does not mean that the labor market is in order. Unemployment data will continue to differ significantly in several countries, and in general, the unemployment rate itself will increase significantly due to a reduction in economic activity.

This afternoon, you should pay attention to the speech of the Chairman of the US Federal Reserve, Jerome Powell, which will be held in Congress after a break related to the coronavirus. We will discuss the prospects of the economy and the pace of its recovery after the pandemic, as well as the expansion of monetary instruments used by the Fed in the fight against the pandemic. It is possible that the statements made may support the US dollar.

As for the technical picture of the EURUSD pair, we can see a return of pressure on risky assets before Powell's speech. The nearest target for sellers of risky assets remains the minimum of 1.1260, the breakout of which is sure to further strengthen the downward movement in the trading instrument, which will lead to an update of the week's lows in the area of 1.1190 and 1.1120.

The British pound is struggling to continue growing, however, it is not as good as yesterday. Data on the labor market slightly confused the maps. On the one hand, according to the ILO standard, the number of unemployed in the UK from February to April fell by -8,000, and the unemployment rate was only 3.9%, but, on the other hand, in May, applications for unemployment benefits in the UK increased immediately by 528,000, which is a very serious number for the country. The unemployment rate jumped to 7.8%. Average earnings for the reporting three-month period increased by 1.7% as predicted.

All this once again shows what difficulties the UK economy will face in the future after the coronavirus pandemic and how necessary a trade agreement is right now, in these difficult times for the country.

As for the technical picture of the GBPUSD pair, at the moment, the bulls hold the resistance of 1.2620, and the main task for today will be to protect this range. But, as usually happens, conversations about the Brexit deal remain conversations, so you should not count on maintaining bullish momentum without any specifics in this direction. The return of the trading instrument to the level of 1.2620 may trigger several speculative stop orders, which will increase pressure on the pound and collapse it to the support levels of 1.2535 and 1.2450. To maintain the bullish momentum, you will need to break through the resistance of 1.2715 and reach a maximum of 1.2805.