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Here are the details of the economic calendar from June 30:
Yesterday's economic calendar had the UK's final GDP data for the first quarter, where the fact of slowing the pace of economic decline from -7.3% to -6.1% was confirmed. The statistical data did not come as something surprising to traders, as they completely coincided with the preliminary estimate of GDP.
To simply put it, the market ignored them.
* GDP is a gross domestic product report prepared by the National Statistics Office, which reflects the total volume of all goods and services produced in the United Kingdom. This indicator is considered an indicator of the overall economy of the country. GDP growth is a positive signal for the national currency, while a decline in GDP can lead to a prolonged weakening of the national currency.
The second important event was Europe's preliminary inflation data, where a decline in consumer prices was recorded from 2.0% to 1.9%.
* The consumer price index is prepared by the Statistical Service of the European Union (Eurostat), which determines the change in prices of the selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation.
From the point of view of fundamental analysis, an increase in inflation is a positive signal for the national currency, but when consumer prices rise faster than forecasts, this is considered not the best signal.
In our case, there was a decline in inflation after a strong growth, which gives a reverse reaction in the market.
In simple words, the normalization of the rate of change in inflation leads to the removal of concerns about the tightening of the monetary policy of the European Central Bank.
The reaction of the market was positive for the Euro currency, but it was extremely temporary. The euro rose at the time of the publication of inflation data and lasted for 35 minutes.
The latest economic development on June 30 was the ADP's June employment report for the private sector, which expected 600,000 new job growth but in reality, it generated 692,000 growth.
The best employment result gave confidence to traders in dollar positions.
* The ADP employment report shows the change in the number of employees in the United States. The growth of the indicator has a positive effect on the unemployment rate in the country, as well as on consumer activity, which in turn has an impact on economic growth.
Analysis of trading charts from June 30:
The EUR/USD pair managed to prolong the decline previously set in the market towards the local low of June 21, where the support level is located, which led to a slight reduction in the volume of short positions.
* The support level is the so-called price level, from which the quote can slow down or stop the downward course. The principle of constructing this level is to reduce the points of support on the history of the chart, where the price reversal in the market has already occurred earlier.
It is worth considering that the support level cannot be eternal and constantly leads to a price reversal. Therefore, traders in their work always have an alternative scenario for the development of the market, which considers the breakdown of this level.
In our case, we are talking about the reduction of sell positions of the pound sterling.
The GBP/USD pair had almost the same cycle as its European counterpart (EUR/USD), but the price area of 1.3785/1.3800 serves as a support level.
Trading recommendation for EUR/USD and GBP/USD on July 1, 2021
Today, Europe is expected to release its final unemployment data for May, where its level is predicted to coincide with the preliminary estimate of 8%.
In this case, the market has already considered all the changes in the quote, and this will not lead to any reaction to the unemployment data.
EU unemployment rate - 9:00 Universal time
* The unemployment rate is the ratio of the number of unemployed to the number of workers [the sum of employed and unemployed], defined as a percentage. This indicator is prepared by the Statistical Service of the European Union (Eurostat).
Meanwhile, the United States will publish its weekly data on applications for unemployment benefits at 12:30 Universal time, where their volume is expected to fall.
* Applications for unemployment benefits reflect the number of currently unemployed citizens and those receiving unemployment benefits. This indicator is considered to be the state of the labor market, where the growth of the indicator negatively affects the level of consumption and economic growth. The reduction of applications for benefits has a positive effect on the labor market.
To simply put it, a decline in the number of applications for benefits can lead to a strengthening of the national currency – the US dollar.
Looking at the EUR/USD trading chart, one can see the breakdown of the base point from June 21 in the face of the level of 1.1847. If the price is kept below 1.1800 on the daily period, a downward cycle towards the level of 1.1700 will become very likely.
As for the trading chart of the GBP/USD, it shows that the quote continues to fluctuate around the base of 1.3785/1.3800 on June 21, while maintaining an active bearish interest in the market. To prolong the decline to new price levels, the quote needs to stay below the level of 1.3785 for a four-hour period.
If the expectations regarding the downward development coincide, we can head towards this spring's local low, namely the 1.3660 area.
* Bears are the name of market participants that are generally accepted in the exchange environment, who play for lowering currency exchange rates.
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