03.07.202010:07 Forex Analysis & Reviews: EUR/USD and GBP/USD: There may be another surge in COVID-19 infections in the UK. Average income in the US has dropped sharply.

On Thursday, the US dollar rose against the euro and the pound amid news that the unemployment rate in the US fell in June this year, indicating the gradual recovery of the labor market after the coronavirus pandemic. Even US President Donald Trump noted such a significant increase in new jobs, pointing to the restoration of the US economy.

The report published by the US Department of Labor revealed that the unemployment rate note only fell to 11.1% in June, but also 4.8 million new jobs were created in the economy. However, there are a number of difficulties and concerns that may affect this indicator in the future, that is, despite the increase in the indicator, there are fewer jobs now in the labor market than before the coronavirus pandemic started.

The main problem right now is still the spread of the coronavirus, so many states are again forced to resort to social distance and isolation measures, which put pressure on economic activity. Bars and restaurants were again closed in Texas, and in Florida, such restrictions also affected a number of catering outlets.

Undoubtedly, the actions of the authorities to assist small companies kept the labor market from falling even further. However, the money is running out now, which will most likely lead to a reduction in staff and personnel, especially in the context of the next introduction of quarantine measures. Retail companies, which have just begun to recover from the effects of the pandemic crisis, will inevitably be hit again.

The weekly report on the number of initial applications for unemployment benefits in the US also indicated a decrease. According to the data, over the week of June 21-27, the number of applications dropped by 55,000, amounting to just 1.43 million.

As mentioned above, many states are returning to isolation measures. Just yesterday, Chicago implemented a two-week quarantine for people entering the city from other states such as Texas, California, Florida and Alabama.

In Florida, a curfew is being introduced to curb the spread of the coronavirus. Night curfew will operate from 20:00 to 04:00, so the opening of all entertainment facilities such as casinos and theaters were canceled. Florida has recorded a jump in the number of COVID-19 cases yesterday.

Another state that did not stand aside was Texas. Yesterday, Governor Greg Abbott announced the mandatory wearing of masks against the backdrop of a sharp increase in the number of new cases of coronavirus infection. The restriction of social gathering with over 10 people is also being considered. Such measures obviously will not benefit economic activity and will lead again to a decrease in consumer demand, which will negatively affect consumer confidence and their assessment of the future.

As for macroeconomic reports, a sharp decrease in the average earnings of Americans was observed in June this year. It already fell by 1.0% in May, but then in June the drop continued and finally to 1.2%. Economists did not expect such an outcome as they expected a slight increase in the indicator since the economy has already opened.

Trade deficit in the US also grew in May, which did not surprise traders, as a reduction in imports and exports amid weak global demand caused by the coronavirus pandemic was quite expected. The report published by the US Department of Commerce revealed that the deficit in trade in goods and services increased by 9.7% in May and settled to $ 54.6 billion. Economists expected the deficit to be $ 53.0 billion.

Such a figure was recorded because imports decreased by 0.9% to $ 199.1 billion in May, while exports fell immediately by 4.4% to $ 144.5 billion. It is the same as the level observed during the financial crisis last 2008-2009.

As for the technical picture of the EUR / USD pair, the quotes are still within the previous range, so the main goal of the bulls is to break this week's high near 1.1290, which was not done yesterday. Only after that will the euro be able to return to the areas of 1.1350 and 1.1390. However, the bears are working on a breakout from the support level of 1.1240, the success of which will bring the EUR / USD pair to the lows of 1.1190.

GBP / USD

The British pound also went under a correction yesterday amid news on the current state of the US labor market. However, the market remained on the side of bulls.

Today, data on consumer confidence in the UK was published, in which at the end of June, a slight increase was recorded. According to the report of GfK, the consumer confidence index was -27 points in June, better than the -30 points at the beginning of last month. Economists expected the index to remain unchanged.

Tomorrow, catering establishments, hotels, shopping and entertainment centers will open in the UK. Many are expecting a new outbreak of the coronavirus because of it, so demand for the British pound has dropped.

Thus, for the technical picture of the GBP/USD pair, a breakout from the support level of 1.2450 will lead to the demolition of a number of bull stop orders and a large movement down to the lows of 1.2385 and 1.2320. But if the bulls manage to show strength and keep the pair at its current level, another attempt will be made to break the maximum of 1.2530.