American reporting is deteriorating, but the dollar is going through tough times even without it
June 24, 2023 2:23 pm
Business activity indices were released on Friday in several countries worldwide, including Germany, the European Union, the United States, and the United Kingdom. I have listed the most important countries relevant to the pairs I regularly discuss. Previous reviews have covered business activity in the European Union and the United Kingdom, so let’s now examine the remaining indices.
Let’s begin with Germany, which is the simplest case. The indices there have fallen similarly to those in the European Union. The manufacturing sector is a major concern, as the index has dropped 41 points. It’s important to remember that any value below 50 indicates a negative trend, and the lower the indicator, the more severe the trend. As we can observe, both Europe and Germany are grappling with this indicator. Although the business activity index for the services sector declined, it remained above the 50 level, but the decrease was significant. Given this, the decrease in demand for the euro on Friday is easily understandable.
In the United States, the manufacturing business activity index continued to decline and now stands at 46.3. In the services sector, it slightly decreased from 54.9 to 54.1. However, the manufacturing sector in America raises concerns, resulting in decreased demand for the dollar in the latter half of the day.
The current wave analysis suggests one of two possible scenarios. Either the entire trend segment for the euro, which commenced on March 15, will transform into an ascending segment, or the wave analysis for the European and British currencies will continue to differ, which is quite uncommon significantly. In the first scenario, we anticipate resuming the euro’s upward movement not below the 11th figure. In the second scenario, the pairs will move asynchronously.
It is also worth noting that the deterioration of economic indicators is currently being observed universally. The central banks of the European Union, the United Kingdom, and the United States continue to signal tightening, which impacts economic growth and indicators. I believe a “recession moment” will arrive soon, a topic widely discussed last year and continuing this year. Initially, it was believed that a recession was inevitable, but the outlook changed in 2023 with the decline in energy prices. Central banks rely on annual GDP figures, expected to show at least slight growth. However, the weaker inflation becomes, the higher the probability of no growth. This is particularly true for the European Union and Britain. In such a case, central banks may “moderate their enthusiasm,” halt tightening, and move more swiftly toward a softer monetary policy.
Based on the conducted analysis, a new downward trend segment is in progress. The pair still has significant room for decline. I consider targets around 1.0500-1.0600 quite realistic and recommend selling the pair with these targets in mind. There is a high probability of completing wave b, and the MACD indicator has already formed two “down” signals. According to an alternative scenario, the current wave will be more extended, but the formation of a downward trend segment will follow it. Hence, I do not recommend buying it.
The wave pattern of the pound/dollar pair has changed and now indicates the formation of an upward wave, which could conclude at any moment. Consider buying the pair only in the event of a successful break above the 1.2842 level. Selling is also recommended, as there have been two unsuccessful attempts to break this level, and the stop-loss should be set above it. The MACD indicator has also signaled a “down” movement.
The material has been provided by InstaForex Company – www.instaforex.com
Business activity indices were released on Friday in several countries worldwide, including Germany, the European Union, the United States, and the United Kingdom. I have listed the most important countries relevant to the pairs I regularly discuss. Previous reviews have covered business activity in the European Union and the United Kingdom, so let’s now examine the remaining indices.
Let’s begin with Germany, which is the simplest case. The indices there have fallen similarly to those in the European Union. The manufacturing sector is a major concern, as the index has dropped 41 points. It’s important to remember that any value below 50 indicates a negative trend, and the lower the indicator, the more severe the trend. As we can observe, both Europe and Germany are grappling with this indicator. Although the business activity index for the services sector declined, it remained above the 50 level, but the decrease was significant. Given this, the decrease in demand for the euro on Friday is easily understandable.
In the United States, the manufacturing business activity index continued to decline and now stands at 46.3. In the services sector, it slightly decreased from 54.9 to 54.1. However, the manufacturing sector in America raises concerns, resulting in decreased demand for the dollar in the latter half of the day.
The current wave analysis suggests one of two possible scenarios. Either the entire trend segment for the euro, which commenced on March 15, will transform into an ascending segment, or the wave analysis for the European and British currencies will continue to differ, which is quite uncommon significantly. In the first scenario, we anticipate resuming the euro’s upward movement not below the 11th figure. In the second scenario, the pairs will move asynchronously.
It is also worth noting that the deterioration of economic indicators is currently being observed universally. The central banks of the European Union, the United Kingdom, and the United States continue to signal tightening, which impacts economic growth and indicators. I believe a “recession moment” will arrive soon, a topic widely discussed last year and continuing this year. Initially, it was believed that a recession was inevitable, but the outlook changed in 2023 with the decline in energy prices. Central banks rely on annual GDP figures, expected to show at least slight growth. However, the weaker inflation becomes, the higher the probability of no growth. This is particularly true for the European Union and Britain. In such a case, central banks may “moderate their enthusiasm,” halt tightening, and move more swiftly toward a softer monetary policy.
Based on the conducted analysis, a new downward trend segment is in progress. The pair still has significant room for decline. I consider targets around 1.0500-1.0600 quite realistic and recommend selling the pair with these targets in mind. There is a high probability of completing wave b, and the MACD indicator has already formed two “down” signals. According to an alternative scenario, the current wave will be more extended, but the formation of a downward trend segment will follow it. Hence, I do not recommend buying it.
The wave pattern of the pound/dollar pair has changed and now indicates the formation of an upward wave, which could conclude at any moment. Consider buying the pair only in the event of a successful break above the 1.2842 level. Selling is also recommended, as there have been two unsuccessful attempts to break this level, and the stop-loss should be set above it. The MACD indicator has also signaled a “down” movement.
The material has been provided by InstaForex Company – www.instaforex.com
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