GBP/USD. July 7th. US reports might provide short-term support to the dollar
July 7, 2023 10:22 am
On Thursday, the hourly chart for the GBP/USD pair displayed a sharp increase, subsequently followed by an equally sharp drop, which was dictated by the news background. The British pound fared slightly better than the European, rebounding twice effectively from the 1.2690 level, facilitating two opportunities to take long positions. The pair has stabilized above the relatively weak corrective level of 23.6% (1.2720). However, I anticipate market volatility similar to yesterday’s. Today, the pair could oscillate upwards or downwards with relative ease.
The wave patterns have become more perplexing following yesterday’s movements. The low of the last downward wave and the peak of the last upward wave have been broken. The waves recorded between July 4 and July 7 suggest a horizontal movement. Waves from July 7 do not indicate a clear dominance of either bulls or bears. As I previously mentioned, the likelihood of upward and downward movements remains high today. Thus, the graphic picture of the pound could be better now.
Given that the dollar experienced growth only for a brief period yesterday, we might see a similar trend today. The ISM Index and the ADP report supported the bears of the pair, but the bulls dominated the market for the rest of the day. If today’s Nonfarm Payrolls and unemployment figures display strong values, the pair might experience a substantial drop, yet any further decline is uncertain since the quotes previously closed above the descending trend corridor.
The chances of receiving strong data from the US on Friday are not at their peak. The unemployment rate has increased in recent months, and payroll reports frequently yield unexpected results. Last month, the market anticipated a minor increase but received a figure of 339K instead. This month, everything may be the opposite.
On the 4-hour chart, the pair shifted in favor of the American following a new “bearish” divergence at the CCI indicator, but there was no solidification below the 1.2674 level. As such, the downward momentum can only continue if there’s a closure below 1.2674. Consolidating the pair’s rate above 61.8% (1.2745) would increase the likelihood of sustained growth towards the subsequent level of 1.2860. As of today, no new emerging divergences have been noted.
Commitments of Traders (COT) Report:
The sentiment of the “Non-commercial” trader category over the last reporting week has become more “bullish.” The number of long contracts held by speculators increased by 2815 units, while the number of short ones decreased by 2571. The overall sentiment of major players remains fully “bullish,” and there is a twofold gap between the number of long and short contracts: 104 thousand versus 52 thousand. The British pound has good prospects for further growth, and the current news background supports it more than the dollar. However, I do not expect a strong rise in the pound soon, as the market has already factored in the Bank of England’s interest rate hike to 0.50%. There are also a few graphical buying signals for now.
News calendar for the US and UK:
USA – Average Hourly Earnings (12:30 UTC).
USA – Unemployment Rate (12:30 UTC).
USA – Change in Nonfarm Payrolls (12:30 UTC).
On Friday, the economic events calendar features three interesting entries from the US. The impact of the news background on traders’ sentiment for the rest of the day could be strong.
GBP/USD forecast and trader advice:
There could be only very minor short sales of the British pound in a “bullish” trend. For example, regarding a rebound on the 4-hour chart from the 1.2745 level with targets at 1.2690 and 1.2640. I advised buying the pair upon a close above the 1.2720 level on the hourly chart with targets in the 1.2750-1.2800 range. The targets have been reached. New purchases are risky, as today’s news background will be strong, and the dollar might take advantage of this situation.
The material has been provided by InstaForex Company – www.instaforex.com
On Thursday, the hourly chart for the GBP/USD pair displayed a sharp increase, subsequently followed by an equally sharp drop, which was dictated by the news background. The British pound fared slightly better than the European, rebounding twice effectively from the 1.2690 level, facilitating two opportunities to take long positions. The pair has stabilized above the relatively weak corrective level of 23.6% (1.2720). However, I anticipate market volatility similar to yesterday’s. Today, the pair could oscillate upwards or downwards with relative ease.
The wave patterns have become more perplexing following yesterday’s movements. The low of the last downward wave and the peak of the last upward wave have been broken. The waves recorded between July 4 and July 7 suggest a horizontal movement. Waves from July 7 do not indicate a clear dominance of either bulls or bears. As I previously mentioned, the likelihood of upward and downward movements remains high today. Thus, the graphic picture of the pound could be better now.
Given that the dollar experienced growth only for a brief period yesterday, we might see a similar trend today. The ISM Index and the ADP report supported the bears of the pair, but the bulls dominated the market for the rest of the day. If today’s Nonfarm Payrolls and unemployment figures display strong values, the pair might experience a substantial drop, yet any further decline is uncertain since the quotes previously closed above the descending trend corridor.
The chances of receiving strong data from the US on Friday are not at their peak. The unemployment rate has increased in recent months, and payroll reports frequently yield unexpected results. Last month, the market anticipated a minor increase but received a figure of 339K instead. This month, everything may be the opposite.
On the 4-hour chart, the pair shifted in favor of the American following a new “bearish” divergence at the CCI indicator, but there was no solidification below the 1.2674 level. As such, the downward momentum can only continue if there’s a closure below 1.2674. Consolidating the pair’s rate above 61.8% (1.2745) would increase the likelihood of sustained growth towards the subsequent level of 1.2860. As of today, no new emerging divergences have been noted.
Commitments of Traders (COT) Report:
The sentiment of the “Non-commercial” trader category over the last reporting week has become more “bullish.” The number of long contracts held by speculators increased by 2815 units, while the number of short ones decreased by 2571. The overall sentiment of major players remains fully “bullish,” and there is a twofold gap between the number of long and short contracts: 104 thousand versus 52 thousand. The British pound has good prospects for further growth, and the current news background supports it more than the dollar. However, I do not expect a strong rise in the pound soon, as the market has already factored in the Bank of England’s interest rate hike to 0.50%. There are also a few graphical buying signals for now.
News calendar for the US and UK:
USA – Average Hourly Earnings (12:30 UTC).
USA – Unemployment Rate (12:30 UTC).
USA – Change in Nonfarm Payrolls (12:30 UTC).
On Friday, the economic events calendar features three interesting entries from the US. The impact of the news background on traders’ sentiment for the rest of the day could be strong.
GBP/USD forecast and trader advice:
There could be only very minor short sales of the British pound in a “bullish” trend. For example, regarding a rebound on the 4-hour chart from the 1.2745 level with targets at 1.2690 and 1.2640. I advised buying the pair upon a close above the 1.2720 level on the hourly chart with targets in the 1.2750-1.2800 range. The targets have been reached. New purchases are risky, as today’s news background will be strong, and the dollar might take advantage of this situation.
The material has been provided by InstaForex Company – www.instaforex.com
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