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10.06.202110:37 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on June 9, 2021

Despite the fact that the euro and the pound behaved somewhat differently yesterday, there are many similarities in their behavior. To begin with, we should consider that the currency market has literally stood still for several days, and except for yesterday's small surge, the Euro currency has remained moving horizontally. This means that we are dealing with a strong stagnation. It can't go on like this for long, as someone will panic sooner or later. That's exactly what we saw yesterday. The tension in the market has reached its limit, and what is much more interesting is that the behavior of both the pound and the euro makes it clear what they will focus on today.

Exchange Rates 10.06.2021 analysis

Let's start with the pound, which is still near a two-year high and is clearly seriously overbought. This means that it is quite difficult for it to rise, and for this to happen, the existing imbalances should be corrected slightly. However, the whole point is that America will release its inflation data today, which should show an acceleration in consumer price growth from 4.2% to 4.7%. Here, it doesn't matter what the Fed says about the allegedly stable situation and the absence of any inflationary risks. One can think that inflation is about to return to normal values and that all this growth is just temporary.

If inflation has been growing for more than a year and has been doing so in recent months, there is practically no choice but to do something with the refinancing rate. In other words, the inflation data will finally convince large investors that the Federal Reserve will raise interest rates in the near future. This will inevitably lead to a slowdown in the pace of economic recovery, which is the best case. In general, the outlook for the US dollar does not look very good. Therefore, the pound clearly has the opportunity to further strengthen its position but due to the obvious overbought, it should fall a little bit before that. This is what we observed yesterday. Thus, it can be said that this maneuver is just preparation for further growth.

Inflation (United States):

Exchange Rates 10.06.2021 analysis

Everything is somewhat more interesting for the Euro currency, since it does not expect US inflation, but the results of the European Central Bank's meeting and Christine Lagarde's subsequent press conference. Moreover, inflationary risks in Europe are clearly only growing. It should be noted that not only it has already reached the target level of 2.0%, but it will also continue to grow. That's at least what the dynamics of producer prices are showing.

Consequently, the ECB simply needs to somehow react to this, and it is very likely that Christine Lagarde will voice the regulator's concerns today about how things are with consumer prices. Investors will regard this as a preparation for an early increase in the refinancing rate. In fact, the European economy is even less prepared for such a detour than the American one, which is not just bad, but very bad.

Thus, the European currency is likely to sharply decline after the meeting but most likely only for the reason that Christine Lagarde may try to ignore this issue. Although this is extremely unlikely. It is clear that the scale of the decline will not be so catastrophic, as it will be restrained by the US inflation. Nevertheless, this is the most likely scenario.

Refinancing rate (Europe):

Exchange Rates 10.06.2021 analysis

The EUR/USD pair still retained the same amplitude between the levels of 1.2160 and 1.2200 after a series of speculative surges yesterday. Trading tactics will depend on keeping the price outside of a particular level for a four-hour period. In simple words, the movement is carried out on outgoing traffic.

Exchange Rates 10.06.2021 analysis

The GBP/USD pair still follows within the borders of the sideways channel, where a special concentration of trading forces has been observed in the lower part of 1.4100/1.4200 in recent days. It can be assumed that the work on the rebound is inside the set levels 1.4100/1.4200/1.4245 and is still relevant among traders. The movement in the lower part of the 1.4100/1.4200 channel will continue until the quote remains below the level of 1.4080 while the transition to the upper part of the channel will occur after the price is held above the level of 1.4205.

Exchange Rates 10.06.2021 analysis

*这里的市场分析是为了增加您对市场的了解,而不是给出交易的指示。

Mark Bom,
Analytical expert of InstaSpot
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