06.07.202110:32 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on July 6, 2021

As expected, Europe's final data on PMIs turned out to be better than forecasted. We waited for this development of events simply because this is exactly what happened with the index of business activity in the manufacturing sector, which was published last week. Perhaps, this is what prevented the Euro currency from showing any impressive growth.

So, the index of business activity in the service sector increased from 55.2 points to 58.3 points, while the preliminary estimate indicated an increase to 58.0 points. The composite index of business activity, which was supposed to grow from 57.1 points to 59.2 points, increased to 59.5 points.

Composite PMI (Europe):

The final data on business activity indices allowed the pound to somewhat be positive. However, this happened with some delay, and the pound actually began to grow seriously only from the opening of the Asian session. The thing is that some weaker results were expected for the UK in contrast to the EU. However, the final data greatly pleased market participants. And although the business activity indices still declined, it was not as much as expected.

In particular, the index of business activity in the services sector declined to 62.4 points, which was supposed to fall from 62.9 points to 61.7 points. The composite index of business activity also fell from 62.9 points to 62.2 points instead of 61.7 points. After all, market participants laid a stronger decline in the indices even at the time of the publication of preliminary data, so we are talking about adjusting positions this time.

Composite PMI (UK):

Today's first focus is the European retail sales data, whose growth rate should slow down from 23.9% to 10.5%. But one shouldn't think that something terrifying is happening. There is none. The values themselves are incredibly high, and for the most part, inadequate. It's all about the low base effect, which European statistics have not yet gotten rid of.

Analyzing the annual data, but monthly, the volume of retail sales should rise by 3.7%. That is, sales are actually growing. In this case, the Euro currency still has the opportunity to strengthen its position slightly.

Retail Sales (Europe):

Today, United States will release its data on business activity indexes. Given the available forecasts, it is possible that the euro and the pound will further grow. The fact is that the index of business activity in the service sector should decline from 70.4 points to 64.8 points. At the same time, the composite index may fall from 68.7 points to 63.9 points. Such values were shown at least by a preliminary estimate.

However, it can be recalled that Europe's final data came out better than the preliminary estimates. So, a similar development of events is possible in the case of the United States, which will lead to an increase in the US dollar.

Composite PMI (United States):

The EUR/USD pair is in the correction stage from the support level of 1.1800, which led to the strengthening of the euro by about 0.70%. In order for the correction to take the form of recovery, the quote must hold above the level of 1.1900, otherwise a reversal cannot be excluded.

The GBP/USD pair moves based on the correction pattern from the variable pivot point of 1.3730. The scale of the pound sterling's strengthening is about 1.20%, which already signals a recovery phase relative to the last week's downward trend.

If the price holds above the level of 1.3900, it can give confidence to buyers, while a price return below 1.3850 could jeopardize the recovery process.