bearish scenario

EUR/USD: Yesterday, the euro and other currencies started trading lower, while volatility was weak. The main reason for the change in sentiment was the weak PMIs in the US. The May ISM Services PMI came in at 50.3, down from April's 51.9. The final Services PMI reading was lowered from 55.1 to 54.9. Factory orders increased by 0.4% in April, below the expected range of 0.8-1.1%. Industrial orders excluding transportation decreased by 0.2%. Market expectations for a Federal Reserve rate hike at the June 14th meeting decreased from 25.3% to 21.8%. The S&P 500 stock index declined by 0.20%.       From a technical standpoint, we see the price returning to the range of 1.0692-1.0738, from which unsuccessful breakouts have occurred in both directions over the past week. Take note that the price has not firmly established itself above or below the limits of the range, which complicates the situation since the next breakout could turn out to be false, particularly on the bullish side, as the global trend is bearish.   We acknowledge that resistance at 1.0804 could be tested if there is an upward breakout. The price may even surpass the level with the MACD line acting as a target, which would constitute a deep correction from the decline since May 4th.   Climbing to 1.0804 represents approximately a 38.2% retracement of the downward move since May 4th. However, as long as the price doesn't breach the 1.0738 level, we'll stick to the bearish scenario with 1.0613 as the target.   The Marlin oscillator has already risen enough (removed negative tension) and may now turn into a new downward wave.   On the four-hour chart, the MACD indicator line is gradually flattening out, and the signal line of Marlin is attempting to merge with the neutral zero line.   The trend is neutral and is likely to remain so for another week until the Fed meeting. However, on the 13th, there will be CPI data released, which could further confuse market participants.        

GBP/USD: Yesterday, the British pound tried to fall below the MACD line on the daily chart but was pushed back up towards the resistance level at 1.2443. The signal line of the Marlin oscillator is moving up along with the price but is providing noticeable resistance to this movement.     A consolidation above 1.2443 with the oscillator transitioning into positive territory can potentially lead the price to the target level of 1.2583. At the moment, a new level has formed at yesterday's low of 1.2367 (coinciding with the April 21 low, where there was also a sharp rebound). Falling below this level will open up the target of 1.2273. The bearish scenario persists     On the four-hour chart, the price has bounced off the support of the MACD indicator line. Currently, the price is consolidating near the level of 1.2443.   The Marlin oscillator is in the downtrend area. Here, the earliest bearish signal is also the support level at 1.2367, reinforced by the MACD line. We await further developments.          

Yesterday, the euro showed a range of 60 points, closing the day at the opening level. The upper shadow tested the 1.0930 level, and this morning the price is headed towards this mark again, not giving up hope of reaching the upper band of the green descending price channel around 1.0990.       This is possible if the euro follows the stock market and employment data turn out worse than expected. For now, the price needs to consolidate above 1.0930.   Surpassing yesterday's low at 1.0871 will be a signal for a decline. On the 4-hour chart, the price could not consolidate below the balance indicator line and returned to the 1.0910/30 range. Here, it can linger for a while and try to overcome the MACD line around 1.0952.   The Marlin oscillator in the positive area is ready to join the growth at any moment.     Given that we accept the bearish scenario for the euro as the main plan, the price may not overcome the MACD line and return below the range. Like yesterday, uncertainty persists in the short-term perspective.    

Unlike the euro, the pound has returned to the levels it was at before the release of preliminary inflation data in the eurozone. This is somewhat logical due to the fact that the data mounted pressure on the euro, while there were no economic reports or news from the UK. Today, the situation is quite similar. The economic calendar is basically empty, and only European Central Bank President Christine Lagarde's speech can affect the market. Primarily, it will affect the euro.   The impact on the pound will be significantly less noticeable. The question is, where will all this lead? Most likely, Lagarde will take note of the slowdown in inflation and maybe even suggest the possibility of a rate cut. Of course, she will not mention any specific timing. But it could be clear that she is already starting to make a hint in December. The euro will fall further, pulling the pound along with it. However, the decline in the British currency will be much less pronounced and possibly short-term.   Last Friday, the GBP/USD pair managed to recover relative to the recent corrective move. A s a result, the quote returned to the area of the resistance level of 1.2700. On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, thus reflecting bullish sentiment among traders. On the same chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle. Outlook The EUR/USD kicks off the new week with a decrease in the volume of long positions, accompanied by a rebound from the level of 1.2700. In this case, hitting the 1.2700 mark indicates a prevailing bullish sentiment. In perspective, this could extend the upward cycle in case the pair tests last week's high. The bearish scenario will come into play in case the pair trades sideways between the levels of 1.2600/1.2700. Comprehensive indicator analysis indicates a downward cycle in the short term due to the rebound. Meanwhile, the bullish sentiment remains in force in the intraday and medium-term periods.   Read more: https://www.instaforex.eu/forex_analysis/362129