FX.co ★ Trading plan for EUR/USD and GBP/USD on July 8, 2021

A rebound was quite rightly expected in the currency market after such a strong movement, which was observed on Tuesday. There was every reason for this since signs of the beginning of a rebound were clearly visible on the commodity markets from the very opening of yesterday's trading. However, commodity markets began to decline again after the opening of the American session, but one should not associate this with the publication of the minutes of the FOMC meeting. The market stayed in place again by this time and all the most interesting things that happened before it. Moreover, the market did not learn anything new. In fact, the content of the minutes was no different from what Jerome Powell announced during his press conference. There were few more details, but the essence does not change from this.

It is noteworthy that the market as a whole positively reacted to the data on open vacancies, whose total number in the US rose from 9 193 thousand to 9 209 thousand. As we can see, the number of vacancies seems to be growing, which looks quite not bad. This also means that the unemployment rate may well decline in the near future. However, this result was achieved only by revising the previous data. Previously it was assumed that there were 9,286 thousand open vacancies last month.

Number of Job Openings (United States):

On the other hand, Germany's placement of 5-year government bonds was practically ignored. The yield of which declined from -0.57% to -0.59%. This is only possible if the demand for government debt is growing. Demand can only grow if investors do not believe in an imminent rise in interest rates, which will inevitably lead to an increase in the profitability of new loans. It turns out that investors assume that the European Central Bank will not simply raise the refinancing rate, but will not even announce its plans on this issue and will not announce any deadlines for the start of tightening its monetary policy. This means that nothing threatens the further strengthening of the US dollar, and the trend for its growth will only continue. Thus, there is nothing surprising in the fact that we did not see any rebound in the currency market yesterday.

Today, the strengthening of the US dollar can also be supported by data on applications for unemployment benefits in the United States. In particular, the number of initial applications should decline by 44 thousand, while the number of repeated applications may also fall by 121 thousand. This is another confirmation that the recent increase in the unemployment rate was quite an accidental and temporary phenomenon. In general, a rebound or even a certain correction will have to wait for a long time.

Number of repeated applications for unemployment benefits (United States):

The EUR/USD pair managed to break through the important level of 1.1800 during a consecutive decline, which ultimately led to the prolongation of the downward cycle from June 1. To continue the downward trend in the market, the quote must hold below the level of 1.1800.

The GBP/USD pair resumed its downward movement after a short stagnation at 1.3785. Sellers still have a local low from July 2 on their way, which may affect the volume of short positions. But if the coordinates are broken, a stronger price decline is not excluded.