31.05.201908:48 Forex Analysis & Reviews: Forecast for EUR/USD and GBP/USD on May 31. The pound and the euro are still prone to fall

EUR/USD – 4H.

As seen on the 4-hour chart, the EUR/USD pair continues the process of falling in the direction of the correction level of 127.2% (1.1102), but yesterday the quotes managed to fall by just a few points. However, the bears continue to put pressure on the euro/dollar pair, and the bullish divergence, as we can see, could not stop the fall. Yesterday, changes in the volume of US GDP became known in the first quarter according to preliminary estimates - +3.1%. The value is not final, but it is not different from traders' expectations. It is because of the coincidence with the forecast that the market did not decide on new sales of the pair. In addition, the news received information that the next country to which Donald Trump's Damocles sword may fall may be Mexico. Trump has long been struggling with the flow of illegal immigrants from this country, but, we can assume that so far unsuccessfully. If Mexico does not bring order to the border with the United States, Trump threatens to impose duties on Mexican goods in the amount of 5%, then 10% and so on. The rebound of the pair from the Fibo level of 127.2% will allow traders to expect a reversal in favor of the euro and some growth in the direction of the correction level of 100.0% (1.1177).

The Fibo grid was built on the extremums from March 7, 2019, March 20, 2019.

Forecast for EUR/USD and trading recommendations:

The EUR/USD pair has not changed anything in the picture of the situation over the past day. Thus, I recommend keeping the euro sales open with the target of 1.1102, with a protective order above the Fibo level of 100.0%. I recommend buying the pair after the rebound from the level of 127.2% to the correction level of 1.1177 and the stop loss order at 1.1102.

GBP/USD – 4H.

The GBP/USD pair calmly continues the process of falling in the direction of the Fibo level of 100.0% (1.2437). Traders find no reason to buy the pound/dollar pair, as news from the UK still come only with a negative color. For example, yesterday, the UK Business Society appealed to the future Prime Minister of the country with a request to avoid Brexit in the "no deal" mode. The UK, which remains in the EU for the time being, is already losing significant sums due to Brexit. And Brexit without a deal will hit the economy and businessmen even more. The new Prime Minister will clearly have a hard time, as it is very difficult to even imagine how you can unleash the tangle of problems that formed after a three-year Brexit procedure under the leadership of Theresa May. Bullish emerging divergence allows us to expect a reversal in favor of the British pound and a return to the correction level of 76.4% (1.2661).

The Fibo grid is built on the extremes of January 3, 2019, and March 13, 2019.

GBP/USD – 1H.

As seen on the hourly chart, the pound/dollar performed a reversal after the formation of a bullish divergence in the MACD indicator. As a result, on May 31, the growth process can be continued in the direction of the corrective level of 161.8% (1.2673). However, the closing of the pair's quotes under the low divergence will work in favor of the US currency and the resumption of the fall in the direction of the correction level of 200.0% (1.2554). In the second half of the day, the US will release information about the income and expenses of Americans in April, which can return the interest of traders to buy the US currency. There are no interesting reports regarding Brexit or the election of a new Prime Minister in the UK yet.

The Fibo grid is built on the extremes of April 25, 2019, and ay 3, 2019.

Forecast for GBP/USD and trading recommendations:

The pair GBP/USD has executed the closing level of 1.2673. I do not recommend selling the pair today, as the hourly chart already has a bullish divergence, and on the 4-hour chart, it can be formed in the next few hours. I recommend buying the pair at the rebound from the Fibo level of 200.0%(hourly chart) with a target of 1.2673 and a protective order under the level of 1.2554 or with the formation of bullish divergence on the 4-hour chart, but very carefully.