17.07.201916:16 Forex Analysis & Reviews: EUR and GBP: sellers of the euro and the pound expectedly took a breather, but it's too early to talk about the bottom of the market

The euro and the pound made an attempt to continue the decline against the US dollar, but inflation data in the UK and the eurozone limited the downward potential.

To say that bears have groped the bottom, it will not be quite right, as for a real market reversal and the formation of an upward correction in the euro and the pound requires a re-update of the current lows, and it is desirable to do it on some good news on the US economy. Only then will the big players be able to exit the market, replacing themselves with speculative traders.

EURUSD

Inflation report in the eurozone in the first half of the day, although it has supported the euro, the pessimism associated with the launch of ECB purchases of bonds continues to put pressure on risky assets.

According to data, in June this year, compared to June last year, consumer prices in the eurozone rose only by 1.3%, while the preliminary estimate was at 1.2%.

As mentioned above, as early as last month, ECB President Mario Draghi said that he was ready to take the necessary measures to stimulate the economy, up to lowering interest rates. Let me remind you that the ECB's target level is just below 2%.

Also, a report was recently released from the European Commission, where inflation forecasts for the current and next years in the euro area were lowered to 1.3%, which only strengthened traders' confidence in the conduct of incentive measures.

Core inflation, which does not take into account volatile categories, rose only by 1.1%, fully coinciding with the forecasts of economists.

As for the technical picture of the EURUSD pair, the bears will not give up trying to continue the downward movement, and this only requires a return to the lows of today, which will increase the pressure on risky assets and lead to a further fall of the trading instrument in the area of the lows of 1.1160 and 1.1130. The upward correction is likely to be limited by the resistance of 1.1240 and 1.1260.

GBPUSD

The British pound managed to hold its positions against the US dollar and returned to the opening level of the day after yesterday's lows. Data on consumer prices in the UK, which grew in June this year, forced the bears to fix profits on short positions.

According to the report of the National Bureau of Statistics, the consumer price index in June this year remained unchanged compared to May but increased by 2.0% compared to the same period in 2018, which fully coincided with the forecasts of economists. Current inflation fully corresponds to the target level of the Bank of England.

If inflation goes beyond this level, it is possible that the Central Bank of England will signal its intention to raise the key interest rate, as repeatedly mentioned in the reports, which can support the pound in "difficult times".

However, a small increase in the pound, or rather even a rebound from the monthly lows, does not mean that the bearish trend is completed or sellers have groped the bottom. Most likely, investor sentiment will continue to push the pound down as the probability that Boris Johnson will take the post of Prime Minister of the United Kingdom will increase.

Let me remind you that Johnson recently said that he is ready for a tough Brexit on October 31, which will entail serious difficulties for the economy.