FX.co ★ Trading plan for EUR/USD and GBP/USD on May 23

There was practically no movement on euro and pound yesterday, mainly due to the empty macroeconomic calendar. However, this kind of situation cannot continue for long, so the market is likely to be active again today. After all, preliminary data on business activity indexes in the UK are being widely published, and forecasts for it are not optimistic. In particular, the services business activity index is expected to decrease from 55.9 points to 55.3 points, while the manufacturing index is likely to remain unchanged. The composite business activity index is expected to decrease from 54.9 points to 54.7 points.

On the bright side, euro could help support pound from declining, as more positive results are expected in the eurozone. For example, the manufacturing index is projected to increase from 45.8 points to 47.0 points, while the services business activity index is expected to grow from 56.2 points to 56.7 points. The composite business activity index is likely to rise from 54.1 points to 54.8 points.

In the US, preliminary estimates for business activity are less optimistic than in the UK. Although the manufacturing index may increase from 50.2 points to 50.3 points, the services business activity index is likely to decrease from 53.6 points to 53.0 points. Therefore, the composite business activity index will decline from 53.4 points to 53.0 points. This, combined with the overbought condition of dollar, is likely to lower demand for dollar further.

The stagnation in EUR/USD may indicate an accumulation of trading forces. However, the situation is unlikely to last long.

Similarly, GBP/USD is not moving, but the exchange rate remains bearish. If the price stays below the level of 1.2410, the local low will be updated. Until then, the pair's price may fluctuate strongly.