EUR/USD – 1H.
Hello, traders! On July 14, the EUR/USD pair continued its growth process after another rebound from the upward trend line. Thus, the mood among traders remains "bullish". There are many factors that can support the demand for the euro. First, it is the COVID-2019 epidemic in the United States, which continues to rage and set anti-records almost every day, threatening the recovery of the American economy, which has already been poured several trillion dollars during 2020, which is guaranteed to lead to a huge budget deficit and an increase in public debt. Secondly, traders expect that the EU summit, which will address the issue of assistance to the European economy, will end with positive results. In other words, the "North" and "South" of the European Union will be able to reach some kind of consensus and 750 billion euros will be allocated to the most affected sectors of the economy. These two reasons are already enough for the euro currency to continue to grow. In addition, two trend lines support the growth of the euro graphically.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair made a consolidation above the level of 1.1347. Thus, the growth process can be continued in the direction of the next corrective level of 100.0% (1.1496), which is the nearest level. I am not sure that the quotes will reach this level, as at the moment they have reached the level of 1.1422, which is the peak for June 10. Therefore, it is possible to rebound from this level, which may work in favor of the US currency and the beginning of a fall in the direction of the corrective level of 76.4% (1.1294) and a new upward trend line.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair performed an increase to the corrective level of 161.8% (1.1405). The pair's rebound from this Fibo level will allow traders to expect a reversal in favor of the US currency and the beginning of a fall in the direction of the corrective level of 127.2% (1.1261). Closing above it will increase the chances of continuing growth towards the next corrective level of 200.0% (1.1566).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair rebounded from the lower line of the "narrowing triangle", which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the "triangle"). Several charts allow for possible growth in the direction of 1.1500-1.1600.
Overview of fundamentals:
On July 14, in the European Union, the index of business sentiment from the ZEW Institute was worse than expected by traders, as well as the volume of industrial production for May. The US consumer price index was in line with forecasts.
News calendar for the United States and the European Union:
US - change in industrial production (13:15 GMT).
On July 15, the European Union's economic news calendar is empty, and in America, a fairly important report on industrial production will be released. Do not forget about the important factors that were described at the beginning of the article.
COT (Commitments of Traders) report:
The latest COT report showed exactly the changes in the mood of traders that I expected to see. The first thing to note is the growth of long-contracts by the "Non-commercial" group and a much smaller number of open short-contracts. Thus, speculators in the reporting week looked in the direction of purchases of the British. However, the "Commercial" group, on the contrary, increased short-contracts, and in total the greater number belongs to short. However, the first group of traders is still more important. And the trend, if you look at the upper half of the illustration, is clearly "bullish". At the beginning of April, there were 161 thousand contracts in the hands of speculators, now - 186 thousand.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend buying the euro currency with a target of 1.1496, as a new close was made above the level of 1.1347. At the same time, I recommend to be careful with purchases, since the movements now alternate 50-70 in each direction, and from the previous peak of 1.1422, the rebound can be performed. I do not recommend rushing to sell the pair yet. To do this, wait for the quotes to close below the trend line on the hourly chart.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
