EUR/USD – 1H.
The EUR/USD pair tried to continue the process of falling during Friday, closing under the corrective level of 76.4% (1.1837). However, in the second half of the day, when data on unemployment, wages, the labor market, and the trade balance were released in the US, the pair performed a reversal in favor of the European currency and began the process of growth in the direction of the downward trend line, which characterizes the mood of traders at the moment as "bearish". Fixing the pair's rate above the trend line will increase the probability of further growth of the euro. Let's return to the information background on Friday. Judging by the fact that the US currency fell after the US news, we can assume that the statistics turned out to be weak and disappointing. However, this is not the case.
The unemployment rate was disappointing, which unexpectedly increased to 5.9%, although traders expected it to decrease to 5.7% on the contrary. But all the other reports turned out to be very attractive and optimistic. Nonfarm Payrolls increased by 850 thousand, while the value of the previous month was revised upwards. The US trade balance for May showed a slightly smaller deficit than expected. And average wages rose in the United States in June by 0.3%. Thus, I cannot say that the news from America came weak. Moreover, traders almost always pay attention to the Nonfarm Payrolls report and work out the rest of the data as it turns out. Therefore, it was very strange to see the US dollar fall on Friday on such strong data on the labor market. After all, earlier last week, traders were also pleased with the ADP report, which also significantly exceeded traders' expectations for the number of new employees in the private sector.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a consolidation under the corrective level of 61.8% (1.1890). Thus, the pair's decline can be continued in the direction of the next Fibo level of 76.4% (1.1782). However, the bullish divergence of the MACD indicator allows us to count on a reversal in favor of the EU currency and some growth in the direction of the Fibo levels of 61.8% and 50.0%.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a reversal in favor of the US currency and consolidated under the corrective level of 161.8% (1.2027). Thus, the fall of quotes can be continued in the direction of the Fibo level of 127.2% (1.1729).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On July 2, there were few news and events in the European Union. However, at least three important reports were published in the United States. Unfortunately, traders did not win them back properly, although the information background itself was strong on Friday.
News calendar for the United States and the European Union:
EU - index of business activity in the services sector (08:00 UTC).
EU - ECB President Christine Lagarde will deliver a speech (09:00 UTC).
EU - ECB President Christine Lagarde will deliver a speech (11:30 UTC).
On July 5, the calendar of economic events in America will be empty, and two speeches by ECB President Christine Lagarde will take place in the European Union at once. It might be interesting.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders became more "bearish". Major players have closed 563 long contracts and opened 3,615 short contracts. Thus, the changes shown in the latest report are not too big. However, the mood of speculators has been becoming more "bearish" for several weeks in a row. However, in general, the advantage of bull traders remains, since they have a large number of open longs.
EUR/USD forecast and recommendations for traders:
I do not recommend selling the pair today, since the decline in quotes has been too strained in recent days no matter how the pair tries to perform a reversal in favor of the EU currency. I recommend buying the pair if the quotes on the hourly chart close above the descending trend line with a target of 1.1919.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
