EUR/USD – 1H.
The EUR/USD pair performed a reversal in favor of the US currency on Monday and fell to the level of 1.1772. The rebound of the pair's exchange rate from this level will allow traders to count on a reversal in favor of the EU currency and some growth in the direction of the corrective level of 76.4% (1.1837). Closing below the level of 1.1772 will increase the probability of a further fall in the direction of the corrective level of 100.0% (1.1704). However, in general, the movement of the pair remains very impressive. Thus, it may take several days to reach any of these levels. There was no background information on Monday. Therefore, nothing influenced the mood of traders. However, the situation should change today, as several rather important reports in the European Union and the United States will be released at once. Let's start with Europe. There will be only one report. However, it is very important. GDP growth rates in the second quarter of 2021. It is the second publication of this indicator in the second quarter. Thus, most likely, it will not differ from the first.
Accordingly, traders expect to see figures of 2.0% q/q and 13.7% y/y. However, the indicators may differ slightly from the previous estimate. Thus, the fate of the European currency in the first half of today will depend on which way they will differ. However, I do not expect a strong reaction from traders to this report. In the afternoon, a retail trade report will be released in America, attracting more attention from traders. It is the American economy that traders are now looking at since the Fed is now on the verge of completing the QE program. Thus, if economic indicators deteriorate (which is quite possible due to the increase in coronavirus cases in America), this may negatively affect the attempts of the US currency to resume growth. The same applies to the report on industrial production. Traders expect that by the end of July, its volumes increased by 0.5%. A lower value can cause a wave of dollar sales. There will be another speech by Jerome Powell in the evening, from whom traders will also expect information about the economic stimulus program.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the EU currency and closed above the Fibo level of 76.4% (1.1782) after the formation of a bullish divergence at the CCI indicator. However, during yesterday's day, the pair's quotes fell below the level of 1.1782. Thus, a new fall is possible in the direction of the corrective level of 100.0% (1.1606). No new emerging divergences are observed today in any indicator.
News calendar for the United States and the European Union:
EU - change in the volume of GDP (09:00 UTC).
US - change in retail trade volume (12:30 UTC).
US - change in the volume of industrial production (13:15 UTC).
US - Jerome Powell will give a speech (17:30 UTC).
On August 17, the calendars of economic events in the European Union and the United States contain many interesting entries. I recommend paying the greatest attention to the speech of Jerome Powell, although all other reports may cause a reaction of traders.
COT (Commitments of Traders) report:
The latest COT report showed that the mood of the "Non-commercial" category of traders during the reporting week became even more "bearish." Major players have opened 18,202 short contracts for the euro and 10,841 long contracts. Thus, in the last eight weeks, the number of short contracts focused on the hands of speculators has increased by almost 90 thousand, and the number of long contracts has decreased by 4. Therefore, a further fall in the European currency is very likely, according to COT reports. However, the past week has shown that bear traders could have already had enough and left the market, and bull traders could take their place. The pair failed to break through the level of 1.1704, which I consider a very remarkable moment.
EUR/USD forecast and recommendations for traders:
Today, I recommend buying the pair with a target of 1.1837 on the hourly chart if a new close is made above the level of 1.1772. I recommend selling if there is a close under the level of 1.1772 with a target of 1.1704.
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.
