EUR/USD – 1H.
The EUR/USD pair reversed in favor of the US currency on Tuesday and fell to the corrective level of 100.0% (1.1704). The rebound of the pair's exchange rate from this level allows traders to count on a reversal in favor of the EU currency and the resumption of the growth of quotes in the direction of the level of 1.1772. Closing below the level of 100.0% will increase the probability of a further fall in the direction of the next corrective level of 127.2% (1.1552). The information background of the last day was quite interesting and important. However, the most important report did not arouse any interest among traders. Thus, all the economic reports of yesterday did not cause a logical reaction from traders.
Consequently, the reasons for the growth of the US currency had to be looked for elsewhere. Jerome Powell's speech was still scheduled for the evening in the United States. However, it isn't easy to imagine that traders began to play this speech 10-12 hours before it began. I can also mention the difficult situation with the US military in Kabul, Afghanistan. Let me remind you that Washington decided to withdraw its troops from Afghanistan, which immediately caused the advance of the extremist organization "Taliban," which captured Kabul. For several days, many residents have been trying to leave the country with all their might because they do not want to live under the Taliban in power and are afraid of reprisals for cooperation with the American military. Thus, the situation is very difficult. And traders do not like geopolitical tensions. In part, the dollar could have shown growth yesterday due to this factor. I also remind you that the Fed may soon announce the curtailment of the quantitative stimulus program. The completion itself may not happen soon, but just statements may be enough for traders to continue buying the dollar.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a new reversal in favor of the US currency and resumed the process of falling in the direction of the corrective level of 100.0% (1.1606). No new emerging divergences are observed today in any indicator. The rebound of the pair's quotes from the level of 100.0% will allow us to count on a reversal in favor of the European currency and new growth in the direction of the corrective level of 76.4% (1.1782).
News calendar for the United States and the European Union:
EU - consumer price index (09:00 UTC).
US - publication of the minutes of the Fed meeting (18:00 UTC).
On August 18, the European Union will release a fairly important inflation report for July. Traders expect that inflation will not change and will be 2.2% y/y. In the evening, the minutes of the last FOMC meeting will be published. Thus, the information background today will be average in strength.
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 1.1772 on the hourly chart if there is a rebound from the level of 1.1704. I recommend selling if there is closure under the level of 1.1704 with the target of 1.1606.
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" - small traders who do not have a significant impact on the price.
