EUR/USD – 1H
Hello, dear traders! On Friday, EUR/USD extended gains and closed above 1.1772. The price is likely to rise to the 76.4% retracement level of 1.1837. In case of a pullback from the 76.4% retracement, the quote may fall to 1.1772. As for Fed Chair Powell's speech, it can de be interpreted in many ways. On the one hand, his remarks were dovish. At the same time, the Fed accepts the possibility of tapering the pace of monthly bond purchases this year. On the other hand, the chair pinpointed a rapid pace of economic recovery in the United States. Anyway, Powell said nothing concrete about the QE program.
Generally speaking, Powell hinted at the possibility of tapering as early as this year. It remains unclear whether the Fed will start reducing bond purchases or just discuss the issue. At least four FOMC members have publicly spoken in favor of tapering. At the same time, it is just four out of twelve, meaning that the decision on tapering may be overturned during the meeting scheduled for September. All in all, Powell's much-anticipated speech at the Jackson Hole symposium did not clarify things. After the event, traders were selling the greenback, showing their discontent with Powell's rhetoric. Notably, Powell's speech was uninformative and traders' reaction to it was formal.
EUR/USD – 4H
On the H4 chart, the quote closed above the 76.4% retracement level of 1.1782. The uptrend is likely to extend to the 61.8% retracement of 1.1890. None of the indicators has formed a divergence today. If the price closes below the 76.4% retracement, it may well start moving towards the 100.0% Fibonacci retracement of 1.1606.
Macroeconomic calendar in United States and European Union:
On August 30, the eurozone's consumer confidence index and pending home sales in the United States are set for release. Both reports are expected to be ignored by the market. The most anticipated reports this week are Nonfarm Payrolls and the US unemployment rate, scheduled for Friday.
Commitments of Traders (COT) report:
The latest COT report logged an increase in bearish sentiment among Non-commercial traders. Speculators closed 39,475 long positions and 7,201 short ones. The total number of long positions held by speculators decreased to 194,000, falling below 200,000 for the first time in a while. Such a sharp drop in long positions indicates that the euro remains under pressure. At the same time, there is a slight possibility that the euro will be bearish in the long term. In the previous week, EUR/USD traded higher.
Outlook for EUR/USD:
Today, traders should consider opening long positions with the target at 1.1837 if the price rebounds from 1.1772 on the H1 chart. Meanwhile, short positions should be considered if the quote closes below 1.1772 on the H1 chart with the target at 1.1704.
TERMS:
Non-commercial traders are large market players: banks, hedge funds, investment funds, private, and large investors.
Commercial traders are commercial enterprises, firms, banks, corporations, and companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import transactions.
Non-reportable positions are small traders who do not have a significant impact on the price.
