EUR/USD – 1H.
On Monday, the EUR/USD pair performed a fall to the corrective level of 1.1772, rebound from it, a reversal in favor of the EU currency, and began the growth towards the corrective level of 76.4% (1.1837). The pair's quotes are within the descending trend corridor, so the mood of traders remains "bearish." Closing the pair's exchange rate above the corridor level will favor the European currency and continue growth in the direction of the Fibo level of 61.8% (1.1919). The information background on Monday was quite weak. There were no economic reports either in Europe or in the United States.
Nevertheless, new information has been received from the European Central Bank, which has become a major news provider in the past few days. Let me remind you that during this time, Christine Lagarde made a speech several times. Moreover, yesterday, a member of the executive committee, Isabel Schnabel, said that she expects inflation to decrease next year.
Let me also remind you that inflation is now a headache for many central banks around the world. In particular, the Fed. Regulators expect inflation to begin to decline after strong growth in 2021, which is "temporary." Nevertheless, inflation is only accelerating in the UK, the US, and the European Union. Future changes in the monetary policy of each bank and how quickly central banks will move to these changes depend on inflation and its value. I can't say that traders reacted to this information. However, I still admit that the European currency is now under pressure because there are much more chances for a reduction in QE volumes in the US in the near future than for a reduction in PEPP volumes in the European Union. Today, the US inflation report for August will be released, so after lunch, traders can move the pair much more actively.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a drop to the corrective level of 76.4% (1.1782). The rebound of quotes from this level allows us to count on a reversal in favor of the euro and a resumption of growth in the direction of the corrective level of 61.8% (1.1890). Closing the pair's exchange rate at 76.4% will increase the probability of further growth towards the next Fibo level of 100.0% (1.1606). There are no emerging divergences in any indicator today. The descending corridor on the hourly chart is also of great importance now.
News calendar for the United States and the European Union:
US - consumer price index (12:30 UTC).
On September 14, the calendar of economic events in the European Union was empty. However, an important inflation report will be released in the US. Thus, the information background today will be strong in the afternoon. However, if the market's expectations for inflation coincide with the real value, then the reaction of traders may be very weak or completely absent.
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 more "bullish." Major players closed 837 long contracts on the euro currency and as many as 16,528 short contracts. Thus, the total number of long contracts in the hands of speculators decreased to 191 thousand, and the total number of short contracts - to 163 thousand. Over the past few months, the "Non-commercial" category of traders has been actively getting rid of long contracts on the euro and increasing short. However, at the same time, the euro itself has grown very slightly during this time. A sharp drop in the number of short contracts may mean that speculators are preparing for new growth of the European currency.
EUR/USD forecast and recommendations for traders:
Yesterday, I recommended buying the pair with a target of 1.1837 on the hourly chart if there is a rebound from the level of 76.4% (1.1782) on the 4-hour chart. Now I recommend keeping these deals open. New purchases – when closing above the level of 1.1837 with a target of 1.1919. I recommend selling if there is a rebound from the upper line of the corridor on the hourly chart, with the target of the level of 1.1772.
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.
