EUR/USD – 1H.
Hi dear traders!
EUR/USD is keeping on declining slowly but surely towards 1.1629. The currency pair completed its consolidation below 1.1704, 100% Fibonacci level. This increases the odds of its further fall. Besides, the downward trend line is still valid. So, the current market sentiment on EUR/USD is bearish. The information background was sparse yesterday despite speeches by ECB President Christine Lagarde and Fed's Chairman Jerome Powell. Nevertheless, traders didn't find out anything new from their comments. ECB President called on market participants not to be on edge due to rampant inflation and stay calm. Christine Lagarde thinks that high inflation doesn't deal a blow to all economic sectors. The policymaker stated that the regulator would respond only to soaring headline inflation and employ appropriate tools if necessary.
However, traders have already heard such words by Christine Lagarde lots of times. So, no response followed after her speech. Likewise, the market gave no immediate response to a speech by Jerome Powell. He said that there is a long way until the US labor market reaches almost full employment.
Notably, citing his words, at the last policy meeting the central bank passed the test for the beginning of tapering QE program. The likelihood of scaling back monetary stimulus is getting more evident day by day, though the rumors about this Fed's move emerged long ago. This scenario could push EUR/USD up providing the US dollar with support. There are no other catalysts for a steady advance of the US dollar now. On the first two days of the week, the economic calendar is empty. Today Christine Lagarde and Jerome Powell are due to speak again at the economic forum arranged by the ECB. Markets will focus on Powell's remarks. If he again drops a hint that QE program could be scaled back in November, the US dollar will have an excuse to extend strength.
EUR/USD – 4H.
On the 4-hour chart, EUR/USD closed below 1.1782 that is 76.4% Fibonacci correction. Hence, the currency pair could continue its decline towards 1.1696, the next 100.0% correction level. Two bullish divergences indicated a bounce of EUR/USD, but this didn't halt the pair's slide. A bounce off 100.0% Fibonacci level might benefit the single European currency and propel modest growth of EUR/USD.
Economic calendar for US and Europe
EU: ECB President Christine Lagarde speaks (15-45 UTC)
US: Federal Reserve's Chairman Jerome Powell speaks (15-45 UTC)
On September 29, the economic calendar reminds us about two speeches by ECB President Christine Lagarde and Federal Reserve's Chairman Jerome Powell. Nevertheless, the overall information background is rather weak today.
COT(Commitments of traders):
The fresh COT report reveals a drastic change in market sentiment of traders in the non-commercial category last week. Speculators opened 550 long contracts on EUR/USD and 18,550 short contracts. Thus, the overall number of long contracts increased to 188,000 and the total number of short contracts rose to 178,000. Over a few months, traders in the non-commercial category actively dumped long contracts on EUR/USD and increased short positions. The process is still going on, but the single European currency logged just a minor decline over this time. All in all, the overall outlook for EUR is moderately bearish, though the currency pair is trading on a soft bearish market.
Outlook for EUR/USD and trading tips
I would recommend opening new long positions on EUR/USD above 1.1704 on the 1-hour chart that is 100.0% Fibonacci level with the upward target at 1.1772. Earlier, I recommended selling EUR/USD if the pair closes below 1.1704 on the 1-hour chart with the downward target at 1.1629. Currently, these positions could be held open.
Terms
The Non-commercial category includes major market players: banks, hedge funds, investment funds, private, and large investors.
The Commercial category embraces commercial enterprises, firms, banks, corporations, companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import operations.
The category of Non-reportable positions means small traders who do not have a significant impact on the price.
