EUR/USD – 1H
On Tuesday, the EUR/USD pair went slightly up towards the level of 1.1629, and today it has already reversed in favor of the US currency and started to weaken towards the correction level of 127.2% at 1.1552. I would like to note that over the past seven days, the pair's movements have been very weak and were mostly found near the level of 1.1552. Thus, traders' sentiment can now be described as neutral which considerably complicates analysis and the process of trading. At the moment, there is no trend and no clear preferences among traders. In addition, there was no information background on Monday. The speeches by Jerome Powell and one by Christine Lagarde did not bring any clues for the markets. The heads of the central banks did not say anything new. Jerome Powell once again discussed the issue of inflation, saying that it is likely to start declining next year. Also, the Fed has started to cut its quantitative easing program and is planning to raise interest rates next year. Probably, these factors allowed bears to stay in control of the pair. If we take a look at higher time frames, we can see that the bearish trend is still prevailing. However, on the hourly chart, the quotes closed above the descending channel and couldn't develop the uptrend after that. Today, we hope that the US inflation report will change the market sentiment at least for the day. After all, it is very difficult to trade the pair now, not only in the medium term but also within the day. Perhaps the US dollar will receive some support today if inflation continues to rise. However, this is not so important now since the regulator has already started to cut its QE program. Therefore, further acceleration of inflation can be regarded as a negative factor. Anyway, we should wait until the pair starts moving in any direction instead of being stuck in one place.
EUR/USD – 4H
On the 4-hour chart, the quotes have rebounded from the correction level of 100.0% at 1.1606 for the third time in recent days. This rebound suggests a slight drop towards the correctional level of 127.2% at 1.140, which is unlikely to be very deep though. The bearish CCI divergence increases the chances of the euro's fall. Closing above the retracement level of 100.0% will ensure the continued growth of the quotes towards the correction level of 76.4% at 1.1782.
Economic calendar, US and EU:
US - Consumer Price Index (13-30 UTC).
US - Initial jobless claims (13-30 UTC).
The economic calendar in the EU is completely empty on November 10. Meanwhile, an important inflation report is scheduled in the US which may influence traders' sentiment. Today, the fundamental background can be moderately strong.
COT (Commitments of Traders) report
The latest COT report showed that the non-commercial category of traders became more bullish during the reporting week. The speculators closed 4,032 long contracts and 10,622 short contracts on the euro. Thus, the total number of open long contracts decreased to 195,000 and the total number of short contracts - to 199,000. As we can see, the numbers almost match which is why we assume that speculators have no clear sentiment. In recent months, the bearish mood has been intensifying. Perhaps, no one has a clear advantage at the moment. It is also possible that in a week or two, the bearish bias will continue to strengthen which will allow the European currency to continue its decline.
Outlook for EUR/USD and trading recommendations
Currently, neither buying nor selling the pair is favorable right now as traders seem to downplay important economic data and ignore key correction levels. Yesterday, I recommended selling the pair in case of a clear pullback from 1.1606 on the 4-hour chart. Although the pullback was completed, the quotes still have not declined yet.
Definitions
Non-commercial traders are large market players, including banks, hedge funds, investment funds, private, and large investors.
Commercial traders are commercial enterprises, firms, banks, corporations, and companies that buy currency to ensure current activities or export-import operations rather than to obtain quick profit.
Non-reportable category of traders refers to small speculators who do not have a significant impact on the price.
