The EUR/USD pair on Monday performed a rebound from the corrective level of 100.0% (1.0808) and a slight drop in the direction of the Fibo level of 127.2% (1.0705). Today, a return to the level of 1.0808 was made, another rebound from this level and a reversal in favor of the US currency. Thus, bear traders are preparing for new sales of the European currency, and the target of the pair's fall remains at the level of 1.0705. The European currency continues to trade near its local, monthly, and annual lows. The most important thing is that bull traders are not making any attempts to seize the initiative from bears right now. I think this is a clear signal that there is no reason to buy euros at this time. These reasons may be absent due to many factors at the same time. For example, geopolitics. Yesterday, Kyiv and Moscow announced that the "second phase of the special operation" that the Kremlin is conducting in Ukraine has begun. Now all military operations are concentrated in the East of Ukraine, where battles are being fought in the Kharkiv, Donetsk, and Luhansk regions.
Russian troops still cannot take Mariupol, and cannot advance deep into the areas listed above. Previously, they were unable to occupy Kyiv, Chernihiv, and Kharkiv, so the shelling of these cities continues, as well as rocket attacks on other Ukrainian cities. In particular, in the last few days, Nikolaev, which remains the last frontier before Odesa, has been actively shelled. There are still forces of "Azov" in Mariupol, as well as the national police. The city is surrounded and cut off from supplies. According to various sources, more than 100 thousand civilians remain inside it. Thus, the military operation in Ukraine has intensified in the last few days. New battles have already begun, and most likely they will last about a month since both sides have significant military groups and equipment. The European currency continues to react very painfully to any deterioration of the situation in Ukraine. Europe is preparing for a food crisis, as more than 25% of agricultural land in Ukraine remains unseeded.
On the 4-hour chart, the pair continues the process of falling towards the corrective level of 100.0% (1.0638), despite the formation of two "bullish" divergences. The downward trend corridor continues to characterize the mood of traders as "bearish". The rebound of quotes from the Fibo level of 100.0% (1.0638) will work in favor of the EU currency and some growth in the direction of the upper boundary of the descending corridor.
Commitments of Traders (COT) Report:
Last reporting week, speculators opened 10,731 long contracts and closed 959 short contracts. This means that the bullish mood of the major players has intensified even more. The total number of long contracts concentrated on their hands now amounts to 221 thousand, and short contracts - 182 thousand. Thus, in general, the mood of the "Non-commercial" category of traders is characterized as "bullish". In this scenario, the European currency should show growth. But instead, it continues to fall into the abyss without any hope of salvation. Thus, it is impossible to draw adequate conclusions from the COT reports now. A very strong influence on the mood of traders is the possible continuation of hostilities in Ukraine, the deterioration of relations between the West and the Russian Federation, and new sanctions against Russia.
News calendar for the USA and the European Union:
US - FOMC member Charles Evans will deliver a speech (16:05 UTC).
On April 19, the calendars of economic events in the United States and the European Union contain one entry for two. Charles Evans' speech is not as important as James Bullard's speech yesterday, so I believe that the influence of the information background on the mood of traders today will be absent.
EUR/USD forecast and recommendations to traders:
I recommend selling the pair now since it closed at 1.0808 (and then rebound) on the hourly chart with a target of 1.0705. I do not recommend buying a pair yet, since the probability of a new fall in the European currency is too high.
