The EUR/USD pair continued the process of falling on Friday and secured under the corrective level of 161.8% (1.0574). Thus, the process of falling can be continued in the direction of the next Fibo level of 200.0% (1.0430). And in the early hours of Monday and the new week, this decline was already continuing. Thus, the euro currency has completely lost ground over the last two market days. At first, traders were not satisfied with the results of the ECB meeting, although they were not so bad, then inflation in the US jumped to 8.6%, which became a new 40-year record, and the dollar rose again. And this week, there will be a meeting of the Fed, which will be of particular importance for traders. The fact is that the FOMC may raise the interest rate by 0.50% for the second time in a row. And some experts believe that the rate can be increased even by 0.75%.
I think that the committee will not dare to take such a step, but there is still a possibility of this. The inflation report, I would say, shocked more than the future Fed meeting with a rate hike of 0.50% at once. After all, it is inflation that now determines what steps the American regulator will take. It is for this reason that the US dollar is growing and growing very fast. Traders understand that inflation itself does not mean much. It means a lot to ordinary consumers, for whom prices are rising for almost everything, but not for currency traders. But the Fed's actions against the background of this inflation are what traders are reacting to right now. Thus, I am waiting for the new growth of the US currency this week. A press conference with Jerome Powell will also be important since it is unlikely that the Fed president will bypass the topic of inflation. Most likely, we will also hear new forecasts for inflation and GDP, as well as what steps the regulator will take at the next meetings. Let me remind you that there is now an almost one hundred percent probability of a 0.50% rate hike at the July meeting.
On the 4-hour chart, the pair performed a rebound from the upper line of the descending trend corridor, near which the pair spent the last two weeks moving along it. It was also closed under the corrective level of 100.0% (1.0638), which allows us to count on a further fall of the pair in the direction of the corrective level of 127.2% (1.0173). Only consolidation over the descending corridor will work in favor of the EU currency and its continued growth in the direction of the Fibo level of 76.4% (1.1041).
Commitments of Traders (COT) Report:
Last reporting week, speculators closed 6,305 long contracts and 4,576 short contracts. This means that the bullish mood of the major players has weakened, but only slightly. The total number of long contracts concentrated on their hands is now 230 thousand, and short contracts - 179 thousand. As you can see, the difference between these figures is not very big and not in favor of bears. Therefore, it is still difficult to realize that in recent months and now the European currency has been falling very much. In recent months, the euro has mostly maintained a "bullish" mood in the category of "Non-commercial" traders. In the last few weeks, the chances of a rise in the euro currency have been gradually growing, but the last two days of last week ruined everything. And this week, no good news is expected for the euro currency yet. Therefore, the currency may continue to fall while speculators may continue to buy euros.
News calendar for the USA and the European Union:
On June 13, the calendars of economic events in the United States and the European Union are empty. Thus, the influence of the information background on the mood of traders today will be absent.
EUR/USD forecast and recommendations to traders:
I recommended selling the pair when closing below the level of 1.0638 on a 4-hour chart with targets of 1.0574 and 1.0430. Now, these deals should be withheld. I recommend buying the euro currency when anchoring above the corridor on a 4-hour chart with a target of 1.1041.
