On Monday, the EUR/USD pair reversed in favor of the euro and then consolidated over the area of the negative trend. As a result, traders' mood may shift to "bullish," and the growth process may then proceed in the direction of the 1.0750 level. The US dollar will benefit from the quotes' recovery from the level of 1.0750, while some will fall in the direction of the corrective level of 1.0614. Fixing the rate of the pair over 1.0750 will increase the likelihood of additional growth approaching the following Fibo level of 200.0% (1.0869).
A report on the fourth quarter's GDP will be made available this morning by the European Union. Since the EU economy is now in a fairly stable state, I don't believe this data will have much of an impact on traders. Although it is slowing down, it has not yet fallen below 0%. There are hardly any changes from one quarter to the next, and traders are dissatisfied. The January inflation report in the United States, which will be made public this afternoon, is much more significant. However, Goldman Sachs economists warn that inflation may surprise and surge, which, in their opinion, will be a complete surprise for the market. Traders anticipate inflation to decline to 6.2%. The indicator may consolidate in the first month of this year, according to bank analysts, which will result in an unexpected increase in its value. The inflation indicator is therefore quite comparable to the identical currency pairs that are unable to move continuously in just one way. Rollbacks occasionally happen, which is also a feature of many economic indices. Additionally, according to Goldman Sachs analysts, there is a "pricing overflow" at the start of every year, which causes businesses to set higher contract rates than usual. I can also speak for myself when I say that an unanticipated rise in inflation could result in the Fed tightening the PEPP more firmly, which would lead to a significant strengthening of the currency across the board.
The pair was held under the upward area on the 4-hour chart. Since the pair left the area where they had been since October, I believe this moment to be of utmost importance. The current "bearish" trading sentiment offers the US dollar good growth chances with targets of 1.0610 and 1.0201. The MACD indicator's "bullish" divergence, however, allows the pair to increase a little in the near term.
Report on Commitments of Traders (COT):
Speculators opened 9,464 long contracts and 2,099 short contracts during the most recent reporting week. Major traders' attitude is still "bullish" and has somewhat improved. Currently, 238 thousand long futures and 103 thousand short contracts are all concentrated in the hands of traders. The COT figures show that the European currency is now growing, but I also see that the number of long positions is over 2.5 times greater than the number of short positions. The likelihood of the euro currency's growth has been steadily increasing over the past few months, much like the euro itself, but the information background hasn't always backed it up. After a protracted "dark time," the situation is still favorable for the euro, so its prospects are still good. Until the ECB gradually raises the interest rate by increments of 0.50%, at least.
News calendar for the USA and the European Union:
EU – GDP in the fourth quarter (10:00 UTC).
US – consumer price index (CPI) (13:30 UTC).
Both the American and European Union economic event calendars have one entry for February 14; nonetheless, both are quite significant. The information backdrop might have a significant impact on how traders feel today.
Forecast for EUR/USD and trading advice:
When the pair rebounds from the 1.0750 level on the hourly chart, new sales of the pair with a target of 1.0614 are probable. On the hourly chart, buying the euro currency is possible if it closes above the level of 1.0750 with a target of 1.0869.
