On Tuesday, the EUR/USD pair continued to rise toward the 1.1000 level, but it has been moving horizontally for over a week. Traders' activity is not at its peak; movements could be stronger and frequently replace one another. Thus, we have no choice but to await the U.S. inflation report, which can affect the sentiment of traders and urge them to trade more actively.
Recent inflation reports have been of particular significance to the market because they heavily influence the decisions made by the FOMC at each meeting. Speculators anticipate a softening of FOMC members' "hawkish" rhetoric if inflation falls rapidly, resulting in a dollar sell-off. If inflation falls slowly, does not fall, or rises, the Fed begins to tighten its policy, which frequently results in a rise in the value of the U.S. dollar. Today, I anticipate exactly this. According to forecasts, in March, inflation should fall from 6% to 5.2%. This is a significant decline. If traders' expectations are accurate, the dollar may experience another decline today. However, I would like to call attention to the fact that the inflation forecast has been known for a long time, allowing traders to plan accordingly. Recent dollar trends have been mainly downward, so this report may already have been considered. If this is true, then the value of the U.S. dollar may rise today. Since it is impossible to determine clearly whether the market has accounted for inflation (as well as to anticipate the actual value of the report in advance), any reaction is possible. You must respond in the present.
From a longer-term perspective, the dollar has every opportunity to begin rising. The ECB is also beginning to tone down its "hawkish" rhetoric, and the next interest rate increases may already be factored in.
On the 4-hour chart, the pair has established itself above the side corridor, allowing traders to anticipate further growth. Above the corrective level of 50.0% (1.0941), consolidation has not yet been possible, but three "bearish" divergences have prevented the decline from commencing. In contrast, the new "bullish" divergence supports the bears. Closing quotes above 1.0941 will enable us to anticipate further growth toward the corrective level of 61.8% (1.1273).
Report on Commitments of Traders (COT):
Speculators opened 4,130 short contracts and 2,498 long contracts during the previous reporting week. Overall, the sentiment of significant traders remains "bullish" and continues to improve. The total number of long contracts held by speculators is now 225 thousand, and the number of short contracts is 82 thousand. The European currency has been rising for over six months, but the number of long contracts among professional speculators has stayed the same over the past few weeks. After a lengthy "black period," the euro's situation remains favorable, so its prospects remain positive. At least until the ECB gradually increases the interest rate by 0.50%. However, the market sentiment may turn bearish in the near future, as the ECB cannot continue to raise the rate by a half-percentage point, and the rate may drop to 0.25% in May. There are sell indicators on both graphs.
News calendar for the United States and Europe:
US – consumer price index (CPI) (12:30 UTC).
US – publication of FOMC protocols (18:00 UTC).
On April 12, the economic events calendar contains two significant entries. The impact of background information on traders' moods for the remainder of the trading day can be substantial.
EUR/USD forecast and trading suggestions:
On a 4-hour chart, sales of the pair can be opened on a rebound from 1.0941, with targets at 1.0861 and 1.0750. On a 4-hour chart, purchases are possible when the price closes above 1.0941, with targets at 1.0000 and 1.1100.
