On Monday, the EUR/USD pair experienced a decline toward the corrective level of 76.4% (1.0917). Still, they managed to rebound from it, presenting an opportunity to resume its upward movement towards the level of 1.0966, which it previously failed to surpass. Suppose the pair's exchange rate consolidates below the 1.0917 level. In that case, it will favor the US currency, resuming the downward movement towards the lower boundary of the ascending trend corridor. Closing below the corridor would shift traders' sentiment toward bearish.
Monday lacked significant news updates, and Tuesday only holds expectations for a single economic report. Although there were several speeches by members of the ECB Governing Council on Monday, they did not provide any crucial information to the market. These speeches generally revolved around concerns about high inflation in the Eurozone, slow rates of its decrease, and a continued insistence on further tightening monetary policy. The market has been exposed to such rhetoric for at least several months. Consequently, based on the recent series of statements and calls to raise interest rates, the European currency did not sustain its upward trend.
Today, we will witness the report on building permits in the United States. While this indicator may moderately influence traders' sentiment, I do not anticipate it to have a significant impact. Since last Friday, the pair has been trading within the range of 1.0917 to 1.0966, and there are currently no signs indicating an imminent breakout. Therefore, we must wait for a breakout from this range before speculating on the pair's next direction. This week includes several important events, including a Bank of England meeting, which is significant for the euro currency, considering the substantial impact the previous ECB meeting had on the British pound. The most intriguing and impactful movements are still to come.
On the 4-hour chart, the pair has ascended to the Fibonacci level of 50.0% (1.0941). The "bearish" divergence observed in the CCI indicator last week has been nullified, and there are no new emerging divergences in any of the indicators. A rebound from the 1.0941 level would favor the US currency, leading to a minor decline towards 1.0610. If the quotes consolidate above the 1.0941 level, the chances of further growth towards the next corrective level of 61.8% (1.1273) will increase.
Commitments of Traders (COT) report:
During the previous reporting week, speculators closed 9,922 long contracts and 3,323 short contracts. Although large traders maintain a "bullish" sentiment, it gradually weakens. The total number of long contracts held by speculators currently stands at 226,000, while short contracts amount to only 74,000. While strong "bullish" sentiment persists, I anticipate that the situation will continue to evolve soon. Over the past two months, the euro currency has experienced more frequent declines than gains. The significant number of open long contracts suggests that buyers may soon start closing their positions (or may have already begun, as indicated by the recent COT reports). There is currently an excessive bias toward bulls. The current data indicates a potential further decline in the euro soon.
The news calendar for the United States and the Eurozone includes:
US - Building Permits (12:30 UTC).
On June 20, the economic events calendar lacked interesting entries apart from a single report in the US. The impact of the news background on traders' sentiment for the remainder of the day may be weak.
Forecast for EUR/USD and trader advice:
I previously suggested selling the pair on a rebound from the 1.0966 level on the hourly chart, with targets at 1.0917 and 1.0843. The first target has been reached. Buying the pair could be on a rebound from the 1.0917 level with targets at 1.0966 and 1.1035. Trading volumes have declined since last week, and today traders' activity is again low.
