On Monday, the EUR/USD pair completed a drop to the corrective level of 38.2% (1.0868), a return to the Fibo level of 23.6% (1.0923), a rebound from it and the peak of the previous wave, and a reversal in favor of the US currency. The last wave upward turned out to be quite weak, and the peak of the previous wave was only broken by a few points. Bull traders attempted to seize the initiative, but at this time, I can only acknowledge their defeat. Two rebounds from the 1.0923 level allow a fall back to the 1.0868 level. Consolidating the pair's rate below this level will renew the low of the last wave down and increase the likelihood of further falling towards the next corrective level of 50.0% (1.0824).
On Monday, there were several interesting reports. In particular, in Europe, there was a weak business activity index in the manufacturing sector, and in the US – two similar indices were also weak. As for Tuesday, today is Independence Day in the United States, and trading on American platforms is not allowed. I am even somewhat surprised that the pair is not completely immobilized today, which would be very logical. However, Europeans still trade without Americans' participation, and the dollar is strengthening after another graphic sell signal.
The picture on the hourly chart is clear. Almost every next peak is below the previous one, which indicates a "bearish" mood among market participants. Thus, I will expect a change in mood to "bullish," only above the level of 1.0923.
On the 4-hour chart, the pair reversed in favor of the euro after forming a "bullish" divergence at both indicators (CCI and RSI). After a rollback upwards, the bears want to continue the pair's fall, so I expect a close below the 38.2% level with a further drop toward the Fibo level of 50.0% (1.0811). Today, there are no new emerging divergences in any of the indicators.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 5422 long contracts and 5801 short contracts. The sentiment of large traders remains "bullish" but is gradually weakening. The total number of long contracts held by speculators now stands at 224 thousand, while short contracts are only 79 thousand. For now, a strong "bullish" sentiment persists, but I believe the situation will continue to change soon. The European currency has been slightly more likely to decline than rise over the last two months. The high number of open long contracts suggests that buyers may begin to close them soon (or have already started, as indicated by recent COT reports) - there's too strong a bias towards bulls now. The current figures allow for a new fall in the euro soon.
News calendar for the US and the European Union:
The economic events calendar is empty on July 4th. The influence of the news background on traders' sentiment for the remainder of the day will be absent.
EUR/USD forecast and advice for traders:
Sales were possible when rebounding from the 1.0923 level on the hourly chart with targets at 1.0868 and 1.0824. Now, these trades can be kept open until buy signals form (rebounds, divergences). Small pair purchases on a "bearish" trend are only possible. For example, a rebound from the 1.0868 level will allow buying with a target of 1.0923. I recommend paying attention only after closing above the 1.0923 level for more serious purchases.
