The EUR/USD pair on Thursday rose to the corrective level at 38.2%-1.0866, bounced off it, and reversed in favor of the American currency. Thus, the process of decline towards the support zone of 1.0785–1.0801 began. A bounce of quotes from this zone will favor the resumption of the euro's growth. Consolidation below it will increase the likelihood of further dollar growth towards the corrective level of 0.0%-1.0696. I consider the second option more likely.
The wave situation remains quite clear. The last completed downward wave broke the low of the previous wave (from March 19th), while the new upward wave has yet to come close to the last peak (from March 21st). Thus, we are currently dealing with a "bearish" trend, and at the moment, there is no sign of its completion. For such a sign to appear, the new upward wave must be able to break the current last peak (from March 21st). The bulls need to push the pair up by another 130 pips for this to happen. Until this moment, I expect a resumption of the decline in quotes. If the new downward wave fails to break the low from April 2nd, this will also be a sign of the end of the "bearish" trend.
The information background on Thursday was very scarce; however, overall, this week provided enough events and news for traders to trade actively. We did see some activity, but most reports and events were in favor of the American currency, although bullish traders were more active. There is a divergence between the information background and the actual movements of the pair. Divergences usually get worked out and closed. Thus, today, I expect the pair to decline at least to the level of 1.0785.
On the 4-hour chart, the pair rose to the corrective level of 50.0%-1.0862. The rebound of the pair's rate from this level worked in favor of the US currency and resumed the decline towards 1.0765. The "bearish" divergence on the CCI indicator also suggests a new rise in the dollar. Consolidation above the level of 1.0862 will allow traders to count on the resumption of growth towards the next corrective level of 61.8%-1.0959. The trend on the 4-hour chart is currently "bearish." As well as on the hourly chart.
Commitments of Traders (COT) Report:
During the last reporting week, speculators closed 2189 long contracts and opened 14959 short contracts. The sentiment of the "non-commercial" group remains "bullish" but continues to weaken rapidly. The total number of Long contracts held by speculators now stands at 180 thousand, while Short contracts amount to 149 thousand. The situation will continue to change in favor of bears. In the second column, we see that the number of short positions has increased from 83 thousand to 149 thousand over the past 2.5 months. Over the same period, the number of long positions decreased from 235 thousand to 180 thousand. Bulls have dominated the market for too long, and now they need a strong information background to resume the "bullish" trend. In the near future, I don't see such a background.
News Calendar for the US and the European Union:
European Union – Change in Retail Trade Volume (09:00 UTC).
US – Change in Nonfarm Payrolls (12:30 UTC).
US – Unemployment Rate (12:30 UTC).
US – Change in Average Hourly Earnings (12:30 UTC).
On April 5th, the economic events calendar contains four entries, among which all reports are from the US. The impact of the information background on traders' sentiment today can be strong.
Forecast for EUR/USD and Trader Advice:
Selling the pair was possible upon a rebound from the level of 1.0862 on the 4-hour chart with targets at 1.0785–1.0801. These trades can still be kept open. Upon closing below 1.0785, sales can be maintained with a target of 1.0696. Buying the pair was possible upon consolidation above the zone of 1.0785–1.0801 on the hourly chart, with a target at 1.0866 (1.0862). The target was reached yesterday. New purchases are possible upon a rebound from the zone of 1.0785–1.0801 with a target of 1.0866.
