On Wednesday, the EUR/USD pair rebounded from the corrective level of 38.2% (1.0866), reversed in favor of the US dollar, and fell by 130 points. Consolidation below the support zone of 1.0785–1.0801 has been achieved, allowing traders to anticipate further decline towards the next corrective level of 0.0% (1.0696). A pause is possible around the level of 1.0725 (the low of the last wave).
The wave situation remains unchanged. The last completed upward wave failed to break the peak of the previous wave (from March 21st), and the new downward wave has not yet managed to break the last low (from April 2nd). However, the last downward wave is incomplete, so it may still break the lows of the previous wave. Thus, we are currently dealing with a "bearish" trend, and there is no sign of its completion. For such a sign to appear, the current downward wave must not break the low from April 2nd.
The information background on Wednesday was very strong, but, for the most part, only one report caused a sharp rise in trader activity. However, in addition to the inflation report, the FOMC minutes from the March 19–20 meeting were released in the US yesterday. The minutes reflected the continuing concerns of FOMC members about inflation. The latest inflation reports did not give the Fed policymakers reason to believe that consumer prices were moving toward the target level. High GDP growth rates, higher labor market indicators, and lower unemployment levels (than expected) were noted. In my opinion, the last FOMC meeting can be considered "hawkish," and the sentiment of FOMC members may become even more stringent after yesterday's consumer price report. The dollar showed logical growth yesterday, which is far from the end of its ascent. Today's ECB meeting may be more "dovish" than the market expects. Today, the dollar may continue to rise.
On the 4-hour chart, the pair made a new rebound from the corrective level of 50.0% (1.0862) after the formation of "bearish" divergences on the CCI and RSI indicators. A reversal in favor of the US currency occurred, and consolidation was achieved below the Fibonacci level of 38.2% (1.0765). This closure allows us to expect a continuation of the decline in quotes towards the next corrective level of 23.6% (1.0644). No new impending divergences are observed today with any indicator, and the trend remains "bearish."
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 8065 long contracts and 22465 short contracts. The sentiment of the "non-commercial" group remains "bullish" but continues to weaken rapidly. The total number of long contracts speculators hold is now 188 thousand, and short contracts - 171 thousand. The situation will continue to change in favor of the bears. The second column shows that the number of short positions increased from 92 thousand to 171 thousand over the last 3 months. Long positions decreased from 211 thousand to 188 thousand during the same period. 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 do not see such a background.
News Calendar for the US and the Eurozone:
Eurozone - ECB Rate Decision (12:15 UTC).
US - Producer Price Index (12:30 UTC).
US - Initial Jobless Claims Change (12:30 UTC).
Eurozone - ECB Press Conference (12:45 UTC).
On April 11th, the economic events calendar contains several entries, among which the ECB meeting stands out. The impact of the information background on trader sentiment today may again be strong.
Forecast for EUR/USD and Trader Recommendations:
Sales of the pair were possible on a rebound from the level of 1.0862 on the 4-hour chart, with a target of 1.0785–1.0801. This target has been achieved. Since consolidation below the zone of 1.0785–1.0801 has been achieved, sales can be maintained with a target of 1.0696. I will not consider buying positions in the coming days, as the probability of further decline is high. Long positions can be considered around the levels of 1.0696 or 1.0644.
