The EUR/USD pair continued its downward trajectory on Monday and consolidated below the corrective level of 127.2%-1.0619. The consolidation is hesitant, but until a reversal is confirmed above the level of 1.0619, the downward trend may continue toward the next Fibonacci level at 161.8%–1.0519. Closing above the level of 1.0619 would benefit the euro and signal some growth towards the corrective level of 100.0%-1.0696.
The wave situation remains unchanged. The last completed upward wave failed to break the peak of the previous wave (from March 21), while the new downward wave broke the last low (from April 2). Thus, we are currently dealing with a "bearish" trend, and there are currently no signs of its completion. For such a sign to appear, the new upward wave (which has not even begun to form yet) must break the peak of the previous wave (from April 9). Alternatively, the new downward wave (which has also yet to begin) must fail to break the last low, which has yet to form.
On Monday, the background information only pleased the bears. Throughout the day, there were not many significant reports, but the most important one – on retail trade – turned out to be significantly above traders' expectations at +0.7% m/m. Thus, in the second half of the day, bears, who were considering taking a pause, resumed their offensive, and the dollar began to rise again. The "bearish" trend persists and may last for some time. Currently, the news is supporting the US currency, and the proximity of the first easing of monetary policy in the EU does not give bulls the opportunity to go on the offensive. It was also announced yesterday that the ECB may lower the rate three times by the end of this year. Unlike the Fed, from which the market expects 1 or 2 rate cuts.
On the 4-hour chart, the pair fell to the corrective level of 23.6%-1.0644 and consolidated below it. The "bullish" divergence in the CCI indicator and the RSI indicator dropping below 20 suggested some growth, but at the moment, it has not yet begun, and the divergence has already been invalidated. Consolidation of quotes below the level of 1.0644 increases the likelihood of further decline towards the next corrective level at 0.0%–1.0450.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 12839 long contracts and 28768 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 175 thousand, while short contracts amount to 142 thousand. The situation will continue to change in favor of the bears. In the second column, we can see that the number of short positions has increased from 92 thousand to 142 thousand over the last 3 months. During the same period, the number of long positions decreased from 211 thousand to 175 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 do not see such a possibility.
News calendar for the US and EU:
EU – ZEW Economic Sentiment Index for Germany (09:00 UTC).
US – Building Permits (12:30 UTC).
US – Housing Starts (12:30 UTC).
US – Industrial Production Change (12:30 UTC).
US – Federal Reserve Chairman Jerome Powell Speech (17:15 UTC).
On April 16, the economic events calendar contains several entries, among which only Jerome Powell's speech stands out. The impact of the information background on traders' sentiment today may be of moderate strength.
Forecast for EUR/USD and trader advice:
Sales of the pair are possible if it consolidates below the level of 1.0644 on the 4-hour chart with a target of 1.0519. Buying opportunities can be considered on a rebound from the level of 1.0619 on the hourly chart with targets of 1.0696 and 1.0764, but in this case, sales should be closed.
