The EUR/USD pair reversed in favor of the European currency on Wednesday and began a new upward movement, consolidating above the corrective level of 100.0%-1.0696. Thus, today, the uptrend in quotes may continue towards the next Fibonacci level at 76.4%-1.0764. However, previously, the pair closed below the ascending trend channel, so I believe that traders' sentiment has shifted to "bearish." A new consolidation below the level of 1.0696 will work in favor of the US currency and the resumption of the decline toward the corrective level of 127.2% (1.0619).
The wave situation remains unchanged. The last completed downward wave broke the low of the previous wave (from April 2nd), and the last upward wave failed to break the last peak from April 9th. Thus, we are dealing with a "bearish" trend, and there is no sign of its completion. For such a sign to appear, the new downward wave (which may have started forming on April 26th) should fail to break the last low from April 16th. Until now, bears have maintained their advantage despite the apparent advantage of bulls in recent weeks.
The information provided on Wednesday was not only extensive but also important. Several reports came out in America that no one can call "passable." The ISM Manufacturing Business Activity Index in April was 49.2, with expectations at 50.0. The Job Openings and Labor Turnover Survey (JOLTS) in March was 8.488 million, against forecasts of 8.69 million. The most important reports on the US labor market turned out worse than expected. I remind you that most American reports also failed to impress dollar buyers last week. Therefore, I believe the American currency fell rightly yesterday, although Jerome Powell's evening statements did not "give a clear order" to traders to sell the dollar. However, overall, the information provided yesterday did not favor bears.
On the 4-hour chart, the pair reversed in favor of the US currency near the corrective level of 38.2% (1.0765) after forming a "bearish" divergence at the CCI indicator. Thus, the decline began and continues towards the Fibonacci level at 23.6% (1.0644). A rebound in quotes from this level will allow traders to count on some euro growth, while consolidation below it will lead to a further decline toward the next corrective level at 0.0%-1.0450. No impending divergences were observed today.
Commitments of Traders (COT) Report:
During the last reporting week, speculators closed 11616 long contracts and opened 10597 short contracts. The sentiment of the "non-commercial" group has turned "bearish" and is rapidly strengthening. The total number of long contracts held by speculators now stands at 167 thousand, while short contracts amount to 177 thousand. The situation will continue to change in favor of bears. In the second column, the number of short positions has increased from 92 thousand to 177 thousand over the last three months. Long positions decreased from 211 thousand to 167 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. However, the information background has been much more supportive of bears lately.
News Calendar for the US and the European Union:
European Union - German Manufacturing Purchasing Managers' Index (07:55 UTC).
European Union - Manufacturing Purchasing Managers' Index (08:00 UTC).
USA - Initial Jobless Claims (12:30 UTC).
On May 2nd, the economic events calendar contains three entries, but there are no truly significant events among them. The impact of the information background on traders' sentiment today may be very weak.
Forecast for EUR/USD and Trader Advice:
Sales of the pair are possible today upon consolidation below the level of 1.0696 on the hourly chart with a target of 1.0619. Buying the euro could be considered after closing above 1.0696 on the hourly chart with a target of 1.0764, but I find it difficult to rely on further growth today.
