On Thursday, the EUR/USD pair consolidated above the resistance zone of 1.0785–1.0797 and continued its upward movement towards the next corrective level of 23.6%–1.0843. Bears are once again leaving the market due to the lack of informational support from the US this week. Even on Independence Day, the US dollar was under pressure. A rebound from the level of 1.0843 will favor the US dollar and lead to a decline towards the zone of 1.0785–1.0797. Securing the pair above 1.0843 will allow for further growth towards the next Fibonacci level of 0.0%–1.0917.
The wave situation has become more complicated this week. A new upward wave broke the peak of the previous wave, while the last completed downward wave failed to break the low of the previous wave. Thus, there were two signs of a trend reversal from "bearish" to "bullish." Initially, the peak from June 18 was broken by only a few points, raising doubts about the bulls' ability to form a trend. However, this week, they received significant informational support, leading to a more confident breakthrough of the peak.
There was no news background on Thursday. In America, it was Independence Day, a holiday with no trading. Nevertheless, in the rest of the world, there was no holiday, and traders took advantage of the situation to push the pair further up. The informational background allowed the bulls to continue their attacks. This week, the dollar was let down by the ISM business activity indices and the ADP report. On Tuesday, Jerome Powell maintained a "hawkish" stance, but traders paid more attention to the economic data rather than Powell's thoughts on "when the monetary policy easing will begin." Frankly, delaying the start of monetary policy easing by the Fed could have helped the bears and the dollar, but as we can see, the market holds a different view. Weak reports from the US currently carry more weight.
On the 4-hour chart, the pair made a new reversal in favor of the euro after forming a new "bullish" divergence on the CCI indicator and rebounding from the corrective level of 61.8%–1.0714. Yesterday, the pair consolidated above the Fibonacci level of 50.0%–1.0794, allowing for continued growth towards the next corrective level of 38.2%–1.0876. There are no emerging divergences on any indicators today.
Commitments of Traders (COT) Report:
During the last reporting week, speculators closed 4,094 long positions and opened 12,288 short positions. The sentiment of the 'Non-commercial' group turned bearish a few weeks ago and is currently strengthening. The total number of long positions held by speculators is now 167 thousand, while the number of short positions is 175 thousand.
The situation will continue to shift in favor of the bears. I see no long-term reasons to buy the euro, as the ECB has begun easing monetary policy, which will lower the yields on bank deposits and government bonds. In the US, these yields will remain high for at least a few more months, making the dollar more attractive to investors. The potential decline of the euro, even according to COT reports, looks significant. Currently, the number of short positions among professional players is growing.
News Calendar for the US and the Eurozone:
- Eurozone - Retail Sales Change (09-00 UTC).
- US - Non-farm Employment Change (12-30 UTC).
- US - Unemployment Rate Change (12-30 UTC).
- US - Wage Level Change (12-30 UTC).
- Eurozone - ECB President Christine Lagarde's Speech (17-15 UTC).
The economic events calendar for July 5 includes many important reports and events, among which I highlight the US unemployment and payroll reports. The informational background will have a strong impact on trader sentiment today.
Forecast for EUR/USD and Trading Advice:
Sales of the pair are now possible upon consolidation on the hourly chart below the zone of 1.0785–1.0797 with targets of 1.0760 and 1.0722. Purchases were possible upon closing above the specified zone with a target of 1.0843. Currently, these can be kept open. Today's US reports may cause a sharp change in market sentiment.
The Fibonacci level grids are built from 1.0602 to 1.0917 on the hourly chart and from 1.0450 to 1.1139 on the 4-hour chart.
