On Tuesday, the EUR/USD pair continued its weak decline after three rejections from the corrective level of 23.6% (1.0843). The pair has been moving towards the support zone of 1.0785–1.0797 for the second consecutive day, now only 40 points away. Trader activity is at a minimum. A rebound from this zone will favor the euro and some growth towards 1.0843. Securing quotes below this zone will allow for a continued decline toward the levels of 1.0760 and 1.0722.
The wave situation has become more complex. The new upward wave broke the peak of the previous wave and continued to form, while the last completed downward wave failed to break the low of the previous wave. As a result, there were two signs of a trend change from "bearish" to "bullish." Last week, bulls received support from significant information, leading to a confident rise in the pair. From the level of 1.0843, the formation of a corrective, "bearish" wave can be expected.
The informational background on Tuesday gave hope for at least more active trader actions. There was no talk of strong downward or upward movement. Jerome Powell spoke in Congress with his semiannual report, raising hopes for new information on monetary policy and the Fed's plans. However, it became clear that the Fed president still takes a wait-and-see approach. This involves waiting for inflation to decrease and maintaining the current rate. Thus, his stance has stayed the same. Tomorrow, the US inflation report for June will be released, and if we see significant changes, we can expect updated rhetoric from Powell next time. From today's speech in Congress, I expect nothing interesting. Powell will read the same text for the second time.
On the 4-hour chart, the pair reversed in favor of the euro after forming a new "bullish" divergence with the CCI indicator and rebounding from the corrective level of 61.8% (1.0714). Later, the pair secured above the Fibonacci level of 50.0% (1.0794), allowing for continued growth towards the next corrective level at 38.2%–1.0876. No imminent divergences are observed in any indicator today.
Commitments of Traders (COT) Report
In 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 now stands at 167,000, while short positions total 175,000.
The situation will continue to change in favor of the bears. I do not see long-term reasons to buy euros, as the ECB has begun easing monetary policy, which will reduce the yield on bank deposits and government bonds. They will remain at high levels in the US for at least several months, making the dollar more attractive to investors. The potential for the euro to decline is substantial, even according to the COT reports. Currently, the number of short positions among professional players is growing.
News Calendar for the US and the Eurozone:
- USA – Speech by Fed President Jerome Powell (14-00 UTC).
The economic events calendar for July 10 contains only one entry. The informational background's impact on trader sentiment today might be weak or absent.
Forecast for EUR/USD and Trader Tips:
Selling the pair was possible after a rebound on the hourly chart from the level of 1.0843, targeting the zone of 1.0785–1.0797. When closing below this zone, new sales are possible, targeting 1.0760 and 1.0722. Buying is possible after a rebound from the zone of 1.0785–1.0797, targeting 1.0843, or closing above 1.0843, targeting 1.0917.
Fibonacci level grids are built on the hourly chart between 1.0602 and 1.0917 and on the 4-hour chart between 1.0450 and 1.1139.
