On Thursday, the EUR/USD pair bounced from the 76.4% corrective level at 1.1517 and turned in favor of the euro, while showing absolutely no interesting movements despite a strong news background. Today, the upward movement may continue toward the 61.8% Fibonacci level at 1.1594. A consolidation of the pair below 1.1517 will work in favor of the U.S. dollar and continue decline toward the next 100.0% corrective level at 1.1392.
The wave structure on the hourly chart remains simple and clear. The latest upward wave did not break the peak of the previous wave, while the last completed downward wave broke the previous low. Thus, the trend remains "bearish" at the moment. Bullish traders have gone on the offensive, but their efforts are still insufficient to form a trend. To recognize the "bearish" trend as complete, the pair must rise above 1.1656 or form two consecutive "bullish" waves.
On Thursday, the U.S. news background allowed traders to expect at least increased activity. However, by the end of the day, it was clear that the market had no desire to open trades and still doesn't. The labor market and unemployment reports can be interpreted in any way and colored however one wishes, but I cannot recall more contradictory data in a long time. Nonfarm Payrolls exceeded the forecast by 69,000, yet the unemployment rate rose to 4.4%. Payrolls exceeded expectations by a wide margin, but data for the previous two months were revised downward. In addition, traders understood from the outset that September's data was long outdated and that the Federal Reserve will base its December monetary policy decision on fresher information. Thus, the U.S. reports contradicted each other and carried little real significance.
On the 4-hour chart, the pair bounced from the 23.6% corrective level at 1.1649, turned in favor of the U.S. currency, and began a new downward move. A consolidation below 1.1538 allows us to expect continued decline toward the 50.0% Fibonacci level at 1.1448. A consolidation above 1.1538 will favor the euro and some growth toward the next resistance level at 1.1649–1.1680. A "bullish" divergence in the CCI indicator increases the likelihood of an upward reversal.
Commitments of Traders (COT) Report:
During the latest reporting week, professional traders closed 789 long positions and opened 2,625 short positions. No new COT reports have been published for over a month. The sentiment of the "Non-commercial" group remains "bullish" thanks to Donald Trump and continues to strengthen over time. The total number of long positions held by speculators is now 252,000, while short positions total 138,000 — essentially a twofold gap. In addition, note the number of green cells in the table above, which reflect strong increases in euro positions. In most cases, interest in the euro is only rising, while interest in the dollar is falling.
For thirty-three consecutive weeks, large traders had been reducing short positions and increasing long ones. Donald Trump's policies remain the key factor for traders, as they may cause numerous problems with long-term and structural consequences for the U.S. economy. Despite signing several important trade agreements, many key economic indicators continue to decline.
News Calendar for the U.S. and the European Union:
- EU – Speech by ECB President Christine Lagarde (08:30 UTC)
- EU – Germany Manufacturing PMI (08:30 UTC)
- EU – Germany Services PMI (08:30 UTC)
- EU – Manufacturing PMI (09:00 UTC)
- EU – Services PMI (09:00 UTC)
- U.S. – Manufacturing PMI (14:45 UTC)
- U.S. – Services PMI (14:45 UTC)
- U.S. – University of Michigan Consumer Sentiment Index (15:00 UTC)
On November 20, the economic calendar contains eight medium-importance events. The news background may have only a moderate influence on market sentiment on Friday, but throughout the entire day.
EUR/USD Forecast and Trading Recommendations:
Selling the pair was possible after closing below 1.1594 on the hourly chart with a target of 1.1517. The target has been reached. New selling opportunities arise if the pair closes below 1.1517 with a target of 1.1392. Buying could be opened on a rebound from 1.1517 on the hourly chart with a target of 1.1594. These trades can be held today.
The Fibonacci grids are built from 1.1392–1.1919 on the hourly chart and from 1.1066–1.1829 on the 4-hour chart.
