EUR/USD – 1H.
On Thursday, July 8, the EUR/USD pair performed a reversal in favor of the European currency and began a new growth process, which ended near the downward trend line. Near this line, the pair's behavior was very strange, since the quotes performed a consolidation above it and immediately began a downward pullback. Thus, at the moment, it is very difficult to say whether the final closing above the trend line has been completed, which should change the mood of traders from "bearish" to "bullish". The fact that the pair has already closed today at the level of 76.4% (1.1837) allows traders to expect a resumption of the fall in the direction of the level of 1.1772. Thus, I am inclined to believe that the fall in quotes will still resume. Meanwhile, the information background of yesterday left much to be desired. During the entire day, in America, a report on the number of applications for unemployment benefits was released, which almost coincided with the expectations of traders.
However, yesterday, it also became known that the ECB has revised its monetary policy on the issue of inflation. Earlier, the ECB called the target level "2% or slightly lower", and now the interpretation will be "2% exactly". The new wording provides for a symmetrical approach, in which inflation may briefly exceed the level of 2%, but in the medium term. The ECB does not expect a value greater than 2%. Christine Lagarde at a press conference of the ECB said that the new approach to determining the inflation target means that 2% is not a "ceiling", but at the same time, it is very undesirable to move the indicator from 2% both downward and upward. By and large, this change in the approach to inflation targeting does not change monetary policy too much. In any case, earlier the ECB also aimed for 2% inflation, which was barely achieved a month ago. However, in the coming months, the consumer price index may begin to slow down again, since the last surge in price growth was caused by "temporary factors", as stated by Christine Lagarde herself. Weak inflation will limit the economic growth of the Eurozone.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a fall to the corrective level of 76.4% (1.1782) and rebound from it. Thus, a reversal was made in favor of the EU currency and growth began in the direction of the corrective level of 61.8% (1.1890). The rebound of quotes from the Fibo level of 61.8% will work in favor of the US currency and fall to the level of 1.1782. Closing below it will increase the chances of a further fall in the direction of the next corrective level of 100.0% (1.1606). Two bullish divergences have not yet been able to stop the fall in quotes.
Overview of fundamentals:
On July 8, there were interesting events and reports in the European Union and America. However, they had almost no effect on the mood of traders. Thus, the influence of information was very weak.
News calendar for the United States and the European Union:
EU - ECB President Christine Lagarde will deliver a speech (10:00 UTC).
EU - ECB report from the monetary policy meeting (11:30 UTC).
On July 9, the calendar of economic events in America is empty, and in the European Union, there will be a speech by Christine Lagarde, which may attract the attention of traders. The report on monetary policy will also be interesting. However, I do not expect a strong reaction from traders to these events.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders became more "bearish". Major players have closed 563 long contracts and opened 3,615 short contracts. Thus, the changes shown in the latest report are not too big. However, the mood of speculators has been becoming more "bearish" for several weeks in a row. However, in general, the advantage of bull traders remains, since they have a large number of open longs.
EUR/USD forecast and recommendations for traders:
Today, I recommend selling the pair with a target of 1.1772, since the closing was performed on the hourly chart under the level of 1.1837 with a Stop Loss order above 1.1837. I recommend buying the pair in case of repeated closing of quotes on the hourly chart above the level of 1.1837 with a target of 1.1919.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
