EUR/USD – 1H.
Hello, traders! On August 13, the EUR/USD pair continued the growth process for most of the day after closing above the downward trend line. However, towards the end of the day, it performed a reversal in favor of the US dollar and began to fall in quotes. Nevertheless, the mood of traders is still characterized as "bullish", and this is most alarming. The fact is that the US currency has fallen very much in comparison with its European competitors in the last month and a half. This phenomenon in the market is called overbought or oversold. In our case, it turns out that the dollar is heavily oversold, and the euro is overbought, so the pair's fall should have started long ago. However, below the level of 1.17, the pair's quotes do not manage to close, and neither American economic reports nor European ones help them in this. There weren't many of them yesterday, but there was plenty of interesting information throughout the week. Now it is not even possible to make a clear conclusion about what is important for traders and what is not. They work out statistical reports in one year, the situation with the coronavirus in the United States has begun to improve, and it is somehow blasphemous to talk about the fall of the American economy once again. Everyone already knows about this, and this information has been worked out many times. Thus, you need to wait for traders to decide and resume the trend.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair performed a new rebound from the Fibo level of 127.2% (1.1729) and began the growth process in the direction of the corrective level of 161.8% (1.2027). However, above the previous peaks of about 1.1908, bull traders are again unlikely to be able to close. The bullish divergence of the CCI indicator also worked in favor of the beginning of growth. Fixing quotes below the level of 127.2% will work in favor of the US currency and the beginning of a downward trend.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair returned to the Fibo level of 261.8% (1.1825). With a large blue rectangle, I indicated that there is now a high probability of movement in the side corridor. Thus, you can also resume working with the pair after you go beyond this rectangle.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle", which now allows us to count on further growth of the euro currency, which can be very strong and long-term.
Overview of fundamentals:
On August 13, there was one report that traders could pay attention to, and eventually did. The number of initial applications for unemployment benefits for the first time since the beginning of the pandemic in America was less than one million, which traders took very positively, and the US dollar began to grow after this report. Short-lived, though.
News calendar for the United States and the European Union:
EU - change in GDP (09:00 GMT).
US - change in retail trade volume (12:30 GMT).
US - change in industrial production (13:15 GMT).
US - consumer sentiment index from the University of Michigan (14:00 GMT).
On August 14, the EU will release the most important report on GDP for the second quarter with a forecast of -12.1% q/q and -15.0% y/y. So much will depend on this report on Friday. However, the US reports are quite important and will set the tone for trading in the second half of the day.
COT (Commitments of Traders) report:
The latest COT report was very predictable. Given the fact that in general, the euro currency continues to grow recently and so far the dollar is only capable of small corrections, it is obvious that large traders continued to increase long-contracts. During the reporting week, their number increased by a little over 19 thousand. At the same time, the "Non-commercial" group also got rid of short contracts, thus showing that their mood is becoming even more "bullish". Thus, the advantage of the euro over the dollar remains large, and the advantage of longs over shorts in the hands of speculators remains great. Based on this, it follows that the COT report does not yet give any signals about the possible end of the growth of the euro currency. This week, the euro currency has slightly worsened its position, however, only Friday's report will show whether the mood of the major players has changed.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend cautious purchases of the currency pair with the goal of 1.1908, as the next rebound from the level of 1.1729 was made. I recommend selling the pair with the goal of a trend line on the 4-hour chart, if the close is made below the level of 1.1729.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
