EUR/USD – 1H.
On Thursday, the EUR/USD pair reversed in favor of the European currency and closed above the corrective level of 100.0% (1.1704). Thus, the growth process can be continued towards the next level of 1.1772. However, the downward trend corridor continues to characterize the current mood of traders as "bearish." Therefore, the fall in the pair's quotes can continue and resume at any time. It would be ideal if the pair got to the upper border of the corridor and performed a rebound from it. It would be a strong sell signal. The information background of yesterday left much to be desired for the European currency. Although there were no important reports at all, the "second-order" reports were also quite interesting. In particular, the index of business activity in the manufacturing sector fell in September from 61.4 to 58.7, and the index for the service sector - from 59.0 to 56.3.
Let me remind you that any value of these indices above 50.0 is considered positive and indicates improvements in the economy. But at the same time, the decline in the indices themselves suggests a slowdown in growth. Thus, according to all indicators, the economies of the world's leading countries and the euro bulls are beginning to slow down. It can only be due to the next wave of coronavirus, which is now being observed both in European countries and in America. At the last meeting, the European Central Bank indicated that it is still too early to complete the stimulus program. The Bank of England and the Federal Reserve refused to take such a step in September. The fact that the world's main central banks are not in a hurry to curtail stimulus speaks volumes. In particular, the situation with the pandemic may worsen, and then the economy will need additional support to not fall into a recession. Thus, central banks' hints and promises about refusing to stimulate the economy by issuing money and buying back securities should be perceived as nothing more than hints and promises. If the situation with the coronavirus worsens, banks will be forced to maintain these support programs.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes closed under the corrective level of 76.4% (1.1782). Thus, the process of falling quotes can be continued in the direction of the next corrective level of 100.0% (1.1606). There are no emerging divergences in any indicator today. There are no signals to buy the pair at this time.
News calendar for the United States and the European Union:
US - Chairman of the Federal Reserve Board of Governors Jerome Powell will make a speech (14:00 UTC).
US - FOMC member Michelle Bowman will give a speech (14:00 UTC).
US - FOMC member Richard Clarida will give a speech (14:00 UTC).
On September 24, the calendar of economic events of the European Union does not contain anything interesting. In the US, representatives of the Fed Powell, Bowman, and Clarida will make speeches. After the Fed refuses to curtail QE in September, traders will wait for the Fed to make new statements about its readiness to abandon QE in November. This information can support the dollar.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders practically did not change. Speculators closed 4,195 long contracts on the euro and 4,276 short contracts. Thus, the total number of long contracts in the hands of speculators decreased to 187 thousand, and the total number of short contracts - to 160 thousand. Over the past few months, the "Non-commercial" category of traders has been actively getting rid of long contracts on the euro and increasing short. However, at the same time, the euro has grown very slightly during this time. Now, speculators have stopped getting rid of only long contracts for the euro. Thus, this week the European currency may try to start a new upward trend.
EUR/USD forecast and recommendations for traders:
I recommended buying the pair when closing quotes above the Fibo level of 100.0% (1.1704) on the hourly chart with a target of 1.1772. Now, these transactions can be closed in profit or wait for growth to 1.1772. I recommend selling if there is a rebound from the level of 1.1772 on the hourly chart, with a target of 1.1704.
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.
