EUR/USD – 1H.
Hello, traders! On July 8, the euro/dollar pair continues the process of falling in the direction of the upward trend line. Thus, in general, the "bullish" mood of traders remains, however, it is extremely weak. Nevertheless, the euro currency is growing, and the US dollar is still experiencing problems. And I believe that all the problems of the US currency are still connected with the coronavirus and high fears of traders about the prospects of the US economy. It is obvious to everyone: the stronger the epidemic, the lower the economic and business activity of the population and business. The lower these two indicators, the slower the recovery will be and the weaker it will be. Thus, unlike Donald Trump and the White House, traders are much more concerned about the epidemiological situation in the United States. It is also worth noting that in Europe, not everything is fine. The coronavirus was stopped, however, this does not mean that there will be no second and third wave. The EU cannot remain isolated from the rest of the world and is already opening its borders. However, members of the European Commission in their forecasts for 2020 and 2021 presented yesterday also expect a long and difficult recovery, which will depend on many factors, some of which may repeatedly "set the stage" for recovery.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair performed a rebound from the level of 1.1347, from which two rebounds were previously performed, with the formation of a bearish divergence and a reversal in favor of the US currency. A little later, it was fixed under the corrective level of 76.4% (1.1294), which increases the probability of a further fall in the direction of the corrective level of 61.8% (1.1167), which was also previously worked out and rebounded from it. Fixing the pair's exchange rate above the level of 1.1347 will increase the pair's chances of continuing growth in the direction of the corrective level of 100.0% (1.1496).
EUR/USD – Daily.
On the daily chart, the euro/dollar pair spent several trading days below the level of 127.2% (1.1261), but performed a consolidation above it, which allows traders to expect continued growth in the direction of the next corrective level of 161.8% (1.1405). At the same time, the level of 1.1347 deters bull traders from making new purchases.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair rebounded from the lower line of the "narrowing triangle", which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the "triangle").
Overview of fundamentals:
On July 7, the only economic report was industrial production in Germany, which fell by 19.3% y/y in May, although traders expected no more than -11.1%. The euro currency fell during the day, but most likely, the reasons are not in the information background.
News calendar for the United States and the European Union:
On July 8, the calendar of economic news and events is empty in the European Union and the US. Thus, there is no information background today.
COT (Commitments of Traders) report:
The latest COT report was released several days late due to Independence Day in the US. However, its figures were very interesting. For example, a group of speculators during the reporting week strenuously got rid of long-contracts for the euro currency and increased short-contracts. This means that large traders do not believe in further growth of the European currency. At the same time, hedgers were actively getting rid of short contracts, however, this information is less important, since it is the "Non-commercial" group that is considered the most important. Thus, I can conclude that the major players are not looking towards new purchases yet, and the rebound from the level of 1.1347 indirectly confirms that traders do not want to continue buying the euro. At the same time, the epidemiological situation in America makes traders cautious when buying the dollar.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend buying the euro currency with the goal of 1.1496, if a close above the level of 1.1347 is made. It is more reasonable to sell the pair now with the target level of 61.8% (1.1167), since the rebound from the level of 1.1347 was performed.
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.
