EUR/USD – 1H.
On Thursday, the EUR/USD pair continued the growth process at the corrective level of 61.8% (1.1919). A rebound of the pair's exchange rate from this level will work in favor of the US currency, and some fall in the direction of the corrective level of 76.4% (1.1837). Closing quotes above the level of 61.8% will increase the probability of further growth in the direction of the next Fibo level of 50.0% (1.1985). However, bull traders will need strong statistics from the Eurozone. Yesterday, the information background for the US currency remained weak. Let me remind you that a day earlier, bear traders were disappointed by the Fed and Jerome Powell since no single word was said about the possible completion of the quantitative stimulus program.
On the contrary, Powell noted that the state of the employment level is still far from the target values. Thus, the QE program will continue in the coming months. But inflation may continue to grow or remain at high values, which is bad for the dollar.
Yesterday, it turned out that US GDP grew by 6.5% in the second quarter, although traders expected to see 8.5%. Thus, many of them concluded that the American economy is beginning to slow down with rising inflation and unknown prospects and the timing of monetary policy tightening. Against the background of this information, the US dollar continued to fall. Today, in the next hour, reports on inflation in the European Union and unemployment and the level of GDP will be released. Traders will pay the most attention to the data on inflation and GDP. However, the real values of these reports should be at least slightly different from the expectations of traders for a reaction to follow. The forecast for inflation is 2.0% y/y. The forecast for GDP is 1.5% y/y. It is worth noting that these are very low values. As I have already said, GDP in the second quarter of the United States was 6.5%, and traders expected an even higher value. Inflation in the European Union also remains relatively weak, although it almost exactly corresponds to the target level of the ECB. Thus, exceeding the forecasts may help the European currency to end the week on a positive note.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed an increase to the corrective level of 61.8% (1.1890). However, there was no rebound at the moment. Closing the pair's exchange rate above this level will work in favor of continuing growth towards the next corrective level of 50.0% (1.1978). A rebound will allow traders to count on a slight drop in the direction of 76.4% (1.178). There are no emerging divergences in any indicator today.
Overview of fundamentals:
On July 29, there was no single economic report or other events in the European Union. But in the US, an important GDP report was released, which traders ignored since the euro currency managed to grow by only 45 points during the day, although the report was much weaker than expectations.
News calendar for the United States and the European Union:
EU - consumer price index (09:00 UTC).
EU - change in the volume of GDP (09:00 UTC).
EU - unemployment rate (09:00 UTC).
US - main index of personal consumption expenditures (12:30 UTC).
US - changes in the level of expenditures and incomes of the population (12:30 UTC).
EU - ECB President Christine Lagarde will deliver a speech (13:30 UTC).
As I have already said, several important reports will be released in the European Union on July 30, and Christine Lagarde will also speak. Each of these events can affect the mood of traders.
COT (Commitments of Traders) report:
The latest COT report showed that during the last reporting week, the mood of the "Non-commercial" category of traders again became more "bearish." Major players opened 7,083 short contracts on the euro and closed 5,643 long contracts. Thus, in the last five weeks, the number of short contracts focused on the hands of speculators has increased by 65 thousand, and the number of long contracts has decreased by 5 thousand. Therefore, a further fall in the European currency is very likely. However, over the past week, the euro/dollar pair has not continued falling quotes.
EUR/USD forecast and recommendations for traders:
Today, I recommend staying in the pair's purchases with a target of 1.1919 on the hourly chart. If there is a close above it, then purchases should be kept with a target of 1.1985. For sale, I recommend waiting for the quotes to rebound from the level of 1.1919 on the hourly chart. The target is 1.1837.
"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.
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