EUR/USD – 1H.
On September 16, the EUR/USD pair performed a reversal in favor of the US currency and continued the process of falling almost all day. By this morning, the pair's quotes have reached the corrective level of 100.0% (1.1762). It is quite difficult to determine further prospects for the pair's movement, since there is still a side corridor on the 4-hour chart, within which the pair continues to trade for the second month. Thus, on the hourly chart in the coming days, a reversal in favor of the EU currency may be performed and the growth process may begin in the direction of the corrective level of 50.0% (1.1886). The results of the Fed meeting, which were summed up last night, did not impress traders too much. The Fed left the key rate unchanged, as well as the volume of the asset repurchase program. However, this volume is now almost unlimited, so the Fed could not change it. Fed Chairman Jerome Powell said at a news conference that the economy is recovering at a faster pace than expected two months ago, and all key forecasts for the economy for 2020 have been revised up. At the same time, Powell said that the outlook remains uncertain due to the coronavirus pandemic. The head of the Federal Reserve also said that a full recovery will not be achieved until the coronavirus is completely defeated. The Fed is ready to use all the necessary tools to help the economy recover.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair performed a reversal in favor of the US currency and consolidated under the upward trend line. Thus, the fall in quotes can now be continued in the direction of the corrective level of 127.2% (1.1729) and the lower border of the side corridor in which the pair continues to trade. Only the consolidation of quotes under the side corridor will allow traders to count on the continuation of the fall in the direction of the next corrective level of 100.0% (1.1496). Otherwise, there will be a rebound and a new growth process to the upper border of the corridor.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed another reversal in favor of the US dollar and anchored under the corrective level of 261.8% (1.1825), which does not mean much, because the quotes continue to remain in the blue triangle, which reflects the flat. The pair's quotes are fixed under the upward trend corridor, which slightly increases the probability of continuing the fall. However, the key remains the side corridor.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has consolidated above the "narrowing triangle", which now allows us to count on further growth of the euro currency, which may be strong, but in the long term.
Overview of fundamentals:
On September 16, there were no news and reports in the European Union, and in America, in addition to the results of the FOMC meeting and a press conference with Jerome Powell, there was also a report on retail trade, which turned out to be worse than traders' expectations. However, the US dollar still rose at the end of the day.
News calendar for the United States and the European Union:
EU - consumer price index (09:00 GMT).
US - number of primary and secondary applications for unemployment benefits (12:30 GMT).
On September 17, the European Union will release a fairly important report on inflation, which has recently fallen below 0.0% y/y.
COT (Commitments of Traders) report:
The latest COT report was very interesting. According to the results of the previous report, major traders of the "Non-commercial" group closed about 11 thousand long contracts. The latest COT report showed a reduction of another 3.7 thousand purchase contracts. At the same time, speculators increased their sales contracts. Thus, the last two COT reports show that the mood of the most important group of traders (speculators) is beginning to change in the direction of "bearish". The Commercial group was actively getting rid of both long contracts and short contracts, closing almost 40,000 in total. All major players in the foreign exchange market got rid of 69 thousand contracts during the reporting week. Thus, I can conclude that the trend is beginning to change and major players are starting to look closely at purchases of the US dollar.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro with a target of 1.1496, if the closing is performed under the side corridor on the 4-hour chart. I recommend buying the pair if there is a rebound from the lower border of the side corridor or from the Fibo level of 127.2% (1.1729) on the 4-hour chart, with targets of 1.1857 and 1.1886.
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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
