EUR/USD – 1H.
On Tuesday, the EUR/USD pair performed an increase to the downward trend line, rebound from it, and resumed the process of falling. However, it could not fall below the previous low, although it closed under the corrective level of 76.4% (1.1837), which increases the probability of continuing the fall towards the next level of 1.1772. Nevertheless, taking into account two bullish divergences on the 4-hour chart at once, I expect that a close above the trend line may be performed today or tomorrow, which will change the mood of traders to "bullish". The information background of yesterday was rather poor. Although, judging by the activity of traders, this can not be said. However, the calendar of events contained only two more or less interesting entries. It is the change in the volume of retail trade in the European Union, as well as the index of business activity in the service sector from ISM. There were other economic reports, but they were even less important than those listed above.
As it turned out, retail trade in the EU at the end of May increased by 4.6% mom and 9.0% y/y. These values turned out to be better than traders expected. However, the European currency showed growth only early on Tuesday morning, and at the time of the release of this report, it was already falling. The same applies to the ISM index. Although its value for the month lost about 3.9 points, it remained very high – 60.1. Thus, traders were not upset because of this decline. The US dollar, however, seems to have perked up after last Friday, when the fall was not entirely logical. Traders remembered that Nonfarm Payrolls turned out to be quite strong last Friday and decided to win back this report on Tuesday. However, from my point of view, this does not greatly increase the probability of a further drop in the pair's quotes. There are no particularly important events in the European Union right now. Recently, Christine Lagarde spoke, who once again stated that the European economy still needs to be stimulated, so the PEPP program will continue to operate until March 2022 at least.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a consolidation under the corrective level of 61.8% (1.1890). Thus, the pair's decline can be continued in the direction of the next Fibo level of 76.4% (1.1782). However, already two bullish divergences in the MACD and CCI indicators allow us to count on a reversal in favor of the European currency and some growth in quotations. Thus, closing above the Fibo level of 61.8% will allow traders to expect growth in the direction of the correction level of 50.0% 1(.1978)
Overview of fundamentals:
On July 6, only the most insignificant reports were released in the European Union and America, which did not have any effect on the mood of traders.
News calendar for the United States and the European Union:
EU - economic forecast from the European Commission (09:00 UTC).
US - publication of the minutes of the Fed meeting (18:00 UTC).
On July 7, data from the European Commission and the Federal Reserve will be released in America and the European Union. I believe that both documents will not make any impression on traders. But if you wait for important information, then wait for it in the evening from the Fed. The last meeting of which caused a strong movement in the market.
COT Commitments of Traders) Report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders became more "bearish". Major players have closed 563 long contracts and opened 3,615 Short contracts. Thus, the changes shown in the latest report are not too big. However, the mood of speculators has been becoming more "bearish" for several weeks in a row. However, in general, the advantage of bull traders remains, since they have a large number of open longs.
EUR / USD forecast and recommendations for traders:
I do not recommend selling the pair today, since in recent days the decline in quotes was too strained or absent at all. The pair may try to perform a reversal in favor of the EU currency. I recommend buying the pair if the quotes on the hourly chart close above the descending trend line with the goals of 1.1919 and 1.1985.
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.
