EUR/USD – 1H.
The EUR/USD pair continued to be within the ascending trend corridor on Friday, and it secured under it today. Thus, the process of falling quotes can now be continued toward the corrective level of 127.2% (1.1552) since the pair also performed a close under the level of 1.1629. The mood of traders has changed at this time to "bearish." The information background on Friday remained fairly neutral, although there were quite a lot of economic reports that day. In particular, the indices of business activity in the United States and the European Union. However, it can be immediately noted that traders did not pay due attention to them. The most important topic now is the Fed's monetary policy, and all the speeches of Jerome Powell and other FOMC members are held through the prism of this event. In other words, traders are waiting for concrete hints that the QE program will begin to decrease starting in November. However, so far, they are only getting information about inflation, which will remain high for a longer period.
On the one hand, this increases the chances that in November, it will be announced that the asset purchase program will be curtailed. On the other hand, in the last two months, Nonfarm Payrolls reports left much to be desired. Thus, the Fed may delay this decision until December. Everyone is talking about inflation now: Jerome Powell, Janet Yellen, and FOMC members. And no one said it could start slowing down anytime soon. Energy prices continue to rise, which will cause a further increase in prices for almost all categories of goods and services. In addition, stimulus measures also continue to stimulate not only the economy but also inflation itself. Thus, the Fed now faces a dilemma: to start curtailing QE and suppress the growth of inflation or to leave it unchanged and continue to wait for the full recovery of the labor market. The growth of the US currency can be continued if traders renew their faith in the rapid curtailment of QE, which has faded a little in the last two weeks.
EUR/USD – 4H.
On the 4-hour chart, the quotes closed above the corrective level of 100.0% (1.1606), which still allows us to count on continued growth in the direction of the next Fibo level of 76.4% (1.1782). Emerging divergences are not observed in any indicator. Fixing the pair's exchange rate below the level of 100.0% will work in favor of the US currency and the resumption of the fall in the direction of the corrective level of 127.2% (1.1404).
News calendar for the USA and the European Union:
On October 25, the calendars of economic events in the European Union and America are empty, so there is no information background today. The activity of traders remains low.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders changed towards "bullish." Speculators closed 8,436 long contracts on the euro and 16,123 short contracts. Thus, the total number of long contracts in the hands of speculators decreased to 195 thousand, and the total number of short contracts - to 206 thousand. Over the past few months, the "Non-commercial" category of traders has tended to get rid of long contracts on the euro and increase short contracts. Or increase short at a higher rate than long. In general, this process continues now, but in the last two weeks, the European currency has shown weak growth.
EUR/USD forecast and recommendations to traders:
Traders are still not trading the pair too actively. Earlier, I recommended buying the pair when closing over a descending corridor on a 4-hour chart with targets of 1.1629 and 1.1704. The last level was never worked out. I do not recommend buying a pair again yet. I recommend selling the pair, as there was a closure under the descending corridor on the hourly chart with a target of 1.1552.
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 to make speculative profits 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.
