EUR/USD – 1H

Hello, dear traders! On Tuesday, EUR/USD fell to the 76.4% retracement level of 1.1837. Apart from that the price also closed below the trend line. All this indicates a change in market sentiment to bearish. The downward trend may extend if the price closes below 1.1837. Sometimes, the end of one trend does not mean the beginning of a new one. The pair may trade in the sideways corridor for a while although traders may expect another movement at the same time (in this case, a downward trend).

If the quote closes below 1.1837, the downward trend may extend to 1.1772. Yesterday, the eurozone's Q2 GDP grew by 2.2%, beating market expectations of a 2% increase. The employment change grew by 0.7%, slightly above a preliminary estimate of a 0.5% rise. Meanwhile, the ZEW Indicator of Economic Sentiment for the euro area plunged to 31.1 versus 42.7. As a result, the euro fell to 1.1840 from 1.1870.

Generally speaking, traders ignored the eurozone's macroeconomic data yesterday. Moreover, it was a calm trading day in the US. Today, the market will focus on the publication of the Fed's Beige Book. There have been questions recently about the economic recovery in the US. Many analysts fear that the pace of recovery may slow due to a new coronavirus wave in the country. It became known that vaccines are ineffective both against the virus and its new strains. Despite the high rate of vaccination, the US population is still getting infected, which is likely to affect the economy.

EUR/USD – 4H

On the H4 chart, EUR/USD pulled back from the 61.8% retracement level of 1.1890. The price is likely to fall to the 76.4% retracement level of 1.1782. Alternatively, if the quote closes above the 61.8% retracement level, the upward trend will extend to the 50.0% retracement level of 1,1978. Neither of the indicators has formed divergence today.

Macroeconomic calendar:

United States - Fed Beige Book

On September 8, macroeconomic calendars in the euro area and the US do not contain any important events apart from the Fed's Beige Book that rarely draws traders' attention.

Commitments of Traders (COT) report:

The latest COT report logged an increase in bearish sentiment among Non-commercial traders. Large market players have closed 1,968 long positions and have opened 11,139 short ones. Thus, the total number of long positions held by speculators decreased to 192K, while short positions increased to 180K. Speculators have been actively selling off the euro for several months. At the same time, the pace of decrease in EUR has been very slow. Moreover, EUR/USD has been growing, despite the outcome of COT reports.

Forecast for EUR/USD:

Traders should consider buying the pair in case of a rebound from the 76.4% retracement level of 1.1837 with the target set at 1.1919 on the H1 chart. Short positions should be considered if the price closes below 1.1837 with the target at 1.1772 on the H1 chart.

TERMS:

Non-commercial traders are large market players: banks, hedge funds, investment funds, private, and large investors.

Commercial traders are commercial enterprises, firms, banks, corporations, and companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import transactions.

Non-reportable positions are small traders who do not have a significant impact on the price.