EUR/USD – 1H.
Hello, traders! On July 6, the euro/dollar pair performed a new growth over the upward trend line, however, it still retains the current "bullish" mood of traders. However, this night the pair performed a reversal in favor of the US currency and began the process of returning to the trend line. The main topic of the day for traders remains coronavirus in America. It seems that it is the new outbreak of the epidemic in the US that does not allow the US dollar to grow. This is what euro bulls use. The fact is that the incidence of coronavirus in the United States continues to increase and in recent days, more than 50,000 new cases were recorded every day. These are absolute records. Thus, no matter what Donald Trump says, some states have already tightened quarantine measures and others may follow their example, since it is the governors who decide on the introduction of quarantine in the US. Thus, according to many analysts, the US economy will again suffer from a coronavirus disease. Even if there is no quarantine.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair performed a rebound from the level of 1.1347, from which two rebounds were previously performed, with the formation of a bearish divergence and a reversal in favor of the US currency. As a result, the process of falling towards the corrective level of 61.8% (1.1167) began. Fixing the pair's exchange rate above the level of 1.1347 will work in favor of the European currency and continue to grow in the direction of the corrective level 100.0% (1.1496).
EUR/USD – Daily.
On the daily chart, the euro/dollar pair spent several trading days below the level of 127.2% (1.1261), however, yesterday it secured above it, which allows traders to expect continued growth in the direction of the next corrective level of 161.8% (1.1405). At the same time, the level of 1.1347 deters bulls from new purchases.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair rebounded from the lower line of the "narrowing triangle", which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the "triangle").
Overview of fundamentals:
On July 6, the European Union released a report on retail trade, which showed a larger than expected increase of 17.8% m/m. In America, the ISM composite index for the non-manufacturing sector was released with an excess of 7.1 points. The PMI for the services sector was also better than traders' expectations.
News calendar for the United States and the European Union:
Germany - change in industrial production (06:00 GMT).
On July 7, Germany has already released a report on industrial production for May, which increased by 7.8% m/m compared to April. Traders were expecting a bigger increase and are a bit disappointed.
COT (Commitments of Traders) report:
The latest COT report was released several days late due to Independence Day in the US. However, these figures were very interesting. For example, groups of speculators during the reporting week strenuously got rid of long-contracts for the euro currency and increased short-contracts. This means that large traders do not believe in further growth of the European currency. At the same time, hedgers were actively getting rid of short contracts, however, this information is less important, since it is the "Non-commercial" group that is considered the most important. Thus, I can conclude that the major players are not looking towards new purchases yet, and the rebound from the level of 1.1347 indirectly confirms that traders do not want to continue buying the euro.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend buying the euro currency with the goal of 1.1496, if the close is made above the corrective level of 1.1347. It is more reasonable to sell the pair now with the target level of 61.8% (1.1167), since the rebound from the level of 1.1347 was performed.
"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 to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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