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22.01.202110:48 Forex Analysis & Reviews: EUR/USD. January 22. COT report. Traders reacted positively to the speech of ECB President Christine Lagarde

EUR/USD – 1H.

Exchange Rates 22.01.2021 analysis

On January 21, the EUR/USD pair resumed the growth process in the direction of the corrective level of 76.4% (1.2182). The new upward trend line characterizes the current mood of traders as "bullish". And if this trend is not short, the pair may well perform a return to the highs of the last three years, which are near the level of 1.2350. What was the reason for the new growth of the European currency? Yesterday, the most important event of the day was the ECB meeting and summing up its results. The deposit and credit rates remained unchanged, so all the attention of traders was turned to the press conference with Christine Lagarde. However, the ECB chairwoman did not meet the expectations of traders, limiting herself only to general phrases that were already known. Lagarde once again said that the coronavirus pandemic is having a negative impact on the economy. She noted that "strict" quarantines remain in some EU countries, which reduces business and economic activity. Therefore, the timing of the economic recovery is delayed. Lagarde also noted that vaccination of the population is a very important stage in resolving the pandemic crisis, but at the moment the pandemic has not gone anywhere and still carries significant risks for the economy. Indirectly, Lagarde touched on the topic of low inflation and the high euro exchange rate. However, there was also no new information.

EUR/USD – 4H.

Exchange Rates 22.01.2021 analysis

On the 4-hour chart, the pair's quotes continue to grow in the direction of the corrective level of 200.0% (1.2353) after the formation of a bullish divergence at the MACD indicator. Closing quotes under the Fibo level of 161.8% will work in favor of the US dollar and resume falling towards the next corrective level of 127.2% (1.1729). So far, the two lower charts indicate a very likely continuation of the growth of the euro currency.

EUR/USD – Daily.

Exchange Rates 22.01.2021 analysis

On the daily chart, the quotes of the EUR/USD pair performed a rebound from the corrective level of 323.6% (1.2079). Thus, the growth of the European currency can now resume in the direction of the corrective level of 423.6% (1.2496). The third chart also indicates a very likely growth of the pair.

EUR/USD – Weekly.

Exchange Rates 22.01.2021 analysis

On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term. The fourth graph.

Overview of fundamentals:

On January 21, a report on applications for unemployment benefits was released in the United States. The number of initial requests was 900 thousand, repeated – 5.05 million. Traders were waiting for weaker data but generally ignored this report. The euro currency is growing again.

News calendar for the United States and the European Union:

EU - index of business activity in the manufacturing sector (09:00 GMT).

EU - index of business activity in the service sector (09:00 GMT).

US - index of business activity in the manufacturing sector (14:45 GMT).

US - PMI index for the service sector (14:45 GMT).

On January 22, reports on business activity in the service and manufacturing sectors will be released in America and the European Union. In the European Union, the services sector is expected to remain below 50.0, which may put pressure on the European currency. In the US, both indices are expected to be high.

COT (Commitments of Traders) report:

The activity of major players at the beginning of 2021 remains quite weak. At the very least, they do not open a large number of new contracts, preferring a cautious strategy. Speculators, according to the latest COT report, opened 2,731 long contracts and closed 6,042 short contracts. Thus, their mood abruptly became more "bullish". Let me remind you that the COT report comes out with a three-day delay, so it does not take into account the drop in quotes of the last days. The "Non-commercial" category of traders, therefore, again increases long contracts, that is, believes in the new growth of the European currency? All charts now point to a very likely resumption of the upward trend.

EUR/USD forecast and recommendations for traders:

On Friday, I recommend buying the euro with targets of 1.2182 and 1.2214 on the hourly chart, if there is a rebound from the trend line or the level of 100.0% (1.2131). It is recommended to open the pair's sales if the pair closes below the trend line on the hourly chart with targets of 1.2072 and 1.1997.

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 support current activities or export-import operations.

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

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Samir Klishi,
Experto Analítico
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