EUR/USD – 1H.
On February 17, the EUR/USD pair continued the process of falling and this night it closed under the corrective level of 23.6% (1.2046). Thus, the process of falling can be continued in the direction of the next Fibo level of 0.0% (1.1952). The fall of the euro currency occurred quite sharply, which makes us look for specific reasons for this. However, finding them now is still very difficult. There was no news from the US or the European Union right now. Everything revolves around a new package of assistance to the American economy from Joe Biden and the Democrats, which should be adopted in the coming weeks. If it is approved by Congress (and there is no doubt about that), the US Treasury will have to raise another $ 1.9 trillion in addition to the 900 billion that was approved as financial aid under Donald Trump. How this money will be "created" is still unclear. They may have been borrowed, they may have been taken from reserve accounts, they may have been printed. Also late last night, the minutes of the last Fed meeting were released. "Minutes of the Fed" rarely are of interest from traders. All because they receive all the most interesting information immediately after the meeting of the regulator. So it was this time. The minutes said that members of the Fed's monetary committee are not considering reducing the asset repurchase program from the current $ 120 billion a month throughout 2021. Thus, the volume of stimulus will remain unchanged, and there is no need to talk about tightening monetary policy now. Earlier, Jerome Powell also repeatedly indirectly confirmed that the recovery will be long and demanded that the economy be helped as soon as possible.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes fell to the corrective level of 161.8% (1.2027). The rebound of the pair from this level will work in favor of the European currency and the beginning of new growth in the direction of the level of 1.2204. Also today, a bullish divergence is brewing for the CCI indicator, which may coincide with a rebound from the level of 161.8%. Closing the pair's rate below this level will increase the chances of continuing the fall towards the next corrective level of 127.2% (1.1729).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a breakdown of the lower border of the upward trend corridor, but it turned out to be false. Therefore, at the moment, the pair retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). A new closure under the corridor will again allow us to count on a drop in quotes.
EUR/USD – Weekly.
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.
Overview of fundamentals:
On February 17, there were no economic reports in the European Union, and in the United States, in addition to the Fed minutes, a report on retail trade was released, which undoubtedly pleased traders. Thus, the growth of the dollar yesterday corresponded to the information background.
News calendar for the United States and the European Union:
EU - ECB report from the monetary policy meeting (12:30 GMT).
US - number of initial and repeated applications for unemployment benefits (13:30 GMT).
On February 18, the European Union will release the ECB minutes from the last meeting. The effect of it may be the same as that of the Fed's protocol. The report on applications for benefits is unlikely to cause a reaction from traders.
COT (Commitments of Traders) report:
Last Friday, another COT report was released. And it turned out to be much calmer than the previous one. The "Non-commercial" category of traders, which I consider the most important, opened 4,722 Long contracts and got rid of 2,606 short contracts. Thus, the mood of speculators again became more "bullish". Accordingly, the prospects of the European currency are improving again after the report of a week ago, when speculators got rid of 23 thousand long contracts and many believed that this upward trend would be completed. However, I warned that this behavior of large players may be an accident. It is still too early to talk about the end of the upward trend. In total, during the last reporting week, all categories of players closed approximately 11 thousand contract positions. Consequently, interest in the euro currency has decreased slightly.
Forecast for EUR/USD and recommendations for traders:
Sales were recommended when closing quotes under the ascending corridor on the hourly chart with targets of 1.2104 and 1.2046. Both goals have been achieved. New sales of the pair are recommended when the quotes close at the level of 161.8% (1.2027) on the 4-hour chart with a target of 1.1952. I recommend buying the pair if the pair rebounds from the level of 1.2027 with a target of 1.2104.
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.
