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EUR/USD – 1H.
On August 18, the EUR/USD pair continued the growth process inside the upward trend corridor, which continues to characterize the current mood of traders as "bullish". No economic reports were published the day before, but political news continues to flow in from America. For example, Treasury Secretary Steven Mnuchin spoke yesterday, saying that Republicans and Democrats still cannot agree on the size of the stimulus package. Let me remind you that the Republicans propose to spend $ 1 trillion on these needs, and the Democrats – $ 3 trillion. Mnuchin accused Democrats of not wanting to discuss a "reasonable deal". Steven Mnuchin also said that while Congress is inactive, the US President is "moving forward" and providing assistance to those people who are still out of work. Traders took this information very negatively, and the US dollar began its decline against all major currencies. At the same time, I would like to note that not only the speech of Steven Mnuchin could cause a new fall in the dollar. For several weeks in a row, the pair traded in a side corridor, and during this time, the bears were not able to take the initiative. Therefore, what was supposed to happen happened. The bulls began to rush forward again.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair have secured over the side corridor, which now allows traders to count on continuing growth in the direction of the next corrective level of 161.8% (1.2027). The pair's rebound from this level will work in favor of the US currency and resume falling in the direction of the corrective level of 127.2% (1.1729). Today, the divergence is not observed in any indicator.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair anchored above a rectangle that showed a side corridor. Thus, the growth process can be continued towards the next Fibo level of 323.6% (1.2084).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle", which now allows us to count on further growth of the euro currency, which can be very strong and long-term.
News overview:
On August 18, there were no economic reports in Europe and the United States. However, since the US almost daily receives disappointing news of a political or epidemiological nature, the dollar continues to fall.
News calendar for the United States and the European Union:
EU - consumer price index (09:00 GMT).
US - publication of the minutes of the Fed meeting (18:00 GMT).
On August 19, the calendars of the European Union and the United States contain one entry each. Inflation in the European Union, if it increases compared to June, may provide additional support to the euro. I expect less from the Fed minutes.
COT (Commitments of Traders) report:
The latest COT report was very eloquent. Large market players in total (for all groups) closed both long and short contracts during the reporting week. However, we are more interested in the "Non-commercial" group, which actively got rid of sales contracts and increased long. Thus, large speculators continued to favor the euro currency, while not favoring the US dollar. The fact that the euro currency continues to trade near its peaks for many months should not be surprising. The largest traders who enter the market in order to make a profit continue to buy the euro currency. Thus, the COT report allows us to conclude that the mood of large traders has not changed during the reporting week. The US dollar is still weak.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend to stay in purchases of the euro currency with the goal of 1.2027, as it was fixed above the upper line of the corridor of 1.1908. I recommend selling the pair with the target level of 1.1729 after fixing the price below the ascending corridor on the hourly chart or rebounding from the level of 1.2027.
Terms:
"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.
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