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EUR/USD – 1H.
On August 31, the EUR/USD pair continued to increase quotes within the new upward trend corridor, which characterizes the current mood of traders as "bullish". There were few drivers for a new fall in the US currency on Monday, however, traders continued to get rid of the US dollar. I believe that the dollar has just started to fall freely. Jerome Powell didn't report anything supernatural or ultra-blue last Thursday. However, it was from that day that a new fall in the dollar began. The only thing that Powell said is a possible excess of 2% of the inflation rate without a momentary reaction from the Fed in the form of a key rate increase. However, the situation was the same earlier. Inflation should reach a level above 2% over a long period of time, not for one month. In recent years, when the rate was no longer raised, and then began to decline due to the crisis, inflation rarely stuck above 2% for a long time. Now, Powell hinted that the Fed is ready to release inflation to 3%. However, you need to get to these three percent first. I believe that this is not a task for the coming months, so the reaction of traders to these words is excessive. We cannot say that the US dollar is falling unreasonably, however, there are still serious doubts about this.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair performed a consolidation over the side corridor, which significantly increases the probability of further growth of quotes in the direction of the corrective level of 161.8% (1.2027). The pair's rebound from this level will work in favor of the US dollar and the beginning of the fall in the direction of the Fibo level of 127.2% (1.1729). The upward trend continues to maintain the bullish mood of traders. Closing quotes above the level of 161.8% will increase the chances of continuing growth in the direction of the next corrective level of 200.0% (1.2353).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed another consolidation above the corrective level of 261.8% (1.1825). However, this level is not strong and I recommend paying more attention to the upward trend corridor. The mood of traders remains "bullish".
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 may be strong, but in the long term.
Overview of fundamentals:
On August 31, Germany released an inflation report that was worse than traders' expectations. However, the euro currency did not feel any pressure from this report.
News calendar for the United States and the European Union:
Germany - unemployment rate (07:55 GMT).
EU - index of business activity in the manufacturing sector (08:00 GMT).
EU - unemployment rate (09:00 GMT).
EU - consumer price index (09:00 GMT).
US - ISM manufacturing index (14:00 GMT).
On September 1, the calendars of the European Union and the United States contain quite a lot of different economic reports. Special attention should be paid to the ISM index in the US manufacturing sector.
COT (Commitments of Traders) report:
The latest COT report was very revealing. According to the results of the reporting week, major traders of the "Non-commercial" group opened 1302 new long contracts and closed 11 thousand short contracts. Thus, their mood became even more "bullish". And the difference between the total volumes of long and short contracts focused on their hands has increased even more. Thus, the "bullish" mood of speculators has been growing continuously since June 20, which allows us to conclude that the upward trend for the euro/dollar pair continues. The "Commercial" group, which usually trades against the trend, opened 7 thousand short-contracts during the reporting week, and the total number of short-contracts for all groups of traders decreased by 7 thousand, and long contracts - by a thousand.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro currency with the goals of 1.1966 - 1.1916, if the rebound from the level of 161.8% (1.2027) on the 4-hour chart and closing under the trend corridor on the hourly chart is performed. I recommend a new purchase of the pair if the closing above the level of 1.2027 with the goal of 1.2096 is completed.
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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