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EUR/USD – 1H.
On October 2, the EUR/USD pair performed a reversal in favor of the European currency and began a new process of weak growth in the direction of the corrective level of 100.0% (1.1762). However, all trading in recent days continues to take place between the levels of 127.2% and 100.0%, thus, the mood of traders is now more neutral than "bullish" or "bearish". The news that Donald Trump got sick with coronavirus had a serious impact on the US stock markets, however, almost nothing on the foreign exchange market. There are still a huge number of problems in America, and the illness of Donald Trump just a month before the start of the presidential election creates a huge number of questions that are now very difficult to answer. Thus, traders are now in a very uncomfortable position. The situation is getting more confusing every day, and the level of uncertainty is only getting higher. Friday's important reports from America did not attract the attention of traders. There is a feeling that traders are waiting for something, and until this "something" has happened, they are ready to trade only very carefully.
EUR/USD – 4H.
On a 4-hour chart, the graphic picture is even less pleasant and even more sad. Over the past few days, the pair's quotes have returned to the side corridor, where they have been trading for about two months and several times performed consolidation above and below the corrective level of 127.2% (1.1729). The range in which the pair is traded is so narrow that it is extremely difficult to draw any conclusions now. In general, traders are now faced with a situation of flat and complete uncertainty.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair performed a sharp reversal in favor of the EU currency and began the process of returning to the weak level of 261.8% (1.1825). However, a drop in prices still looks more likely.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has consolidated above 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 October 2, the consumer price index in the European Union fell even lower than 0.0%. Thus, the EU is facing a third consecutive month of falling prices, compared to the same period in 2019. In America, the most important Nonfarm Payrolls report was released, which also turned out to be worse than traders' expectations, amounting to 661,000 with expectations of 850,000. Traders ignored both reports.
News calendar for the United States and the European Union:
EU - index of business activity in the service sector (08:00 GMT).
EU - change of volume of retail trade (09:00 GMT).
US - ISM composite index for the non-manufacturing sector (14/;00 GMT).
On October 5, reports that will be released in the European Union is not the most important, and in America – the ISM index, which may attract the attention of traders.
COT (Commitments of Traders) report:
The last COT report was quite boring. During the reporting week, the "Non-commercial" category of traders got rid of both long and short contracts. With approximately equal amounts. Thus, the mood of speculators remained the same. In general, all categories of traders also closed approximately the same number of long and short contracts. Thus, there were really few changes during the reporting week. In general, major traders still have about 5 times more long contracts than short. This means that speculators still believe that the European currency will continue to grow. But how long will their faith last? However, the information background from America is now such that it is only in the growth of the euro currency that one can believe.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro with a target of 1.1608, if the close is made under the level of 127.2% (1.1695) on the 4-hour chart. I recommend buying the pair today if it closes above the level of 100.0% (1.1762) with the target level of 76.4% (1.1821).
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 for 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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