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EUR/USD – 1H.
On December 1, the EUR/USD pair continued the growth process, despite the earlier consolidation of quotes under the upward trend line. However, bull traders kept the initiative in their hands and continued to grow. Fixing the pair's rate above the Fibo level of 161.8% (1.2027) worked in favor of continuing growth towards the next corrective level of 200.0% 1.2094. Closing above this level will increase the probability of further growth towards the next Fibo level of 261.8% (1.2202). Meanwhile, most traders are frantically trying to find the reason for the strong growth of the European currency. Yesterday, for example, there were no such important economic reports that could have caused such strong growth. Moreover, the EU inflation report was very weak. Jerome Powell and Christine Lagarde's speeches took place much later than the fall in the US currency began. Thus, most likely, this collapse is caused by purely speculative factors. In other words, traders simply buy the euro and sell the dollar, without even paying attention to the background information or economic reports. The euro is growing, everyone wants to make money on it, buy euros even more, which leads to even more growth. And Jerome Powell and Steven Mnuchin, speaking in the US Congress, spoke only about the worsening risks to the US economy and called on Congress to provide additional assistance to small businesses and the unemployed. The Fed Chairman has been calling on Congress to approve a new package of aid to the US economy for the past few months. This is not news. And it is unlikely that this event could cause the dollar to fall, given that the European economy also needs new incentives.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes have consolidated above the corrective level of 161.8% (1.2027), which now increases the probability of continuing growth in the direction of the next corrective level of 200.0% (1.2353). Today, the divergence is not observed in any indicator. Given the nature of the growth of the euro currency, I would say that any technical signals now have a small value.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed an increase to the Fibo level of 323.6% (1.2079). A rebound from this level will allow traders to expect a reversal in favor of the US currency and a slight drop in the direction of the corrective level of 261.8% (1.1822). However, more attention should now be paid to the lower charts.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair, but in the long term.
Overview of fundamentals:
On December 1, the European Union released a report on inflation (very weak) and business activity in the production sector (neutral). In America, the ISM business activity index (slightly worse than in October). In general, the economic reports were not so important and resonant as to cause such a strong drop in the dollar.
The news calendar for the United States and the European Union:
EU - unemployment report (10:00 GMT).
US - change in the number of employees from ADP (13:15 GMT).
US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (15:00 GMT).
On December 2, Jerome Powell's second speech to the US Congress will take place, as well as a fairly important ADP report on changing the number of employees.
COT (Commitments of Traders) report:
The new COT report was released again late, and again there were few changes in it. The "Non-commercial" category of traders, which is the most important, opened 3,061 new long contracts during the reporting week and closed 1,932 short contracts. Thus, quite unexpectedly, the mood of the major players became more "bullish" after it had become more "bearish" for several months. Perhaps this is an isolated moment and the next report will show a new desire of speculators to get rid of the European currency. However, this is the case now. The total number of long contracts held by speculators is still extremely high, but the euro currency has grown quite significantly over the past 9 months.
EUR/USD forecast and recommendations for traders:
Today, I recommend selling the euro with a target of 1.2027, if the rebound from the level of 200.0% (1.2094) on the hourly chart is completed. New purchases of the pair can be opened after closing quotes above the level of 200.0% (1.2094) with a target near the Fibo level of 261.8% (1.2202).
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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