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EUR/USD – 1H.
On January 29, the EUR/USD pair rebounded from the corrective level of 100.0% (1.2131) and resumed the growth process. The new upward trend line characterizes the current mood of traders as "bullish". Fixing the pair's rate under the trend line will work in favor of the US currency and some fall in the direction of the Fibo level of 127.2% (1.2072). The rebound from it will allow us to count on continued growth in the direction of the corrective level of 76.4% (1.2182).
The American economy is recovering faster after the crisis, and this is a fact. Severe quarantine measures that persist in many EU countries are putting enormous pressure on the European economy. In November last year, for a whole month, the EU authorities carried out a "lockdown", which also affected the pace of recovery. However, the "lockdown" is already over, and the service sector still feels quite difficult. This was indicated by the latest published business activity indices in the EU and the US. In the European Union, business activity in the service sector has long been below 50. But in the US, there are no such problems. Thus, in the long term, the US economy can reach pre-crisis levels faster than the European one. Important business activity indices for the EU and US manufacturing sectors will also be released today. If the European Union begins to experience similar problems in the production sector, this could put serious pressure on the European currency on Monday and during the current week. Business activity in US manufacturing (2 indices) are near the level of 60, so it is unlikely that the dollar will come under pressure today.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes are moving in an unclear direction. It is more correct to say that they are moving along the corrective level of 161.8% (1.2027), without approaching the level itself. Thus, before the pair closes at the level of 161.8%, traders can expect a resumption of growth in the direction of the corrective level of 200.0% (1.2353).
EUR/USD - Daily.
On the daily chart, the quotes of the EUR/USD pair performed a new fall to the Fibo level of 323.6% (1.2079). A new rebound from this level will again work in favor of resuming growth in the direction of the corrective level of 423.6% (1.2496). Closing the pair under an upward trend corridor will increase the likelihood of a further fall in the long term.
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 January 29, reports on personal consumption expenditures and changes in personal income and expenses of Americans were released in the United States. Given that the pair has been trading in different directions all day, it is unlikely that these reports have affected traders.
News calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (09:00 GMT).
EU - unemployment rate (10:00 GMT).
US - index of business activity in the manufacturing sector (14:45 GMT).
US - ISM manufacturing index (15:00 GMT).
On February 1, in addition to reports on business activity, the European Union will also release the unemployment rate for December. In general, there will be an information background today.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which was intended to help answer the question, what are the prospects for the euro currency? At the beginning of 2021 (in its first month), the quotes of the euro currency fell more than they grew. However, as 3 out of 4 COT reports show during this time, the "Non-commercial" category of traders is once again increasing the number of long contracts on their hands. This means that speculators continue to believe in the growth of the euro currency. During the last reporting week, major players opened more than 3 thousand long contracts and closed more than 1 thousand short contracts. Thus, their mood was again more "bullish" than a week earlier. Are we waiting for the new growth of the European currency?
Forecast for EUR/USD and recommendations for traders:
It is recommended to buy the euro currency with the targets of 1.2182 and 1.2214 on the hourly chart when it breaks away from the trend line. New sales of the pair are recommended when closing under the trend line with the target of the Fibo level - 1.2072.
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.
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