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EUR/USD – 1H.
On February 5, the EUR/USD pair performed a reversal in favor of the European currency and began the growth process, also completing a close over the downward trend corridor. Thus, the mood of traders has changed to "bullish", and the growth process can be continued in the direction of the corrective level of 127.2% (1.2072). On Friday, all the attention of traders was turned to the Nonfarm Payrolls report, which shows how many new jobs were created in the month, not counting the agricultural sector. Earlier, the ADP report on the change in the number of employed people was released, which turned out to be quite strong and optimistic, however, the Nonfarm Payrolls report was weaker than traders' expectations. Thus, the fall of the US currency that began in the morning continued in the afternoon, when reports in the US were released. Oddly enough, the unemployment rate in America continued to decline and in January it was already 6.3%. Thus, the whole package of statistics was not very unambiguous. On the one hand, there are weak Nonfarms, and on the other – a strong report on unemployment. Thus, I believe that not the least role in the fall of the dollar was played by third-party factors, as well as the changed mood of traders. After all, the market turns around not only when there are specific reasons for this. The information background is an important component of the forex market, however, it does not only affect the movement of pairs. Thus, I believe that the US currency may again be under pressure from traders in the coming week. Bear traders have so far lost the initiative in the market.
EUR/USD – 4H.
On the 4-hour chart, the picture looks completely different. First, the bearish mood of traders persists here, as the pair is trading under the descending trend line. Thus, the rebound from this line, in general, can work in favor of the US currency and the resumption of the fall in the pair's quotes in the direction of the corrective level of 127.2% (1.1729). But closing the rate above the trend line will increase the probability of further growth of quotes in the direction of the Fibo level of 200.0% (1.2353) and confirm the assumption made after analyzing the hourly chart.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair closed under the lower border of the upward trend corridor. Thus, the third analyzed chart indicates a very likely drop in the pair's quotes in the near future, in the direction of the corrective level of 261.8% (1.1822), which contradicts the hourly chart.
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 February 5, the calendar of economic events in the European Union was empty. In the US, important reports were released, which did not help the US dollar to continue the growth process.
News calendar for the United States and the European Union:
EU - ECB President Christine Lagarde will deliver a speech (16:15 GMT).
On February 8, the US economic calendar is empty, and the European Union will host a speech by ECB President Christine Lagarde as part of the debate on the ECB's annual report for 2019 in the European Parliament.
COT (Commitments of Traders) report:
Last Friday, another COT report was released. Let me remind you that the European currency has been losing ground over the past week. Therefore, the weakening of the "bullish" mood in the category of "Non-commercial" traders is quite understandable. However, speculators at the end of the reporting week closed as many as 23 thousand long contracts and at the same time increased 11 thousand short-contracts. Thus, their mood became more "bearish". Nevertheless, the growth of the euro currency quotes last Friday indicates that speculators may have hurried with a massive sell-off of the euro.
Forecast for EUR/USD and recommendations for traders:
It is recommended to buy the euro currency with the targets of 1.2131 and 1.2182 on the hourly chart when closing quotes above the descending trend line on the 4-hour chart. It is recommended to open sales at the break from the trend line on the 4-hour chart with the targets of 1.1996 and 1.1913.
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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