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EUR/USD – 1H.
The EUR/USD pair resumed the fall of quotes during Wednesday, having previously performed a rebound from the downward trend line. Thus, the mood of traders is still characterized as "bearish", and the fall of quotes can be continued in the direction of the next level of 1.1772. And in the case of closing below it – in the direction of the corrective level of 100.0% (1.1704). Bull traders can re-enter the game no earlier than the closing of the pair's rate above the trend line. Yesterday was marked by only two events, each of which traders could consider from different angles. Not to mention that everyone's expectations could be very different. In the morning, the European Commission presented its summary of GDP and inflation forecasts for the coming years. Without going into details (traders did not pay any attention to these figures anyway), I can note that the forecasts for GDP and inflation were increased compared to the previous report of the European Commission. It means that the European Union is waiting for an acceleration in the pace of economic recovery. This is good, but at the same time, several European senior officials have called on Europe to prepare for a new wave of coronavirus. Several countries are already experiencing new outbreaks of the disease. In addition, the whole world is concerned about the situation with the Indian strain of coronavirus, from which even vaccinated people die, and vaccines are not so effective against it. Thus, Europe may face another wave of disease, which will automatically mean a slowdown in the economic recovery and the extension of all measures to stimulate it. Thus, Christine Lagarde is still completely right, as she has repeatedly stated that now is not the time to cancel incentives. The EU economy has not yet become stronger and can stand on its feet only with the help of "two crutches". Thus, I expect that all the incentives will be maintained until at least March 2022, as originally planned.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes fell to the corrective level of 76.4% (1.1782) despite the formation of two bullish divergences. The rebound of quotes from this level will work in favor of the US currency and the beginning of growth in the direction of the Fibo level of 61.8% (1.1890). Closing the pair's exchange rate below the level of 76.4% will increase the probability of a further fall in the direction of the next corrective level of 100.0% (1.1606).
Overview of fundamentals:
On July 7, reports from the European Commission and the Fed were released in the European Union and America, but I can't say that they affected the mood of traders. We can say that the information background was interesting yesterday, but weak.
News calendar for the United States and the European Union:
US - number of initial applications for unemployment benefits (12:30 UTC).
EU - ECB press conference (12:30 UTC).
On July 8, a report on the number of applications for unemployment benefits will be released in America, and an unscheduled press conference of the European Central Bank will be held in the European Union. I expect that interesting news can only come from the ECB, while the American report is unlikely to arouse the interest of traders.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the "Non-commercial" category of traders became more "bearish". Major players have closed 563 long contracts and opened 3,615 short contracts. Thus, the changes shown in the latest report are not too big. However, the mood of speculators has been becoming more "bearish" for several weeks in a row. However, in general, the advantage of bull traders remains, since they have a large number of open longs.
EUR/USD forecast and recommendations for traders:
I do not recommend selling the pair today, although slowly but surely, it continues to fall. However, the movement of the last few days is weak. I believe that a reversal of quotes in favor of the euro currency is now possible. I recommend buying the pair in case of closing quotes on the hourly chart above the descending trend line with targets of 1.1919 and 1.1985 or in case of a rebound from the level of 1.1782 on the 4-hour chart.
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 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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