08.08.202214:41 Forex Analysis & Reviews: Forecast for EUR/USD on August 8. A strong labor market allows the Fed to further raise the rate

The EUR/USD pair reversed in favor of the US currency on Friday and suffered a new fall. I don't give any goals for a new fall or the pair's growth. It would be best to switch to a 4-hour chart, which perfectly shows what is happening. Specifically, the pair has been trading for a month along the corrective level of 127.2% (1.0173) in a sideways corridor. I specifically don't want to put this corridor on the hourly chart, as it will only add confusion. Traders know there is a flat in the euro currency at this time. However, this flat is not quite ordinary. Let's remember, usually, if we are talking about a side corridor or a flat, we mean weak activity of traders, low volatility, and a lack of a clear direction. The euro/dollar pair trades actively every day, passing at least 100 points daily. There is a trend within each day, and quotes do not stand alone with a dying look.

Thus, we get a flat of a higher scale: when the pair practically does not move from its place on the 4-hour chart, and quite active movement is observed on the lower charts. On Friday, the information background was clearly "in favor" of the dollar rising. The Nonfarm Payrolls report exceeded traders' expectations by more than twice, and the unemployment rate has decreased even more and now stands at 3.5%. These two reports allowed traders to start repurchasing the US currency, but these purchases, by the way, quickly ended. The flat on the 4-hour chart is more important now than the background information. However, I still have to admit that America's strong labor market data unties the hands of Jerome Powell and the Fed in some way. If earlier there were high fears of a recession, then after these reports, the mood of dollar bulls has improved, and the Fed can now continue to raise the rate without fear of a serious slowdown in the economy and a deterioration in the labor market. Over the next month, I expect a new rise in the US dollar.

On the 4-hour chart, the pair continues to remain above the level of 127.2% (1.0173). Thus, the growth process can be resumed in the direction of the upper line of the descending trend corridor. However, I want to note that the level of 1.0173 is weak, and the pair regularly breaks it in both directions. I would focus now on the very nature of the movement – horizontal. Consolidation above the descending corridor will increase the probability of resuming growth in the direction of the next corrective level of 100.0% (1.0638).

Commitments of Traders (COT) Report:

Last reporting week, speculators closed 6,349 long contracts and 9,122 short contracts. It means that the "bearish" mood of the major players has become a little weaker, but it has remained. The total number of long contracts concentrated in the hands of speculators now amounts to 191 thousand, and short contracts – 230 thousand. The difference between these figures is still not too big, but it remains not in favor of euro bulls. In the last few weeks, the chances of the euro currency's growth have been gradually increasing, but recent COT reports have shown no strong strengthening of the bulls' positions. The euro has failed to show convincing growth in the last four weeks. Thus, it is still difficult to count on the strong growth of the euro currency. So far, I am inclined to resume the fall of the euro/dollar pair.

News calendar for the USA and the European Union:

On August 8, the calendars of economic events in the European Union and the United States were empty. The influence of the information background on the mood of traders today will be absent.

EUR/USD forecast and recommendations to traders:

I recommend new sales of the pair when rebounding from the upper line of the corridor on the 4-hour chart with a target of 1.0173. I recommend buying the euro currency when fixing quotes above the descending corridor on the 4-hour chart with a target of 1.0638.