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EUR/USD – 1H.
The EUR/USD pair continued its slow decline during Tuesday and consolidated under the corrective level of 61.8% (1.1919). Thus, the process of falling quotes can be continued in the direction of the next Fibo level of 76.4% (1.1837). The information background of Tuesday received a very unexpected color. Christine Lagarde's speech at the Brussels Economic Forum was scheduled for this day. However, the most important and interesting statements did not belong to the ECB president but the head of the Bundesbank, Jens Weidmann. Weidmann said during his speech that the incentive program should be reduced gradually and not rush into this issue. The most important issue that the ECB is currently facing is the cancellation of the stimulus under the PEPP program.
Weidmann noted that all restrictions related to the pandemic must be completely lifted for the ECB to start reducing the stimulus program. The Eurozone economy shows a stable and sustainable recovery. According to the president of the Bundesbank, the European economy has recently shown improvement. However, the coronavirus pandemic still keeps the risks high and the prospects uncertain. Therefore, the ECB will not rush into this issue since the completion of the stimulus program may negatively affect the pace of recovery. Weidmann also noted that inflation has increased in recent months. However, the head of the Bundesbank adheres to the opinion of Christine Lagarde on this issue: the surge in inflation is temporary. Thus, traders received some important information, but it hardly increases the likelihood of the cancellation of incentives for the European economy in the near future. On the contrary, the ECB representative made it clear that no one intends to rush the cancellation.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a drop to the corrective level of 61.8% (1.1890). The rebound of the pair's exchange rate from this level will work in favor of the European and the beginning of growth in the direction of the corrective level of 50.0% (1.1978). Closing quotes at 61.8% will increase the chances of continuing the fall of quotes in the direction of the next Fibo level of 76.4% (1.1782).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a reversal in favor of the US currency and consolidated under the corrective level of 161.8% (1.2027). Thus, the decline in quotes can be continued in the direction of the Fibo level of 127.2% (1.1729).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle," which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On June 29, the calendars of economic events in the European Union and the United States were almost empty. The report on consumer confidence in the US provided minimal support to the dollar.
News calendar for the United States and the European Union:
EU - consumer price index (09:00 UTC).
US - change in the number of employees from ADP (12:15 UTC).
On June 30, one rather important report will be released in America and the European Union. I believe that everyone can have a certain influence on the mood 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 4,717 long contracts and opened 24,017 short contracts. Thus, the changes shown in the last report are really serious. Of course, we should not forget that these serious changes are related to the reaction of traders to the Fed meeting, which took place on Wednesday before last. Therefore, the next COT report may be much calmer.
EUR/USD forecast and recommendations for traders:
It is recommended to sell the pair if the quotes close at 61.8% (1.1890) on the 4-hour chart with a target of 1.1782. I recommend buying the pair in case of a rebound of quotes from the level of 1.1890 on the 4-hour chart with a target of 1.1978.
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" are small traders who do not have a significant impact on the price.
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