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EUR/USD – 1H.
The EUR/USD pair rose to the corrective level of 76.4% (1.1837) during the day, and it consolidated above this level this morning. Even though Jerome Powell's speech took place only late in the evening, traders began to get rid of the US currency in the morning. And given the "dovish" rhetoric, the chances of further growth are increasing. The closing of the pair's rate above the level of 76.4% in itself allows traders to count on a change in the direction of the Fibo level of 61.8% (1.1919). Now let's analyze the speech of Jerome Powell. By and large, there is nothing much to sort out here. The head of the US central bank in Congress repeated all the same statements that he had repeatedly voiced earlier. According to Powell, the US economy continues to recover, but this growth will slow down without monetary stimulus, and problem areas may begin to shrink again.
First of all, attention was paid to the labor market, as about 7.5 million more Americans remain unemployed compared to 2019. Thus, the Fed continues to prioritize the labor market and not inflation. Inflation, according to Powell, can maintain high growth rates for several more months, but after that, it will inevitably begin to slow down. The head of the Federal Reserve also noted that now is not the time to complete the program of assistance to the economy. However, conversations about this among the members of the monetary committee have already begun. Thus, the Fed chairman destroyed the traders' hopes for tightening monetary policy in the near future. Inflation will continue to grow, and the Fed will not prevent it from doing so. The issue of ending QE will be discussed. However, it is unknown when the Fed will move from words to deeds.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes fell to the corrective level of 76.4% (1.1782), rebounded from it, and began the growth in the direction of the Fibo level of 61.8% (1.1890). The rebound of the pair's exchange rate from this level will allow traders to expect a reversal in favor of the US currency and a return to the level of 1.1782. Closing quotes above 1.1890 will increase the probability of further growth. And after yesterday's speech by Jerome Powell, the pair has much more chances for growth.
Overview of fundamentals:
On July 14, the "Beige Book" review and the producer price index were published in America, and a report on industrial production was published in the European Union. However, these data did not affect the mood of traders in any way. The information background was weak during the day, but traders traded the pair based on possible statements by Powell in the evening.
News calendar for the United States and the European Union:
US - number of initial and repeated applications for unemployment benefits (12:30 UTC).
US - change in the volume of industrial production (13:15 UTC).
US - Chairman of the Federal Reserve Board of Governors, Jerome Powell, will speak (13:30 UTC).
On July 15, another performance by Jerome Powell will take place in America. However, it will be an exact copy of yesterday. In addition to it, two more reports will be released. However, traders are now more impressed by what they heard yesterday, and it is unlikely that these reports will affect their mood.
COT (Commitments of Traders) report:
The latest COT report showed that during the last reporting week, the mood of the "Non-commercial" category of traders again became more "bearish." Major players have opened 3,871 long contracts on the euro but also opened 16,472 short contracts. Thus, in the last three weeks, the number of short contracts focused on the hands of speculators has increased by 44,000, and the number of long contracts has decreased by 1,000. Therefore, a further fall in the European currency is very likely. At the same time, the general mood of speculators remains "bullish" since there are one and a half times more long contracts on their hands.
EUR/USD forecast and recommendations for traders:
Today, I recommend selling the pair with a target of 1.1772 if the closing is made on the hourly chart below the level of 1.1837. Purchases of the pair were recommended yesterday in case of a rebound of quotes on the hourly chart from the level of 1.1772 with a target of 1.1837. This goal has been achieved. New purchases of the pair – when closing above the level of 1.1837 with a target of 1.1919.
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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