18.10.202312:33 Forex Analysis & Reviews: EUR/USD. October 18th. Good statistics didn't help the dollar

The EUR/USD pair continued to rise on Tuesday and closed above the corrective level of 161.8% (1.0561). Thus, the rise of the European currency may continue today towards the next level at 1.0637. If the pair secures a rate below 1.0561, it will work in favor of the US dollar, renewing the decline towards the level at 1.0489.

The wave situation is currently ambiguous. Friday's decline led to the breaking of the low on October 9, which suggests a shift from a "bullish" trend to a "bearish" one. However, I still have a strong feeling that the bears are not ready to resume the trend right now. Yesterday's closing above 1.0561 serves as indirect confirmation. It appears that we have signs of a trend change from "bullish" to "bearish," but in the near future, signs of a "bearish" trend changing to a "bullish" one may emerge. I believe that in the near future, the pair may return to 1.0637, and we should close our eyes to the waves until the situation becomes clearer.

In the US, reports on retail sales and industrial production were released yesterday. Both turned out slightly better than traders expected and provided some support for the dollar. However, this support was short-lived, and the pair still rose by several tens of points by the end of the day. In my opinion, such a movement indicates that bullish traders intend to push the pair at least to the level of 1.0561, and further developments will be visible. A rebound from this level could confirm the shift to a "bearish" trend. I recommend considering the option of growth to 1.0561 as the primary one for now.

On the 4-hour chart, the pair bounced off the corrective level of 100.0% (1.0639), reversed in favor of the US dollar, and started falling towards the Fibonacci level of 127.2% at 1.0466 after a "bearish" divergence formed on the CCI indicator. The impending "bullish" divergence has been canceled. Both charts currently provide a lot of signals, and they do not give a clear answer to the question of which direction to expect movement this week. The market situation is not the simplest and most straightforward right now.

Commitments of Traders (COT) report:

In the last reporting week, speculators closed 4,261 long contracts and 850 short contracts. The mood of major traders remains "bullish" but has been noticeably weakening in recent weeks and months. The total number of long contracts held by speculators is now 207,000, while short contracts amount to 132,000. The difference is now less than double, whereas a few months ago, the gap was threefold. I believe that the situation will continue to change in favor of the bears. Bulls have dominated the market for too long, and now they need a strong information background to start a new "bullish" trend. There is no such background at the moment. Professional traders may continue to close their long positions in the near future. I believe that the current figures allow for a further decline in the euro in the coming months.

Economic calendar for the USA and the European Union:

European Union - Consumer Price Index (CPI) (09:00 UTC).

European Union - ECB President Lagarde will deliver a speech (09:00 UTC).

USA - Building Permits (12:30 UTC).

USA - Federal Reserve's Beige Book (18:00 UTC).

On October 18, the economic events calendar includes four entries, each of which may influence the movement of the euro and the dollar. The impact of the information backdrop on trader sentiment today is expected to be moderate.

Forecast for EUR/USD and trader recommendations:

Selling the pair was possible upon closing below the hourly chart's trend corridor, targeting 1.0561 and 1.0525. Both targets have been achieved. New sales are possible on a rebound from 1.0637, with a target at 1.0561. I previously advised buying upon closing above the level of 1.0561 on the hourly chart, with a target at 1.0637. These positions can be kept open at this time.