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Hi, dear traders! The EUR/USD pair returned to the level of 1.0785 on Friday. A rebound in the price from this level will work in favor of the American currency. So, EUR/USD could resume the fall in the direction of the correction level of 100.0% – 1.0725. Fixing the pair's rate above the level of 1.0785 will work in favor of further growth in the direction of the next Fibonacci level of 76.4%, 1.0823. The activity of traders in recent weeks has been quite low. Hence, it is very difficult to count on strong movements.
The information background on Friday was of average strength. There was no important news in the European Union, but several reports were released in the United States, which closed the week of important statistics. It became known that the producer price index increased by 0.3% m/m and by 0.9% y/y. Traders expected weaker readings, so the US dollar received support from the bulls. However, within an hour, a disappointing consumer sentiment index from the University of Michigan was released, which cooled the ardor of buyers. Therefore, the bears for the US dollar entered the scene. As a result, EUR/USD recovered to the level of 1.0785.
Today traders can take an additional day off, as there will be no information background. Today I will analyze only the technical picture, or rather, just monitor the level of 1.0785.
On the 4-hour chart, EUR/USD rose to the upper line of the downward trend corridor. A rebound of price from this line will allow us to count on a reversal in favor of the US currency and a resumption of the fall towards the correction level of 23.6% – 1.0644.
The downward trend corridor still defines the current trading sentiment as bearish. If the instrument consolidates above the downward corridor, we can expect a break in the bearish trend and growth of the pair, at least to the correction level of 50.0% – 1.0862.
Commitments of Traders (COT):
In the last reporting week, speculators opened 8,398 long contracts and 17,713 short contracts. The mood of large market players remains bullish, but continues to weaken. The total number of long contracts held by speculators is now 210K, and short contracts – 158K. I still believe that the situation will continue to change in favor of the bears. The bulls have dominated the market for too long, and now they need a strong information background to maintain the bullish trend. I don't see such a background now. Professional traders may continue to close long positions (or open shorts ones) in the near future. I believe that current figures allow the euro to continue its fall in the coming months.
Economic calendar for US and EU
On February 19, the economic calendar does not contain a single interesting entry. There will be no influence of the information background on trading sentiment today.
Intraday outlook and trading tips on EUR/USD
It makes sense to open short positions today if there is a rebound from the level of 1.0785 on the 1- hour chart with targets at 1.0725 and 1.0670. Buying the pair will be reasonable if EUR/USD consolidates above the downward trend corridor on the 4-hour chart with targets at 1.0823 and 1.0862. However, the activity of traders today can be very low.
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