Relevance up to 05:00 2021-10-16 UTC–4
EUR/USD – 1H.
The EUR/USD pair continued the growth process on Thursday and was near the upper line of the descending trend corridor by the end of the day, which keeps the current mood “bearish.” Thus, the growth of the European currency over the past two days may be a correction. The rebound of quotes from the level of 1.1629 or the upper boundary of the descending corridor will allow us to count on a reversal in favor of the US currency and the resumption of the fall in the direction of the corrective level 127.2% (1.1552). Closing above the level of 1.1629 will increase the chances of continued growth in the direction of the corrective level of 100.0% (1.1704) and will change the mood of traders to “bullish.” The information background of yesterday was relatively weak. Only two reports, both in America, were released in a day. The producer price index was 0.5% m/m and 8.6% y/y in September, and the number of applications for unemployment benefits was 293 thousand per week. The second indicator is slightly more important than the first, which helped the US currency grow slightly in the second half of Thursday.
But in general, the movements were very weak again. The European currency has started the growth process, but it can end very quickly since it has not been possible to close above the descending corridor. Also, the current growth looks like a correction, since before it, for more than a month, the quotes only did what they fell. It means that, in general, traders are looking towards the sale of the euro, which is confirmed by COT reports. Over the past three weeks, major players have opened more than 60 thousand short contracts. But at the same time, the US dollar is not growing at a pace that could be described as significant. The pair crawls down more than it moves. Today, another retail trade report will be released in the US, which should be paid attention to. Although the markets are now looking more towards the Fed and are now waiting for concrete actions from the central bank to curtail the stimulus program, and are not ready to buy the dollar on expectations alone, which will not come true in any way.
EUR/USD – 4H.
On the 4-hour chart, the pair’s quotes performed an increase to the corrective level of 100.0% (1.1606). However, there was no closing above it. The hourly chart and the descending corridor on it are more important now. Closing over this corridor will work in favor of continuing growth in the direction of the corrective level of 76.4% (1.1782).
News calendar for the USA and the European Union:
US – change in retail trade volume (12:30 UTC).
US – consumer sentiment index from the University of Michigan (12:30 UTC).
On October 15, there will not be a single interesting report in the European Union. In the United States, the calendar of economic events contains a report on retail trade and an index of consumer sentiment. The rather mediocre reports will be complemented by a speech by FOMC member John Williams. I believe that the information background will be weak today.
COT (Commitments of Traders) report:
The latest COT report showed that the mood of the “Non-commercial” category of traders changed very much during the reporting week. Speculators have opened 2,493 long contracts on the euro and 25,707 short contracts. Thus, the total number of long contracts in the hands of speculators has grown to 198 thousand, and the total number of short contracts – up to 220 thousand. Over the past few months, the “Non-commercial” category of traders has tended to eliminate long contracts on the euro and increase short contracts. Or increase short at a higher rate than long. This process continues now, and the European currency, meanwhile, continues to fall slightly. Thus, the actions of speculators affect the behavior of the pair at this time. The fall may continue.
EUR/USD forecast and recommendations to traders:
Traders show a desire to start trading more actively. Fixing the pair’s rate above the descending corridor on the hourly chart will allow you to buy with a target of 1.1704. I recommend selling the pair in case of a rebound from 1.1629 on the hourly chart with a target of 1.1552.
“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 to make speculative profits 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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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