EUR/USD – 1H.
Hello, traders! On July 17, the EUR/USD pair again performed a reversal in favor of the European currency and resumed the growth process. Thus, both upward trend lines continue to characterize the current mood of traders as "bullish". At the end of last week, two significant events occurred for the euro currency. First there was a meeting of the European Central Bank, which was not very interesting, and then there was a summit of the European Union, which was supposed to solve very serious issues for the economy of the Eurozone. However, the summit did not end on Saturday (as originally planned), Sunday, or even Monday. This morning, it was announced that the negotiations will continue on July 20, as the parties still did not reach a consensus on the most important issues. Regarding the allocation of the 750 billion euro recovery fund and the budget for 2021-2027. The main stumbling block remains the issue of the amount of subsidies to the countries most affected by the epidemic. The countries of the "lean four" insist that the total amount of grants be reduced to 350 billion euros from the current proposed 450. In addition, many summit participants demand strict control over the expenditure of funds that will be provided free of charge, which is opposed by the main recipients, Italy and Spain.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair continue to grow in the direction of the corrective level of 100.0% (1.1496). The rebound of quotes from this level will allow traders to expect a reversal in favor of the US currency and a slight fall in the direction of the corrective level of 76.4% (1.1294). Closing the pair's rate above 1.1496 will increase the probability of further growth towards the next Fibo level of 127.2% (1.1729). The upward trend line does not allow for a strong drop in quotes now.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair made a consolidation above the corrective level of 161.8% (1.1405). As a result, the growth process can be continued towards the next Fibo level of 200.0% (1.1566).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair continues to grow in the direction of 1.1600 (the upper line of the "triangle") after rebounding from the lower line of the "narrowing triangle". Several charts support possible growth in the direction of 1.1500-1.1600.
Overview of fundamentals:
On July 17, the European Union released the consumer price index for June, and in the US - the consumer confidence index. Both reports did not impress traders who were waiting for information from the EU summit. Thus, the general mood of traders has not changed.
News calendar for the United States and the European Union:
On July 20, the news calendar of the European Union and the United States is completely empty. Thus, there is no information background today, but traders continue to expect the results of the meeting of the heads of the EU countries and expect positive results.
COT (Commitments of Traders) report:
The latest COT report showed a sharp increase in the number of long-term contracts in the hands of the "Non-commercial" group. This means that the most important major market players during the reporting week (July 8-14) looked only in the direction of purchases. Several thousand short contracts were also opened, but much less than long. Thus, it is not surprising that the euro currency grew all the previous week and continues to do so at the beginning of the new week. If the results of the summit do not disappoint, the growth of this currency may continue this week. However, the COT report itself tells us now about a persistent bullish trend, as for the second week in a row, speculators are actively increasing long-contracts.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend staying in the pair's purchases with a target of 1.1496. I recommend selling the pair if the quotes close below the trend line on the 4-hour chart with a target of 61.8% (1.1167).
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.