EUR/USD – 1H.
Hello, traders! On July 20, the EUR/USD pair performed a fall to the second ascending trend line and a new rebound from it. Thus, the "bullish" mood of traders remains, and the growth process continues. Over the past four days, all traders' attention has been focused on the EU summit, which resolved issues about the EU budget for 2021-2027 and the 750 billion euro economic recovery fund. Only this morning it became known that the parties have finally agreed on everything. This was announced by French President Emmanuel Macron and European Council President Charles Michel via their Twitter accounts. The amount that will be provided to countries affected by the pandemic in the form of loans increased to 360 billion euros, and in the form of grants - reduced to 390 billion euros. Thus, it was possible to meet the requirements of the Nordic countries (Denmark, Sweden, the Netherlands, Finland, and Austria) that the number of grants should be reduced. All EU leaders called today a historic day for the EU. Well, now the main thing to understand is whether the traders themselves will also be overwhelmed with optimism. Are they ready to continue buying the euro currency, especially against the backdrop of the continuing raging coronavirus epidemic in the United States?
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 pair's rebound from this level will allow us to count on 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 quotes above the level of 1.1496 will increase the probability of further growth towards the next Fibo level of 127.2% (1.1729). The upward trend line characterizes the current mood of traders as "bullish".
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, after rebounding from the lower line of the "narrowing triangle", continues the growth process in the direction of the 1.1600 level (the upper line of the "triangle"). Several charts support possible growth in the direction of 1.1500 - 1.1600.
Overview of fundamentals:
On July 20, there were no economic reports or events in the European Union or the United States, except for the EU summit, which we have already written about above. Thus, the information background was rather weak.
News calendar for the United States and the European Union:
On July 21, the EU and US news calendars are again empty. Thus, the information background is also absent today.
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. The COT report tells us now about a persistent bullish trend, as for the second week in a row, speculators are actively increasing long-contracts. The results of the EU summit, by the way, can make the "bullish" mood of speculators even stronger. However, the results of the summit may be already taken into account in current prices. After all, the euro currency has continued to grow in recent days. The trend lines on the hourly and 4-hour charts will help you understand this issue.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend continuing to stay 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 hourly chart with the goal of 1.1347.
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.