EUR/USD – 1H.
Hello, traders! On August 5, the EUR/USD pair continued to grow above the upward trend line, which the pair's quotes have not even approached in recent weeks. The "bullish" mood of traders remains stable and strong. As before, I recommend that you consider purchases not before closing under the trend line. What can we say now about the information background? The latest news is as follows. One of the most important reports for the American economy now and in general – the report from ADP – came out much weaker than forecasts. This means that the labor market in America is recovering very slowly. Unemployment rates have been declining recently, as can be seen from the same indicator and weekly publications of applications for unemployment benefits. But for the US dollar, this information is clearly not enough to go into growth. Plus, the epidemiological situation is not improving much in the United States. The number of daily recorded coronavirus diseases has decreased slightly, however, there is no question of "extinguishing" the epidemic wave now. Just if earlier 60-70 thousand new cases were recorded daily, now it is 50-60 thousand. That's the difference. The economic and epidemiological situation in America remains extremely difficult, so traders do not risk buying the US currency yet.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair, after rebounding from the corrective level of 127.2% (1.1729), performed a reversal in favor of the euro currency and resumed the growth process in the direction of the corrective level of 161.8% (1.2027). The MACD indicator may form a new bearish divergence in the next few hours, which will allow you to count on a slight drop in quotes. Traders may also have problems fixing above the previous peak.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair performed a false breakout of the corrective level of 261.8% (1.1825). However, after a few days, I also performed a real breakdown of this level with closing above it. As a result, the growth process can now be continued towards the next corrective level of 323.6% (1.2084). Only the extremely strong growth of the euro in recent months is alarming.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation over the "narrowing triangle", which now allows us to count on further growth of the euro currency, which can be very strong and long-term.
Overview of fundamentals:
On August 5, reports on retail sales and business activity in the service sector were released in the European Union. Both did not attract much attention from traders. The reports from America were a little more interesting. In particular, the ADP report showed +167 thousand employed, although traders were waiting for at least 1.5 million, which caused new sales of the dollar.
News calendar for the United States and the European Union:
US - number of primary and secondary applications for unemployment benefits (12:30 GMT).
On August 6, the EU calendar is empty, and only one report on applications for unemployment benefits will be received from America.
COT (Commitments of Traders) report:
The latest COT report was extremely interesting. The Non-commercial group opened as many as 36277 purchase contracts during the reporting week. This is a very high value. And it was it that formed the upward trend for the reporting period. Thus, this figure alone from the entire report was already enough to make a conclusion about the current mood of major traders in the European currency. The Commercial group also actively opened and closed contracts, however, data for this group is not important. In total, 241 thousand long-contracts and only 79 thousand short-contracts are now placed in the hands of speculators. Thus, the latest COT report does not yet give any reason to assume the end of the upward trend.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend cautiously buying a currency pair with a target of 1.2024, since the rebound from the level of 1.1729 was performed. Around the peak of July 31, I recommend to be careful, as it is possible to hang up. I recommend selling the pair with the target level of 1.1496 if the closing is performed under the level of 1.1729, as well as under the upward trend line on the hourly chart.
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.