EUR/USD – 1H.
The EUR/USD pair was trading quite actively on September 22. The rebound of quotes from the Fibo level of 100.0% (1.1762) allowed to resume the process of falling, as a result of which the pair performed consolidation under the corrective level of 127.2% (1.1695). Thus, traders can now count on a further drop in quotes in the direction of the next Fibo level of 161.8% (1.1608). The new downward trend corridor characterizes the current mood of traders as bullish, however, it has a very large angle of inclination. Thus, it will not be difficult for bull traders to close above it. During yesterday, the most important and interesting event was Jerome Powell's speech before the House Financial Services Committee. The Fed chairman said that Congress will probably have to allocate new money to support the most affected sectors of the economy. Powell noted the growth of many macroeconomic indicators but still said that the coronavirus makes the future of the American economy uncertain. Thus, the Fed chairman believes that the future of the economy will depend on the government's actions in the fight against the epidemic and the allocation of support packages. It is difficult to say whether the dollar received support after this speech, however, traders generally reacted well. The US dollar continued to grow and finally left the side corridor after a long time.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the EUR/USD pair continue the process of falling and have consolidated under the side corridor. Thus, the process of falling can be continued in the direction of the next corrective level of 100.0% (1.1496). The pair's quotes broke out of the side corridor after two months. Today, the divergence is not observed in any indicator.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed another reversal in favor of the US dollar, fixing under the corrective level of 261.8% (1.1825), and most importantly - under the blue rectangle that displayed the flat. Thus, now the chances of continuing the fall in the direction of the Fibo level of 200.0% (1.1566) have significantly increased.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has consolidated above the "narrowing triangle", which now allows us to count on further growth of the euro currency, which may be strong, but in the long term.
Overview of fundamentals:
On September 22, the European Union did not have a single important report or event. Thus, the entire information background of the day was reduced only to the speech of Jerome Powell. However, this was enough for the dollar to continue growing.
The news calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (08:00 GMT).
EU - index of business activity in the service sector (08:00 GMT).
US - index of business activity in the manufacturing sector (13:45 GMT).
US - PMI for the services sector (13:45 GMT).
US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (14:00 GMT).
On September 23, the calendars of economic events in America and the European Union do not contain reports on business activity, which is unlikely to interest traders too much. Powell's new speech to Congress may also get scant attention from traders.
COT (Commitments of Traders) report:
The latest COT report was very interesting. During the reporting week, the "Non-commercial" group got rid of 17 thousand long contracts and only 1.7 thousand short ones. Thus, the mood of major speculators began to change to "bearish". The total number of long contracts focused on the hands of speculators is 231 thousand against 52 thousand short contracts. Thus, the advantage is still with the bulls, however, it is beginning to decrease. Over the past three weeks, the "Non-commercial" group has closed almost 30 thousand long contracts, which significantly increases the probability of a fall in the European currency in the near future. However, the number of short contracts has also decreased in the last two months - from 80 thousand to 50 thousand. Thus, the euro may start the process of falling, however, it is unlikely to be strong.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro with a target of 1.1608, as it was closed under the side corridor on the 4-hour chart. I recommend buying the pair if it closes above the descending corridor on the hourly chart with a target of 1.1762.
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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.