EUR/USD – 1H.
On October 16, the EUR/USD pair attempted to start a new growth process, failing to consolidate under the corrective level of 23.6% (1.1707). However, this morning, the quotes made a return to this level. Thus, the US currency shows growth at the beginning of the trading week, but will it continue? Recently, traders have begun to pay less attention to the negative information background from the United States. All the factors that led to the growth of quotations to 1.2000 have already been worked out, however, there is nothing new. Thus, before the elections in America, the US dollar may even grow slightly in tandem with the euro. Moreover, many countries in the European Union now have high levels of morbidity and high growth rates of these levels. The situation is particularly difficult in France, Portugal, Poland, the Czech Republic, Spain, Italy, and the Netherlands. And the coronavirus, as we all know, has a major impact on the economy. Quarantine measures have already been tightened in many EU countries, and curfews have been imposed in some countries. However, the situation with the spread of the virus continues to worsen, so in the near future, we can expect new restrictive measures from EU governments. Of course, all these measures will lead to a serious drop in business and economic activity, which, in turn, will lead to a strong slowdown in the economy.
EUR/USD – 4H.
On the 4-hour chart, the graphic picture remains very boring. Even though the price continues to fall on the hourly chart, the pair continues to trade inside the side corridor on the 4-hour chart. The fall brought the pair to the lower border of the side corridor. And it is this lower limit that does not allow bear traders to go further down. Thus, closing the pair's exchange rate under the corridor will increase the probability of further falling towards the next corrective level of 100.0% (1.1496).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a rebound from the Fibo level of 261.8% (1.1825) and a reversal in favor of the US currency. Thus, now traders can expect a new process of falling in the direction of the corrective level of 200.0% (1.1566).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has completed a consolidation 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 October 16, the European Union released the consumer price index for September, which disappointed traders, as it remained at a minimum level of -0.3%. In America, the report on retail sales was optimistic, and on industrial production – disappointing. On average, the statistics package was neutral.
US and EU news calendar:
US - Fed Board of Governors Chairman Jerome Powell will deliver a speech (12:00 GMT).
EU - ECB President Christine Lagarde will deliver a speech (12:40 GMT).
On October 19, ECB President Christine Lagarde will speak again in the European Union, and Federal Reserve Chairman Jerome Powell will speak in the United States.
COT (Commitments of Traders) report:
The latest COT report was quite revealing. The most significant and important category of Non-commercial traders continues to get rid of long contracts for the third week in a row, closing another 2.5 thousand during the reporting week. Also, about 5 thousand short-contacts were opened, thus, the mood of major players concerning the European currency became more "bearish" again. Thus, there is reason to assume that the euro currency can complete its victorious march and start falling again in a pair with the dollar. The total number of long contracts focused on the hands of speculators remains several times more than short contracts. However, this gap has been narrowing in recent weeks. The "Commercial" category of traders, on the contrary, gets rid of both categories of contracts, but to a greater extent from short contracts, working in contrast to speculators.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro with a target of 1.1612, if the close is made under the level of 23.6% (1.1707) on the hourly chart and under the lower border of the side corridor on the 4-hour chart. Purchases of the pair today will be possible with the targets of 1.1765 and 1.1812 if a rebound is made from the lower border of the side corridor on the 4-hour 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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.