EUR/USD – 1H.
On October 29, the EUR/USD pair continued the process of falling and it was fixed under the corrective level of 76.4% (1.1676) by the end of the day. Then the correction began, during which the quotes returned above the level of 76.4%. In general, the "bearish" mood of traders remains and they had very good reasons to actively buy the dollar and sell the euro. Yesterday, a rather important event took place in the European Union – the next, penultimate meeting of the ECB this year. The European Central Bank left the key parameters of monetary policy unchanged, however, none of the traders expected any changes, given that the ECB remains almost the only Central Bank that has not carried out any rate manipulation since the beginning of the pandemic. Thus, all attention was focused on the speech of ECB President Christine Lagarde, which subsequently lowered the euro down. Christine Lagarde was very pessimistic. She said that the growing number of diseases in the EU countries is an additional risk for the European economy. Now it may start to slow down again, as France and Germany (the largest EU economies) have already introduced "lockdowns". According to Lagarde, the EU economy will remain in a cycle of ultra-low rates, deflation, and extremely weak economic growth for a long time. Her words indirectly suggest that at the end of the year, the ECB may go for a new expansion of the PEPP program.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes finally secured under the side corridor. Thus, this consolidation increases the probability of a further fall in the direction of the corrective level of 100.0% (1.1496). The lower chart also supports this scenario. At the same time, closing the pair's rate above the side corridor line or the level of 127.2% (1.1729) will again work in favor of the EU currency and resume growth in the direction of 1.1907.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a new rebound from the corrective level of 261.8% (1.1825), which allows traders to count on a fall. On the 4-hour chart, the pair left the side corridor, which also increases the pair's chances of falling quotes.
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 October 29, the results of the ECB meeting were summed up in the European Union. In America, a very important report on GDP for the third quarter (inconclusive value) was also released, which showed a 33% economic recovery.
News calendar for the United States and the European Union:
EU - change in GDP (10:00 GMT).
EU - consumer price index (10:00 GMT).
EU - unemployment rate (10:00 GMT).
US - main index of personal consumption expenditures (12:30 GMT).
On October 30, we recommend that you focus on the report on the European GDP for the third quarter. It may cause a similar reaction from traders to yesterday's US GDP report.
COT (Commitments of Traders) report:
The latest COT report was rather boring and uninformative. The most important category of non-commercial traders increased only 1 thousand long contracts and 700 short contracts during the reporting week. Thus, changes in their mood can be described as minimal and insignificant. Over the past few weeks, changes in this category are generally quite weak. Only on October 6, a fairly strong drop in the number of long contracts was registered. However, it is the lack of serious changes among speculators that reflects what has been happening on the market in recent months. Namely, trade in the side corridor. We are less interested in other categories of traders, but in any case, there are no major changes that deserve attention.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro currency with a target of 1.1612, if the close is made under the corrective level of 76.4% (1.1676) on the hourly chart. Purchases of the pair will be possible with a target of 1.1715 if the quotes perform a rebound from the level of 76.4% 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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.