EUR/USD – 1H.
On November 19, the EUR/USD pair performed a reversal in favor of the European currency and began a new growth process, also consolidating above the corrective level of 23.6% (1.1845). Thus, despite exiting the upward trend corridor earlier, bull traders can resume the global growth process of the pair in the direction of the corrective level of 0.0% (1.1920). So, the European currency is growing again, although some extremely important information has not been received from America and the European Union in recent days. ECB President Christine Lagarde has already spoken five times this week (various video conferences), but most of her speeches concerned the coronavirus and the possible consequences of the second wave for the economy. Lagarde believes that the EU economy will suffer very much due to the new outbreak of the epidemic that began a month ago, as well as due to new restrictive measures. Thus, Lagarde announced a new package of stimulus measures to support the economy in December 2020. Also, Lagarde called on the European Commission to remove all differences over the seven-year budget and the recovery fund as quickly as possible. In total, these two projects amount to almost 2 trillion euros, and "the Eurozone needs this money", Lagarde said. The next ECB meeting will be held on December 10, and the vast majority of experts believe that the asset purchase program will be expanded by 500 billion euros. This is negative news for the euro, as it means that the European economy is slowing down again. However, given the fact that the epidemic in America is even stronger and more terrible, and the economy will also shrink this winter, the euro currency remains at a fairly high position.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the EU currency and returned to the upper border of the side corridor. Rebound from this border will work in favor of the UD currency and resume falling in the direction of the corrective level of 127.2% (1.1729). Closing the pair's rate above the corridor will increase the probability of further growth in the direction of the Fibo level of 161.8% (1.2027).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a new reversal in favor of the European currency and fixed above the corrective level of 261.8% (1.1822). This level remains weak, and I recommend paying more attention now to the lower charts, which respond more quickly to changes in the market.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair, but in the long term. In the short term, a drop is preferable.
Overview of fundamentals:
On November 19, the European Union hosted several speeches by Christine Lagarde, which I mentioned above. Also in America, a report on applications for unemployment benefits was released. The number of initial orders was higher than traders expected, and the total number of repeated orders was lower.
The news calendar for the United States and the European Union:
EU - ECB President Christine Lagarde will make a speech (08:35 GMT).
On November 20, the European Union calendar includes a new speech by ECB President Christine Lagarde, and no more events or economic reports are scheduled for this day.
COT (Commitments of Traders) report:
The latest COT report was released with some delay. The most important category of non-commercial traders got rid of another 6,600 long contracts during the reporting week (-9,2 thousand a week earlier), so speculators continue to close contracts for the purchase of the European currency. However, they also closed 2.1 thousand short-contracts. However, despite this, the strengthening of the "bearish" mood continues in the most important category of traders. Based on this, I conclude that the European currency is falling, but recent months show that the euro is not falling. However, the total number of long contracts in the hands of speculators continues to decline, while short contracts continue to grow. Therefore, no other conclusions can be drawn now.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro currency with targets of 1.1845 and 1.1798, if the rebound from the upper border of the side corridor is made on the 4-hour chart. Purchases of the pair will be possible with a target of 1.2027 if it is fixed above 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.