EUR/USD – 1H.
On December 7, the EUR/USD pair performed a reversal in favor of the EU currency after rebounding from the corrective level of 200.0% (1.2094), a slight increase and resumed the fall of quotes in the direction of the level of 200.0% and the ascending trend line, which continues to characterize the current mood of traders as "bullish". Thus, in the case of a new rebound of the pair from the level of 200.0% or the trend line, the growth process of the pair will be resumed in the direction of the corrective level of 261.8% (1.2202). Meanwhile, a new geopolitical conflict is brewing in the European Union. Earlier, I wrote that the leaders of Poland and Hungary vetoed draft laws proposed by the European Commission on the allocation of the budget for 2021-2027, on the fund for economic recovery after the pandemic, as well as on a new mechanism for observing the rule of law. It is the new compliance mechanism that Warsaw and Budapest disagree with. Under the new mechanism, funding can be cut if there are signs of violation of the democratic principle or abuse of authority, as well as abuse of power. The EU accuses Hungary and Poland of violating these provisions and threatens to cut off their funding. However, the first two bills can be approved by the EU countries without the participation of Hungary and Poland, which will further inflame the current situation in the European Union. It is hoped that Germany will be able to reach an agreement with Warsaw and Budapest before the EU summit, at which all the bills should be voted on. But if this remains the case, a new split will ripen in the European Union.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US currency and began the process of falling towards the corrective level of 161.8% (1.2027). However, the bullish divergence of the CCI indicator allowed the quotes to perform some growth and stop falling. Fixing the pair's rate under the low of this divergence will increase the probability of further decline.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a consolidation above the Fibo level of 323.6% (1.2079). Thus, the probability of continuing growth in the direction of the next corrective level of 423.6% (1.2495) increased. And until the pair completes the consolidation under the level of 323.6%, there are still high chances of continued growth.
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 in the long term.
Overview of fundamentals:
On December 7, the EU and the US did not have a single report or other events. Thus, the information background was absent on this day.
The news calendar for the United States and the European Union:
EU - business sentiment Index from the ZEW Institute (10:00 GMT).
EU - change in GDP (10:00 GMT).
On December 8, the European Union will release an insignificant ZEW report and a more important GDP report. In America, the news calendar is empty. The information background will be weak again today.
COT (Commitments of Traders) report:
For the third week in a row, the mood of the "Non-commercial" category of traders has become more "bullish". This is indicated by COT reports and it coincides with what is happening now for the euro/dollar pair. During the reporting week, speculators opened 4,306 new long contracts and closed 301 short contracts. However, I would like to draw your attention to the fact that in the last two weeks, traders of the "Commercial" category have become very active, who have opened a total of 35 thousand contracts, most of which are short. But I still pay more attention to speculators. Their activity has been low in recent weeks, and purchases of the euro currency are extremely cautious as if forced. I still believe that the euro's upward trend is nearing its end.
EUR/USD forecast and recommendations for traders:
Today, I recommend selling the euro with the target of the Fibo level of 161.8% (1.2027), if the closing is performed under the trend line on the hourly chart. New purchases of the pair can be made if there is a rebound from the level of 200.0% or the trend line on the hourly chart with the target of the corrective level of 261.8% (1.2202).
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.