EUR/USD – 1H.
On February 16, the EUR/USD pair attempted to continue the growth process and closed above the corrective level of 50.0% (1.2151). However, at this point, the strength of the bull traders ended and the pair's quotes, having performed a reversal in favor of the US currency, began the process of falling. The closing of the pair's rate under the upward trend corridor means a change in the mood of traders to "bearish", and the closing under the Fibo level of 38.2% (1.2104) increases the probability of a further fall in the direction of the corrective level of 23.6% (1.2046). Meanwhile, the dollar got a new respite. In recent weeks, we can even say from the very beginning of the year that traders are waiting for Congress to approve a new package of assistance for American companies and the population as part of the fight against the consequences of the pandemic and the crisis. However, although Congress passed a budget resolution that allows it to approve a new stimulus package by a simple majority (that is, Republicans will not prevent this), many contradictions remain. The US economy is recovering at a faster pace than the European or British economies. At the end of 2020, its losses are only 2.5% y/y. However, the national debt is growing by leaps and bounds, and Joe Biden proposes to pour almost $ 2 trillion more into the economy, which will lead to an even greater increase in debt. However, the reduction of the aid package may harm the political ratings of the Democrats. After all, the president must begin his work by fulfilling his promises. And there were promises – to provide a new package of assistance to all those in need as soon as possible. Reducing the package may be perceived negatively by the public. Against the background of the lack of decisions taken, the US currency has started to grow again, which may last for several days or even a couple of weeks until the information about the decision of Congress is received.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes completed a close above the downward trend line, so the mood of traders changed to "bullish". However, yesterday, the bearish divergence of the CCI indicator allowed the pair to perform a reversal in favor of the US currency and begin the process of falling in the direction of the corrective level of 161.8% (1.2027). I now recommend paying more attention to the hourly chart.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed a breakdown of the lower border of the upward trend corridor, however, it turned out to be false. Therefore, at the moment, the pair retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). A new close under the corridor will confirm the dollar's intentions to continue growing.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On February 16, the European Union released a report on GDP, which turned out to be slightly better than traders' expectations. However, the euro currency still collapsed in the second half of the day, so this report did not become the basis for new purchases of the pair.
News calendar for the United States and the European Union:
US - retail trade volume change (13:30 GMT).
US - change in industrial production (14:15 GMT).
On February 17, all the most interesting reports will be released in the United States. Retail sales may rise in January and support demand for the dollar.
COT (Commitments of Traders) report:
Last Friday, another COT report was released. And it turned out to be much calmer than the previous one. The "Non-commercial" category of traders, which I consider the most important, opened 4,722 long contracts and got rid of 2,606 short contracts. Thus, the mood of speculators again became more "bullish". Accordingly, the prospects of the European currency are improving again after the report of a week ago, when speculators got rid of 23 thousand long contracts and many believed that the upward trend would be completed. However, I warned that this behavior of large players may be an accident. It is still too early to talk about the end of the upward trend. In total, during the last reporting week, all categories of players closed approximately 11 thousand contract positions. Consequently, interest in the euro currency has decreased slightly.
Forecast for EUR/USD and recommendations for traders:
Sales were recommended when closing quotes under the ascending corridor on the hourly chart with targets of 1.2104 and 1.2046. The first goal has been achieved, and the second goal is to keep sales open. I do not recommend buying a pair today, as it recently left the ascending corridor.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.