EUR/USD – 1H.
Hello, dear traders! On Wednesday, the euro/dollar pair reversed in favor of the US dollar and dropped to 1.1450. If the pair rebounds from this level, it may reach the 127.2% Fibonacci retracement level located at 1.1552. If the price fixes below 1.1450, it is likely to slide to the 161.8% Fibonacci level located at 1.1357. Yesterday's rise in the greenback was caused just by one event: the publication of the US consumer price report for October.
Traders had expected the US inflation to rise, but they failed to predict such a significant jump. The CPI soared by 6.2% on a yearly basis and by 0.9% on a monthly basis. The core CPI, which excludes prices of food and energy, surged by 4.6% on a yearly basis and by 0.6% on a monthly basis. Thus, after some hesitations, traders began buying the US dollar.
Nevertheless, the downward trend channel is still reflecting the bearish market sentiment. At the moment, the quote is near the lower limit of the range and may bounce from it to touch the upper limit.
The recent news from the US boosted the greenback. The Fed decided to launch the QE tapering, inflation is growing, and employment in the non-farm sector finally exceeded forecasts. Only the GDP report for the third quarter disappointed market participants.
EUR/USD – 4H
On the four-hour chart, the pair continues falling to the 127.2% correctional level located at 1.1404 from the 100.0% Fibonacci level at 1.1606. Bearish divergence also supported the greenback. If the price rebounds from the 127.2% correctional level (1.1404), it may rise to 1.1606. If the euro/dollar pair closes below 1.1404, it is likely to decrease to 1.1148.
US and eurozone macroeconomic calendar:
The European Commission will disclose its economic forecast.
On November 11, the US macroeconomic calendar is absolutely empty and the European Commission will disclose its economic forecast. The report will hardly affect the market situation.
Commitments of traders report.
The recent COT report showed that during the reporting week, the mood of the non-commercial traders became more bullish. Speculators closed 4,032 long positions on the euro and 10,622 short positions. Thus, the total number of long positions decreased to 195 thousand, and the total number of short positions - to 199 thousand. Now, these numbers practically coincide, which gives reason to assume that there is no clear mood among speculators. In general, in recent months, there has been a tendency to strengthen the bearish mood. It is quite possible that now the mood of traders is at a point where no one has an advantage. In a week or two, the bearish sentiment will continue to strengthen, thus pushing the euro lower.
Outlook for EUR/USD
Two days ago, I recommended selling the pair, if it rebounded from 1.1606 on the four-hour chart. In fact, the pair dropped to 1.1450 on the one-hour chart. Trades could be closed. It is possible to open short positions, if the price closes below 1.1450. Buy orders could be initiated above 1.1450 with the target of 1.1552.
Terms:
Non-commercial traders are major market players such as banks, hedge funds, investment funds as well as private and large investors.
Commercial traders are commercial enterprises, firms, banks, corporations, companies that buy foreign currency not to make speculative profits, but to ensure current activities or export-import operations.
Non-reportable positions are opened by small traders who do not have a significant impact on the price.