The EUR/USD pair on Friday tried to continue the growth process after a crazy Thursday, but it failed to do so. In the afternoon, a reversal was made in favor of the US currency and the process of falling in the direction of the corrective level of 161.8% (1.1357) began. At the moment, the fall is suspended, but it can be continued today. The consolidation of quotes above the level of 1.1450 will work in favor of the EU currency and the resumption of growth in the direction of the corrective level of 127.2% (1.1552). Friday was less interesting than Thursday. On Thursday, the results of the meeting of the European Central Bank were announced and the euro shot up by 160 points. On Friday, important reports on unemployment, wages, and payrolls were to be released in America. I can't say that these reports were insignificant, but the reaction of traders to them was not strong. Immediately after the statistics were released, the pair performed a drop of 60 points, but then very quickly regained most of the losses.
But the reports themselves were very interesting and strong. The unemployment rate unexpectedly rose from 3.9% to 4.0%, although it has been steadily declining over the past year. The number of payrolls increased by 467 thousand in January, although traders expected +50-100 thousand. Wages also increased more than expected. Thus, the information background turned out to be very strong and should have caused a stronger growth of the dollar. However, bear traders did not show their interest in this information, and the US currency showed more than modest growth. The upward trend corridor currently characterizes the mood of traders as "bullish". Fixing the quotes of the pair under it will allow you to count on a new strong fall of the pair. ECB President Christine Lagarde will speak today. After the meeting last week, she said that the ECB's target remains inflation of 2%, but did not say anything about how this level is going to be achieved. Just a couple of hints about a possible rate hike in 2022 and nothing else interesting. Thus, today traders will be waiting for new information about this.
On the 4-hour chart, the pair's quotes secured above the corrective level of 127.2% (1.1404). Thus, the growth process can now be continued towards the next Fibo level of 100.0% (1.1606). Closing the pair's rate at the level of 127.2% will work in favor of the US currency and resume falling in the direction of the corrective level of 161.8% (1.1148). Emerging divergences are not observed in any indicator today.
Commitments of Traders (COT) Report:
Last reporting week, speculators closed 2,525 long contracts and opened 1,378 short contracts. This means that their mood has become more "bearish". The total number of long contracts concentrated on their hands now amounts to 211 thousand, and short contracts - 187 thousand. Thus, in general, the mood of the "Non-commercial" category of traders is characterized as "bullish". This makes it possible for the European currency to count on continued growth. It is over the past few weeks that the number of long contracts has increased, while short contracts have decreased. Thus, the mood of the major players has changed, which gives reason to expect growth over the next months.
News calendar for the USA and the European Union:
EU - ECB President Christine Lagarde will deliver a speech (15:45 UTC).
On February 7, the calendar of economic events of the European Union contains only Christine Lagarde's speech, and the US calendar contains nothing. The information background can have a strong impact on traders today, or maybe none.
EUR/USD forecast and recommendations to traders:
I recommend new sales of the pair now with a target of 1.1357 since the closing was made under the level of 1.1450 on the hourly chart. I recommend buying the pair when it rebounds from the 1.1357 level on the hourly chart or when it closes above the 1.1450 level. In the first case, the target is 1.1450, in the second – 1.1552.