Hello, dear traders! On Tuesday, the euro/dollar pair continued sliding at a very slow pace towards the bottom limit of the upward channel. At the end of the day, it hit the limit. The price may bounce from the limit towards the 127.2% correctional level of 1.1552. If the pair closes below the channel, it is likely to go on falling to the nearest correctional level of 161.8% located at 1.1357.
At the moment, the news flow is very weak. In the first two days of the week, only Christine Lagarde's speech could be considered a significant event. However, traders ignored it. Notably, the ECB President did not say anything new or interesting.
Today, the situation with the information background will hardly change. Therefore, the same sluggish movement may be observed during the whole day. Only tomorrow, the US inflation report may boost market activity. However, the pair's direction will be determined by the unveiled figures. Now, trading activity is almost zero. That is why tomorrow, it will be easy to make the pair move. I think that a strong inflation report will encourage bears who support the US dollar in the euro/dollar pair. Of course, the US inflation may slacken. However, in the last months, there were no prerequisites for this. The US inflation is likely to remain at approximately 7% compared to the previous months. Notably, traders may ignore such data. In this case, the whole week will be boring.
On the four-hour chart, the euro/dollar pair consolidated above the 121.2% correctional level at 1.1404. Thus, the pair may continue rising to the next 100.0% Fibonacci level of 1.1606. If the pair closes below the 127.2% level, it is likely to resume falling to the 161.8% correctional level located at 1.1148.
Commitment of Traders Report (COT):
Last week, speculators closed 25 long contracts and opened 1,378 short contracts. This means that their mood has become more bearish. The total number of long contracts is 211 thousand, whereas the number of short contracts totals 187 thousand. Thus, in general, the mood of the non-commercial traders is characterized as bullish. This means that the euro has a chance to go on climbing. During the last few weeks, the number of long contracts increased, while the number of short contracts decreased. Thus, the mood of the major players has changed, which gives a reason to expect growth over the next months.
Trader's calendar for the US and the EU:
On February 9, the macroeconomic calendar for both the US and the EU is absolutely empty. Today, traders' sentiment will hardly be influenced by a news flow. That is why trading activity is likely to remain the same compared to yesterday.
Outlook for EUR/USD and trading recommendations:
It is possible to open sell positions with the target of 1.1357, if the pair closes below the downward channel on the one-hour chart. Buy positions could be opened after a rebound from the lower limit of the rage on the one-hour chart or after a closure below 1.1450. In both cases, the target is located at 1.1552.