The EUR/USD pair continued the growth process on Thursday and by the end of the day almost fulfilled the corrective level of 200.0% (1.1143). An ascending trend line has been built, which characterizes the mood of traders as "bullish". However, given the weakness of the euro's growth in recent weeks, I believe that its growth may end very quickly. Nevertheless, only consolidation under the trend line will work again in favor of the US dollar and the resumption of the fall. Yesterday was quite a busy day. In Europe, the inflation report for February was released. Let me remind you that at the ECB meeting last week, no decision was made to raise the rate. There were also no statements from Christine Lagarde that the regulator would start raising the rate in 2022. Thus, for the time being, the ECB is completely inactive about inflation, unlike the Fed and the Bank of England, which are at least trying to restrain price growth.
Christine Lagarde also gave a speech yesterday, which spoke specifically about inflation. According to her, the inflation rate will stabilize near the target level in the medium term. How this stabilization will be achieved and what is meant by the words "medium-term perspective", the ECB president did not say. From my point of view, inflation will grow, as it is now a trend that has captured the whole world. Initially, inflation was rising due to huge quantitative stimulus programs. Then, when the pandemic began to recede, due to the huge savings of the population of some countries, who rushed to buy goods. Further, the growing labor market led to the need to raise wages. Now - because of the geopolitical conflict in Ukraine and rising oil and gas prices, which somehow affect pricing. Thus, I do not understand what Christine Lagarde is counting on when she says that inflation is stabilizing. Perhaps she means 2030.
On the 4-hour chart, the pair performed an increase to the corrective level of 161.8% (1.1148), but there was no rebound from it. Nevertheless, the pair can perform a reversal in favor of the US currency and begin a new process of falling in the direction of the corrective level of 200.0% (1.0865). Fixing the pair's rate above the level of 1.1148 will increase the probability of further growth towards the next Fibo level of 127.2% (1.1404). Emerging divergences are not observed in any indicator today.
Commitments of Traders (COT) Report:
Last reporting week, speculators opened 14,899 long contracts and 20,676 short contracts. This means that the bullish mood of the major players has become weaker. The total number of long contracts concentrated on their hands now amounts to 248 thousand, and short contracts - 186 thousand. Thus, in general, the mood of the "Non-commercial" category of traders is still characterized as "bullish" and is strong. This would give an excellent opportunity for the European currency to count on growth, if not for the information background, which now supports only the American currency. We are now witnessing a paradoxical situation: the bullish mood of major players is increasing (if you look at it for several months), while the currency itself is falling. And it falls quite heavily. Thus, geopolitics is now a priority.
News calendar for the USA and the European Union:
On March 18, the calendars of economic events of the European Union and the United States are empty. The influence of the information background on the mood of traders today will be absent. I also doubt that there will be news on the situation in Ukraine today. A good time for correction.
EUR/USD forecast and recommendations to traders:
I would recommend new sales of the pair if the pair performed a rebound from the level of 1.1143 on the hourly chart, but there was no such rebound. Therefore, sales are now possible with targets of 1.1050 and a trend line on the hourly chart, but there was no signal. I recommend buying a pair if there is a rebound from the trend line with a target of 1.1143.