Outlook for EUR/USD for European session on April 12. COT report. Eurozone reports to put EUR under pressure again

Conditions for opening long positions on EUR/USD:

Yesterday, traders received several signals to enter the market, which allowed them to earn money. Let us take a look at the five-minute chart to analyze the market situation. Earlier, I asked you to pay attention to the level of 1.0894 so that you could decide when to enter the market. Thanks to the absence of important macroeconomic data and the fact that the euro opened with a rise, buyers managed to push the price above 1.0894 to hit 1.0930. Unfortunately, the price did not downwardly test the level of 1.0894. That is why traders did not receive an additional buy signal. The pair also lacked several pips to touch 1.0936. There, we could have seen a false break and a short signal. As a result, traders did open positions in the first part of the day. During the US trade, bulls were very active near the support level of 1.0881. After several false breaks, we saw buy signals. Although the pair rose less than expected, an increase of 20 pips is a good result of the US trade.

Let's take a look at the futures market and COT report before we focus on a further movement of the euro/dollar pair. According to the COT report from April 5, the number of both long and short positions increased. Notably, the number of buyers exceeded the number of sellers. Such data could be explained by the expectations of new measures from the ECB. The regulator has been emphasizing the necessity of a more aggressive approach for the last few weeks. However, the absence of positive news about the Russia-Ukraine talks and rising geopolitical tension are still having a negative influence on the euro. That is why bulls cannot form a strong upward correction. In the near future, the US and the eurozone are going to disclose important inflation data. The reports will contain more accurate figures on the consumer price growth after the beginning of the special military operation in Ukraine. This information will provide politicians with hints about further actions on monetary policy. This, in turn, may help us to predict a future movement of the euro/dollar pair. According to the COT report, the number of long non-commercial positions increased to 210,914 from 200,043, while the number of short non-commercial positions climbed to 183,544 from 178,669. Since the rise in the number of short positions was less significant than a jump in the number of long positions, the general non-commercial net position advanced to 27,370 compared to 21,374. The weekly close price slid to 1.0776 from 1.0991.

In fact, the overall situation remained the same compared to yesterday. However, this day is expected to be more interesting thanks to a bulk of important macroeconomic reports. Firstly, it is Germany's consumer price index data. The indicator's growth will hardly have a positive influence on the euro. However, if the CPI figures exceed expectations, bulls may try to take control over the resistance level of 1.0886. A break and a downward test of this level, will provide traders with the first buy signal with the target at a strong resistance level of 1.0931. If the price exceeds the level, it will have a chance to jump to the highs of 1.0970 and 1.1007. However, the jump will be possible in case of very positive data on Germany's business sentiment index and ZEW economic sentimentfor the eurozone. In March, the indicators may decline even more amid the current geopolitical situation. If the euro/dollar pair drops, bulls should protect the support level of 1.0839. The price may slide to this level amid weak macroeconomic data from the eurozone. Only a false break of the level will give the first long signal. If the pair decreases and bulls fail to protect 1.0839, it will be wise to avoid opening long positions. It will be possible to go long after a false break of the low of 1.0810. Traders may also open long positions from 1.0772 or higher – from 1.0728, expecting a rise of 30-35 pips within one day.

Conditions for opening short positions on EUR/USD:

At the moment, the pair has every chance to continue losing value. Until the pair hovers below 1.0886, the likelihood of a decline will remain very high. Once bears lose this level, the situation will change dramatically. A false break of 1.0886 amid weak reports from the eurozone may lead to a sell signal with a decline to the support level of 1.0839. A break of this level may force buyers to go lower.A break and a test of 1.0839 may give an additional signal to open short positions with the target at the low of 1.0810. A farther target is located at 1.0772, where it is recommended to lock in profits. If the euro rises and bears fail to protect 1.0886, bulls will try to open more long positions, expecting an upward correction. Since a lot depends on the geopolitical situation, the euro will hardly gain in value. It will be better to go short after a false break of 1.0931. It is also possible to sell the euro from 1.0970 or higher – from 1.1007, expecting a decrease of 25-30 pips.

Signals of indicators:

Moving Averages

The trading is performed near the 30- and 50-day moving averages. This fact points to the formation of the sideways channel ahead of the publication of important inflation reports.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

If the euro breaks the lower limit of the indicator located at 1.0840, it is likely to fall. Meanwhile, a break of the upper limit at 1.0920 may cause a jump.

Description of indicators