On Friday, the EUR/USD pair performed a new rebound from the corrective level of 323.6% (0.9963). This rebound led to a slight increase in the euro currency, but on Monday morning, the quotes returned to this level. Thus, a new rebound will cause new growth in the euro currency, and closing at 0.9963 will cause the euro to fall towards the level of 0.9782. It is worth noting that the European currency moved horizontally for most of last week while the pound continued to fall simultaneously. Something stopped bear traders from selling again. But right now, the most important event looming on the horizon is the FOMC meeting, which starts tomorrow. And on Wednesday, its results will be summed up, and traders have almost no doubt that another 0.75% will raise the interest rate. Some even believe that the Fed will decide to raise the rate immediately by 1.00%, but I believe that this will not happen. Inflation in the US is still slowing down for the second month in a row, and there is no need to tighten the pace of rate hikes.
How will the euro/dollar pair react to this event? On the one hand, it would be logical to expect a new fall. But on the other hand, traders are aware of the possible decision of the Fed, so they could already react to it. As always, I recommend being prepared for any outcome. The Fed meeting is always a very difficult fundamental event. Not only will the bid decision matter, but also Jerome Powell's comments. And it is impossible to predict his comments. He will likely say again that the regulator will closely monitor and respond to inflation. However, what does this mean? We cannot see future inflation reports now. Therefore, the Fed does not know what decisions will be made at the next meetings. Thus, I would say this: the probability of new growth in the US currency is high, but you should not treat it as the only possible option. On Monday, there will be no information background, so the horizontal movement will likely continue.
On the 4-hour chart, the pair rebounded from the corrective level of 127.2% (1.0173), a reversal in favor of the US currency, and began to fall towards the corrective level of 161.8% (0.9581). The downward trend corridor continues to characterize the mood of traders as "bearish." Another attempt to close the pair's rate above the corridor can change the mood of traders to "bullish" for a long time, but it failed.
Commitments of Traders (COT) Report:
Last reporting week, speculators opened 2,501 long contracts and closed 2,2011 short contracts. This means that the "bearish" mood of the major players has weakened, and the total number of long contracts concentrated in the hands of speculators now amounts to 207 thousand, and short contracts – 219 thousand. The difference between these figures is shrinking, but the European currency continues to fall. In the last few weeks, the chances of the euro currency's growth have been gradually increasing, but bull traders are not willing to buy euros yet. The euro currency has not been able to show strong growth in the last few months. Therefore, I would now bet on an important downward trend corridor on a 4-hour chart. I recommend expecting the growth of the European currency after the closing of quotations above it.
News calendar for the USA and the European Union:
On September 19, the calendars of economic events in the European Union and the United States did not contain a single interesting entry. The influence of the information background on the mood of traders today will be absent.
EUR/USD forecast and recommendations to traders:
I recommended selling the pair when rebounding from the level of 1.0173 (1.0196) on the 4-hour chart with a target of 0.9900. Now, these positions can be held or closed at will. I recommend buying the euro currency when fixing quotes above the level of 1.0173 on a 4-hour chart with a target of 1.0638.