Hello, dear traders! On Friday, EUR/USD traded horizontally. Throughout the week, the pair hovered below 0.9782, bouncing off it from time to time. Even US inflation data released on Thursday were not enough for the trend to resume. Inflation in the US showed a modest fall, which means the US Federal Reserve is unlikely to reduce the pace of rate hikes. In case of a pullback at 0.9782, traders may count on a new decrease to the 423.6% Fibonacci level of 0.9585. Should the pair close above 0.9782, we may see growth to the 323,6% retracement level of 0.9963.
On Friday, the United States saw the release of two important reports. Retail sales came in at 0.0% in September. Michigan consumer sentiment was 59.8. USD bulls were disappointed at retail sales results. They failed to settle above 0.9782.
This week. The market will focus on inflation data in the eurozone. The ECB is now also taking aggressive measures. Although it made the decision to hike rates later than the Federal Reserve and the Bank of England. Therefore, the regulator has no other choice now but to raise the interest rate at the fastest pace. Inflation has already exceeded 10% and shows no signs of a slowdown. So, the ECB may lift rates by 0.75% at the next meeting as well as the Federal Reserve. Traders will clearly show a reaction to the inflation report in the eurozone although it could be similar to their reaction to US inflation last week. In fact, a surge in consumer prices could cause a brief increase in buying pressure on the euro.
Moving within the descending corridor on the H4 chart, the price is falling to the 161.8% Fibonacci level of 0.9581. Bearish sentiment is felt across the market. The euro could soar if the quote settles above the descending corridor, with the target at the 127.2% retracement level of 1.0173.
Commitments of Traders:
Last week, speculators closed 3,255 long positions and opened 2,928 short ones, reflecting a decrease in bullish sentiment. The number of long and short positions in hands of speculators is 196K and 158K respectively. The euro is still unable to show significant growth. In the past few weeks, the prospects for the bullish euro increased. Still, traders are actively buying the greenback right now. Therefore, it would be wiser to bet on the important descending corridor on the H4 chart. The euro has been unable to close above it. In addition, it is crucial to pay attention to geopolitical news, as this is what is weighing on trader sentiment at the moment. The euro is now unable to show growth due to major players' sentiment.
Macro events in the United States and the eurozone:
On October 17th, the macroeconomic calendar contains important releases neither in the US nor in the eurozone. The fundamental background is unlikely to affect trader sentiment today.
Outlook for EUR/USD:
Consider selling the pair after a bounce off the upper limit of the corridor on the H4 chart or after a bounce off 0.9782 on the H1 chart. The target is seen at 0.9585. If the price settles above the upper limit of the corridor on the H4 chart, long positions could be opened with the target at 1.0638.