On Thursday, the EUR/USD pair kept moving upward in the direction of the corrective level of 1.0609. The increase had no informational basis; yesterday during the day, there was simply a report on unemployment benefits applications, which rarely impacts the attitude of traders. The US dollar will benefit from the quotes recovering from the level of 1.0609 and the continuation of the decline in the direction of the level of 1.0483. The likelihood of continued growth toward the level of 1.0700 will improve if the pair's rate is closed above 1.0609.
Jerome Powell and Christine Lagarde both gave performances this week. Markets were paying special attention to Powell's speech in Congress and his remarks regarding a possible tightening of the PEPP. Yet Lagarde's address was overshadowed by this event, although the ECB president stated that interest rates will continue to increase and inflation is too high to refuse further tightening. Nevertheless, Lagarde rated the current status of the economy as good, citing low unemployment (the lowest level in history) and practically promising a 0.50% rate increase at the March meeting. She added that the rate will keep increasing in the upcoming sessions, but the rate of growth will depend on new sets of economic data. Powell and Lagarde both received almost the same marks for their performances. The Fed rate is higher and will stay that way for a while, which is the only difference. The US dollar may be supported by this difference in the coming weeks or months. In any event, the Fed rate is about to reach its maximum level, and inflation has been falling for seven consecutive months. In 2023, the ECB will have the chance to raise rates more significantly than the Fed.
The pair has stabilized under the upward trend corridor on the 4-hour chart, allowing us to still anticipate a further decline even if the pair has left the corridor it has been in since October. Trader sentiment is described as "bearish," which creates strong growth opportunities for the US dollar with a target of 1.0201. No new emergent divergence in any indication has yet been seen.
Report on Commitments of Traders (COT):
Speculators closed 8,417 long contracts and 22,946 short contracts during the most recent reporting week. The positive sentiment among large traders is still present and getting stronger. Please be aware, though, that the most recent report is from February 7. The "bullish" attitude may have grown stronger at the start of February, but how are things now? Speculators now have 238 thousand long contracts, while just 73 thousand short contracts are concentrated in their hands. While the value of the euro has been declining for some weeks, we are currently without new COT data. The likelihood of the euro currency's growth has been steadily increasing over the past few months, much like the euro itself, but the information background hasn't always backed it up. After a protracted "dark time," the situation is still in the euro's favor, and its prospects are strong. Until the ECB gradually raises the interest rate by increments of 0.50%, at least.
News calendar for the USA and the European Union:
US – average hourly wage (13:30 UTC).
US – change in the number of people employed in the non-agricultural sector (13:30 UTC).
US – unemployment rate (13:30 UTC).
EU – ECB President Lagarde will deliver a speech (15:00 UTC).
The economic event calendars for the European Union and the United States each have four significant entries on March 10. The Nonfarm Payrolls report is the most significant of them all. The information backdrop might have a significant impact on how traders feel today.
Forecast for EUR/USD and trading advice:
On the hourly chart, new sales of the pair can be initiated when it rebounds from the 1.0609 level with a target of 1.0483. Although the rise in the euro currency is likely today as a result of numerous significant events and data, I do not now advise buying it.