Hi, everyone! The EUR/USD pair advanced to 1.0917, the 76.4% Fibonacci retracement level, on Monday and consolidated above it on Tuesday. Thus, the pair has every chance of extending gains to the next level of 1.0966. If the price fixes below 1.0917, the US currency will resume its bullish run. In this case, the pair will slide to the 1.0843 mark, which coincides with the 61.8% Fibonacci level.
Monday's macroeconomic calendar was bereft of any important news releases. Today, traders may take notice of the ECB's economic forum in Portugal, where many central bank governors will speak. In the first half of the week, market participants may get interesting insights about the regulator's further monetary policy steps. In addition, Jerome Powell is set to speak twice. However, there is no important news so far, which is why trading activity is quite low.
Notably, ECB Governing Council member Martins Kazaks said on Monday that the regulator could raise interest rates even this autumn. Recall that the market expects the central bank to tighten monetary policy in July but doubts the regulator's readiness to raise rates in September and at subsequent meetings. Kazaks suggested that the ECB would likely keep lifting rates after the July meeting due to high inflation.
According to him, bets on a rate cut in early 2024 are wrong. High inflation risks persist, which could force the ECB to continue raising interest rates. However, this statement comes as no surprise to market participants as ECB members have already mentioned that more than once. This indicates that the key rate in Europe will be higher than predicted a few months ago.
According to the 4-hour chart, the EUR/USD pair turned negative and fixed below 1.0941, the 50.0% retracement level. Thus, the euro is likely to extend weakness, approaching the 38.2% Fibonacci level at 1.0610. Technical indicators show no emerging divergences. If the price consolidates above the level of 1.0941, Europe's single currency will most likely resume gains, heading for the 1.1273 mark, which coincides with the 61.8% Fibonacci level.
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 3,261 long contracts and 10,434 short contracts. The sentiment of major traders remains bullish but is gradually fizzling out. The total number of long contracts held by speculators is currently 229,000, and short contracts - only 85,000. Strong bullish sentiment persists, but the market situation is likely to change shortly. The European currency saw more losses than gains in the last two months. The high volume of long positions suggests that buyers may start closing them soon (or have already started, as the latest COT reports suggest). The current figures signal a new decline in the euro in the near future.
News calendar for US and EU:
EU - Speech by ECB President Christine Lagarde (08-00 UTC)
US - Building Permits (12-00 UTC)
US - Durable Goods Orders (12-30 UTC)
US - New Home Sales (14-00 UTC)
On June 27, the macroeconomic calendar includes a number of important news releases, among which Lagarde's speech stands out. The impact of fundamental factors on market sentiment for the rest of the day is likely to be medium.
EUR/USD forecast and trading tips:
Traders are recommended to go short after the price fixes below the level of 1.0917 on the 1-hour chart. The levels of 1.0843 and 1.0784 can be seen as targets. New long positions will be relevant in case the price closes above the 1.0917 mark, with a view to reaching the target levels of 1.0966 and 1.1035.