On Thursday, the EUR/USD pair made a new reversal in favor of the US dollar, falling to the corrective level of 100.0% (1.0637). A rebound from this level will benefit the European currency and may lead to some growth towards the 1.0697 level. If the quotes consolidate below 1.0637, the likelihood of further decline toward the next level at 1.0533 increases.
The wave situation perfectly illustrates the weakness of the bulls. Over the past 5–6 days, the information background has been quite weak, which the bulls could have used in their favor as the bears paused. However, all we saw was one upward wave that broke the peak of the previous wave. The last upward wave couldn't break the peak, and a strong decline in quotes began yesterday, indicating a new downward wave that easily overcame all previous lows. Thus, we have a new "bearish" trend, and at the moment, there are no signs of its completion.
At first glance, it may seem strange for the euro to fall when the ECB raises the rate. However, I want to remind you that a strong "bearish" trend has formed over the past two months. Bears can sell the pair when they see fit. If the market has no desire to buy the euro, what difference does it make whether the ECB raises or lowers the rate? We are used to the fact that the nature of the information background affects the pair's movement, but this is only sometimes the case. For example, the market now expects that the European Central Bank is approaching the end of its tightening cycle. Yesterday, the phrase "a rate level sufficient to exert pressure on inflation" was heard. Thus, the main point of yesterday's meeting was that the regulator is preparing to end the tightening. This is why the euro fell.
On the 4-hour chart, the pair has fallen to the 100.0% Fibonacci level and remains within the descending trend corridor. Therefore, a rebound from the level of 1.0639 may lead to some growth. Still, for a significant strengthening of the euro, I recommend waiting for the price to consolidate above the trend corridor. If the pair closes below 1.0639, it increases the chances of further decline towards the corrective level of 127.2% (1.0466). There are no imminent divergences observed in any of the indicators.
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 5,190 long contracts and 15,638 short contracts. The sentiment of major traders remains bullish but has weakened in recent weeks and months. The total number of long contracts held by speculators now stands at 235,000, while short contracts amount to 99,000. The situation will continue to change in the opposite direction over time, but bearish traders are not attacking bulls too aggressively now. The high value of open long contracts suggests that professional traders may close them soon—too strong a bias towards bulls at the moment. The current numbers allow for continuing the euro's decline in the coming weeks. The ECB is increasingly signaling the end of the tightening procedure of the monetary policy.
Economic Calendar for the United States and the European Union:
European Union - ECB President Lagarde will deliver a speech (09:45 UTC).
United States - Industrial Production (13:15 UTC).
United States - University of Michigan Consumer Sentiment Index (14:00 UTC).
On September 15th, the economic events calendar includes only one important entry - a new speech by Christine Lagarde. The impact of the information background on traders' sentiment today can be moderately strong.
Forecast for EUR/USD and trader recommendations:
New pair sales are possible today if it closes below the level of 1.0637 on the hourly chart, with a target of 1.0533. Buying today is possible on a rebound from the level of 1.0637, with targets at 1.0697 and 1.0787.