The EUR/USD pair resumed upward movement on Tuesday and consolidated immediately above several levels. The last of them was the corrective level of 50.0% (1.0862), consolidation above, which allows counting on continued growth towards the next Fibonacci level of 61.8% (1.0958). Closing the pair's rate below the level of 1.0862 today will work in favor of the US currency and a decline towards the levels of 1.0765 and 1.0714. I believe the second scenario is more likely.
The wave situation is becoming more complicated day by day. The stronger each wave, the harder it is to trade the pair. It may take a whole week to form each such wave. One needs to wait a week or more to determine the trend. Waves currently need to be more helpful for traders. The last upward wave surpassed two previous peaks, so the trend is currently "bullish." But that does not mean that a prolonged decline in the euro will not start today, and we can only find out that the trend has changed to "bearish" after breaking the last low, which the pair needs to fall by 215 points. The pair covered such a distance in just a few hours yesterday, but it won't do that daily.
The information background of yesterday contained several interesting reports, but all European data can be safely ignored, as they did not affect the market sentiment. The US Consumer Price Index was the culprit for all the troubles of the dollar. As soon as inflation in October slightly fell below expectations, the market rushed to sell the US currency, and we saw a new upward wave, which, frankly, should not have happened. Base inflation in October also dropped slightly, but not enough to abandon the possibility of a new tightening of the Fed's monetary policy.
On the 4-hour chart, the pair reversed in favor of the European currency and rose to the corrective level of 61.8% (1.0882). A bounce of quotes from this level will favor the US currency and the long-awaited decline towards (initially) the corrective level of 76.4% (1.0790). The "bearish" divergence on the CCI indicator did not have time to work out yesterday. No new imminent divergences are observed today. Closing above the level of 1.0882 will further increase the probability of further growth towards the next Fibonacci level of 50.0% (1.0957).
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 1649 long contracts and closed 2018 short contracts. The mood of major traders remains "bullish" but has noticeably weakened in recent weeks and months. The total number of long contracts held by speculators is now 212 thousand, and short contracts – 123 thousand. The gap is less than double, although a few months ago, the gap was triple. I think the situation will continue to change in favor of bears. Bulls have dominated the market for too long, and now they need a strong information background to start a new "bullish" trend. Such a background is currently lacking. Professional traders may continue to close long positions in the near future. I believe that current figures allow for continuing the decline in the euro in the coming months.
News Calendar for the US and the Eurozone:
Eurozone – Industrial Production Volume (10:00 UTC).
US – Retail Sales Volume (13:30 UTC).
US – Producer Price Index (PPI) (13:30 UTC).
On November 15, the economic events calendar contains three second-tier entries. The impact of the information background on traders' sentiment on Wednesday may be weak.
Forecast for EUR/USD and trader recommendations:
I still do not recommend considering purchases of the pair at this time. After a rise of 200 pips, the likelihood of a new rise is small. I can advise selling today when closing below the level of 1.0862 on the hourly chart with a target of 1.0765.