FX.co ★ EUR/USD. February 24. COT report. Jerome Powell: economic outlook remains uncertain

EUR/USD – 1H.

On February 23, the EUR/USD pair continued to trade inside the upward trend corridor, which keeps the current mood of traders "bullish". However, closing the pair under this corridor will work in favor of the US currency, and some fall in the direction of the corrective level of 38.2% (1.2104). The rebound from the lower limit of the corridor will work in favor of the European currency and the resumption of growth in the direction of the corrective level of 61.8% (1.2197). The most important event of the last day was the speech of Jerome Powell in the US Congress before the Committee on Financial Services. The Fed chairman said that price pressure remains negligible, inflation is weak, and the economic outlook is uncertain. Powell noted that the current state of the economy is too far from the target levels of employment and inflation and may take a sufficient amount of time to reach them. Powell also recalled that at the end of last year, the Fed changed its approach to inflation. Inflation will now be allowed to stay above the 2% level for an extended period without tightening monetary policy. This is a response to periods of low inflation. The Fed is still waiting for the value of the consumer price index at the level of at least 2%. Powell also noted that progress in vaccination can accelerate economic recovery and improve the economic outlook. In general, his speech to the financial services committee was quite predictable. This is not the first time we have heard many theses. Thus, in general, Powell did not surprise traders with anything. Also, traders were not surprised by the report on inflation in the European Union, which was released yesterday morning with an indicator of 0.9% y/y. Traders did not expect this indicator to change in any way in January.

EUR/USD – 4H.

On the 4-hour chart, the pair's quotes continue the growth process in the direction of the level of 1.2204 after rebounding from the corrective level of 161.8% (1.2027) and the formation of a bullish divergence at the CCI indicator. The rebound of quotes from this level will allow traders to count on a reversal in favor of the US currency and a slight drop in the direction of 1.2027. Closing the pair's rate above the level of 1.2204 will work in favor of continuing growth in the direction of the next Fibo level of 200.0% (1.2353).

EUR/USD – Daily.

On the daily chart, the quotes of the EUR/USD pair performed the second breakdown of the lower border of the upward trend corridor, and also false. Therefore, at the moment, the pair still retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). Closing under the corridor will allow you to count on a long drop in quotes.

EUR/USD – Weekly.

On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.

Overview of fundamentals:

On February 23, there were events in the European Union and the United States that could have affected the pair's movement but did not. The activity of traders throughout the day was low.

News calendar for the United States and the European Union:

US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (15:00 GMT).

On February 24, the calendar of economic events in the European Union is empty, and in America, Powell's second speech to the US Congress will be held. It is unlikely that it will differ from the first one, so the information background may be weak today.

COT (Commitments of Traders) report:

Last Friday, the next COT report was released, and for the second week in a row, it turns out to be very calm. If a week earlier the "Non-commercial" category of traders increased long contracts and got rid of short contracts, then in the last week they increased both long and short contracts, but in even smaller quantities. A total of 2,537 long contracts and 1,284 short contracts were opened. Thus, the mood of the major players became only slightly more "bullish". On the other hand, it has not become more "bearish", which means that the prospects for the European currency remain wonderful. In general, during the last reporting week, more short contracts were opened, however, we are more interested in the data on the speculator group.

Forecast for EUR/USD and recommendations for traders:

Sales of the pair are recommended when closing quotes under the ascending corridor on the hourly chart with targets of 1.2104 and 1.2046. It was recommended to buy the pair in the case of closing quotes above the trend line on the hourly chart with targets of 1.2151 and 1.2197. The first one has already been reached, and we are waiting for the second one until the closure under the corridor is completed.

Terms:

"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.