FX.co ★ EUR/USD. March 18. COT report. The Fed has significantly improved its forecasts for the economy, but at the same time, an increase in rates should not be expected in the next 2-3 years

EUR/USD – 1H.

The EUR/USD pair moved strictly horizontally for most of yesterday. Thus, traders had no desire to pay attention to the report on inflation in the European Union and had no desire to trade before the outcome of the Fed meeting. There was also no reversal or rebound during the day. There are also no trend lines or trend corridors right now. In general, before summing up the results of the meeting, the graphic picture was as ambiguous as possible. However, after summing up the results, the European currency began to grow sharply and closed above the corrective level of 100.0% (1.1952). Thus, the growth process can now be continued towards the next Fibo level of 76.4% (1.2021). As for the outcome of the meeting. The regulator left unchanged the key rate and the volume of monthly asset repurchases - 0.25% and 120 billion dollars, respectively. However, none of the traders expected anything else. But traders were waiting for Powell to hint at a possible curtailment of the quantitative stimulus program or announce its gradual reduction. However, the Fed chairman didn't say anything like that. But the regulator has raised, and significantly, the forecasts for the economy in the coming years. Thus, the GDP forecast for 2021 has been increased from 4.2% to 6.5%, and inflation will rise to 2.4%. Also, the dot plot chart was presented, which displays the forecast of the Fed's leaders regarding the increase in the key rate. According to this chart, a tightening of monetary policy should not be expected before 2024. Perhaps it was this fact that disappointed traders who started selling the US dollar last night.

EUR/USD – 4H.

On the 4-hour chart, the pair's quotes performed a reversal in favor of the European currency and began the growth process in the direction of the corrective level of 161.8% (1.2027). The rebound of the pair from this level will work in favor of the US dollar and the resumption of the fall in the direction of the Fibo level of 127.2% (1.1729). Closing the pair's rate above the level of 161.8% will increase the probability of further growth towards the next level of 1.2223. There are no emerging divergences in any indicator today.

EUR/USD – Daily.

On the daily chart, the quotes of the EUR/USD pair performed a consolidation under the upward trend corridor, so the mood on the traffic was "bearish". The descending trend line confirms this. Fixing the pair's rate under the Fibo level of 261.8% will increase the chances of a further fall in the direction of the corrective level of 200.0% (1.1566).

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 March 17, the European Union released the consumer price index, which traders did not pay any attention to. In the US, as I have already said, the results of the Fed meeting were summed up.

News calendar for the United States and the European Union:

EU - ECB President Christine Lagarde will deliver a speech (08:00 GMT).

EU - ECB President Christine Lagarde will deliver a speech (10:00 GMT).

US - number of initial and repeated applications for unemployment benefits (12:30 GMT).

US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (15:55 GMT).

On March 18, there will be two speeches by Christine Lagarde and another by Jerome Powell. These are the most important events of the day. The information background may be strong 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 quite aggressive. This time, the "Non-commercial" category of traders reduced 14,000 long contracts on their hands and opened 12,000 new short contracts. It follows that the mood of speculators has become much more "bearish". Consequently, the chances of a further fall in the euro currency quotes are growing. Other categories of traders are of much less concern to us since it is speculators who set the tone of trading.

EUR/USD forecast and recommendations for traders:

It is recommended to sell the pair at the close of quotes under the level of 100.0% (1.1952) with a target of 1.1873 on the hourly chart. Purchases of the pair were recommended when closing above the level of 100.0% (1.1952) on the hourly chart with targets of 1.2021 and 1.2063. Now, these transactions can be kept open.

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.