FX.co ★ Forecast for EUR/USD on July 26 (COT report). Traders want to know when the Fed will end the QE program

EUR/USD – 1H.

The EUR/USD pair again showed absolutely nothing on Friday. Looking at the picture of the hourly chart, it becomes clear that the pair has not shown any absolute movement for more than a week. It is trading carefully along with the level of 1.1772, occasionally moving slightly away from it. Thus, neither closing nor rebounding from this level now gives traders absolutely nothing. The background information on Friday was quite interesting. However, it did not cause any attention of traders. Both in the United States and the European Union, business activity indices in the services and manufacturing sectors have been released. The European index was almost unchanged compared to June, and the American one for the services sector declined quite noticeably, which did not affect the US dollar in any way. There will be practically no news this week until Wednesday. On Wednesday, the two-day meeting of the Federal Reserve will end in the United States, and its results will be announced.

It is the most interesting and the only event in the first three days of the week. No one expects a change in monetary policy from the Fed now. Jerome Powell regularly makes speeches and regularly clarifies that the Fed will continue to support the economy, and the curtailment of the QE program and the increase in rates will not begin soon. However, a week ago, it became known that inflation in the United States has already accelerated to 5.4% y/y, which makes traders and markets nervous and worried. After inflation rose, Powell spoke twice in the US Congress. However, his speech did not take into account the new price increase. Thus, after the Fed meeting, the speech at the press conference will be the first after the inflation report. Therefore, traders will look forward to a change in the rhetoric of the Fed president on this issue. Traders are waiting for Powell to announce that the Fed has begun discussing the completion of the QE program and wants to hear specific deadlines. The dollar can continue its growth only in this case.

EUR/USD – 4H.

On the 4-hour chart, the pair's quotes performed another drop to the corrective level of 76.4% (1.1782). But the movements are now so weak that the pair can not perform either a rebound from this level or closure under it. Thus, even graphical analysis is now as ambiguous as possible. The ECB meeting last week did not give anything. The Fed's meeting this week may also give nothing. Nevertheless, sooner or later, traders will start trading more actively. There are no emerging divergences in any indicator today.

Overview of fundamentals:

On July 23, only business activity indices were released in America and the European Union, but traders did not pay any attention. Thus, the information background was present, but it was weak.

News calendar for the United States and the European Union:

On July 26, the calendars of economic events in the European Union and America are empty. The same picture will be tomorrow (except for only one report).

COT (Commitments of Traders) report:

The latest COT report showed that during the last reporting week, the mood of the "Non-commercial" category of traders again became more "bearish." Major players opened 7,083 short contracts on the euro and closed 5,643 long contracts. Thus, in the last five weeks, the number of short contracts focused on the hands of speculators has increased by 65 thousand, and the number of long contracts has decreased by 5 thousand. Therefore, a further fall in the European currency is very likely. However, over the past week, the euro/dollar pair has not continued falling quotes.

EUR/USD forecast and recommendations to traders:

At this time, the movements are very weak, and the information background does not help traders in any way. I recommend waiting for the pair to start moving in the usual mode.

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 ensure current activities or export-import operations.

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