FX.co ★ Technical analysis of EUR/USD for August 16. COT report. Bears lose faith in USD

EUR/USD – 1H

Hello, dear traders! On Friday, EUR/USD reversed, closing at 1.1772. The upward trend is likely to continue to the 76.4% retracement level of 1.1837. In case the quote reverses from the 76.4% retracement level or closes below 1.1772, it might trigger the start of the downward movement to 1.1772 and 1.1704. On Friday, the greenback was falling and the macroeconomic calendar was empty. In the European Union, no important reports were published. In the United States, the University of Michigan Consumer Sentiment Index was down by 10 points in August. As a result, the greenback dipped further.

Bears seem to no longer want to sell the pair. Now, it is bulls' time to become active. This assumption is confirmed by charts. On the H4 chart, there is a bullish divergence. As for the H1 chart, the price reversed from the 100.0% retracement level of 1.1704. Nevertheless, it seems that bulls are willing to buy. Could fundamental background change their plans? On the one hand, nothing can prevent the euro/dollar from strengthening. Tomorrow, however, important reports - the eurozone's GDP and US retail sales - are scheduled for release. For the upward trend to extend, the US statistics should come out worse than market expectations. Conversely, the eurozone should reveal stronger results. Otherwise, bears might start pushing the price down to the 1.1704 level. On top of that, the coronavirus situation in the US is getting out of control. The number of new infections keeps rising, casting doubt on the economic recovery. Therefore, it might be the euro's time to go up.

EUR/USD – 4H

On the H4 chart, the quote reversed, closing above the 76,4 retracement level of 1.1782 after a bullish CCI divergence was formed. Thus, the uptrend is expected to extend to the 61,8% retracement level of 1.1890. Today, there are no divergence signs. In case of consolidation below the 76,4% retracement level, the greenback may strengthen. Consequently, the quote is likely to fall to the 100.0% retracement level of 1.1606.

US and EU macroeconomic calendar:

On August 16, the macroeconomic calendar both in the US and the EU will be empty. At the same time, a series of important reports are scheduled for release in both countries during the week.

Commitments of Traders (COT) report:

According to the latest COT report, sentiment among the Non-commercial group of traders became even more bearish. Large market players opened 18,202 short and 10,841 long positions in EUR/USD. For the past 8 weeks, the number of short positions held by speculators soared by 90,000. Meanwhile, the number of long positions decreased. The euro is expected to continue falling, according to the COT report. At the same time, the previous week revealed that sentiment might turn bullish. Notably, the pair failed to break the 1.1740 level.

Outlook for EUR/USD:

Today, traders should consider entering long positions with the target at 1.1837 on the H1 chart since the price closed above 1.1772. Short positions should be considered in case the price closes below 1.1772 with the target seen at 1.1704 or reveres from 1.1837 with the target set at 1.1772.

TERMS:

Non-commercials are large market players: banks, hedge funds, investment funds, private, large investors.

Commercial are commercial enterprises, firms, banks, corporations, companies that buy currency not to obtain 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.