FX.co ★ EUR/USD: outlook for European session on April 19. COT report. EUR may slump against US again

Conditions for opening long positions on EUR/USD:

Yesterday, traders did not receive signals to enter the market. The pair failed to reach the expected levels due to small trade volume and low volatility caused by long weekends in some countries. Today is expected to be quite a calm day. However, pressure on risk assets is rising amid the worsening geopolitical situation. That is why it is better to go on selling the euro.

Before we continue analyzing the euro/dollar pair, let's focus on the futures market and fresh data unveiled by the COT report. Thus, according to the COT report from April 12, the number of long positions surged, whereas the number of the short ones dropped. Such a change reflects expectations that the ECB will take some measures to cap inflation growth. Christine Lagarde announced such a possibility last week. The fact is that the ECB is planning to complete the asset purchase program by the third quarter of the year and start increasing the benchmark rate to curb inflation that has a significant influence on households. Notably, many countries have faced such a problem. According to the previous week's report, the US consumer price index approached the highest level last seen 40 years ago. This fact may force the Fed to take even more radical measures. During the next meeting, which is scheduled for May, the regulator may raise the key interest rate by 0.5%. Against this backdrop, demand for the US dollar remains high, thus pushing the euro/dollar pair lower. The euro is also affected by the Russia-Ukraine conflict and the lack of progress in the negotiations. The COT report unveiled that the number of long non-commercial positions increased to 221,645 from 210,914, whereas the number of short non-commercial positions inched down to 182,585 from 183,544. Although the number of long positions jumped, we should remember that the COT report is of minor importance since the market situation changes rapidly. In other words, these figures do not reflect the real state of affairs. On the other hand, a drop in the euro makes it more attractive for investors. That is why a jump in long positions was quite expectable. According to the previous week's results, the total non-commercial net position climbed to 39,060 from 27,370. The weekly closing price slumped by almost 100 pips to 10.877 from 1.0976.

In fact, the overall market situation has not changed. Although bears managed to push the pair to a monthly low during the Asian trade, a lot will depend on bulls' actions near 1.0761. Since today the eurozone is not planning to disclose any important reports, the euro will hardly increase. It is quite possible that bulls will try to regain control over the resistance level of 1.0808. However, it is not an easy task. Only a break and a downward test of this level will give the first buy signal with the target at the important resistance level of 1.0848, which is capping the upward potential of the pair. If the price exceeds 1.0848, it will have a chance to jump to such highs as 1.0885 and 1.0931. Such a rise will be possible only in case of positive news about Russia-Ukraine talks. However, we will hardly receive any positive information in the near future. In case of a decline, bulls should first protect the support level of 1.0761. The pair may touch this level at any moment since traders' are discouraged by the current events in the economy and the whole world. Only a false break of this level will give the first buy signal. If the pair drops and bulls fail to protect 1.0761, it will be a good idea not to open long positions. It will be possible to go long after a false break of the low of 1.0723. Traders could also buy the euro from 1.0682 or lower from 1.0636, expecting a rise of 30-35 pips within one day.

Conditions for opening short positions on EUR/USD:

Yesterday, sellers met all the expectations and now they have every chance to push the price lower. Until the euro trades below 1.0808, the likelihood of a further decline will be very high. However, once bears lose this level, the market situation will alter significantly. A false break of 1.0808 will cause a sell signal with the target at 1.0761. The pair has already tested this level today. The pair's return to this level may negatively affect buyers. A break and test of 1.0761 will give an additional short signal with the target at 1.0723. A farther target is located at 1.0682, where it is recommended to lock in profits. If the euro climbs and bears fail to protect 1.0808, the number of long positions may increase, thus boosting the pair. Nevertheless, under the current conditions, traders should not bet on the euro's appreciation. It will be wise to go short after a false break of 1.0848. Traders may also sell the euro/dollar pair from 1.0885 or higher – from 1.0931, expecting a change of 25-30 pips.

Signals of indicators:

Moving Averages

Trading is performed below the 30- and 50-day moving averages, thus pointing to a further decline in the pair.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

A break of the lower limit of the range located at 1.0761 will lead to a drop in the euro. A break of the upper limit of the range located at 1.0800 may cause a jump in the single currency.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 30. It is marked in green on the graph.
• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
• Bollinger Bands. The period is 20.
• Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions is a total number of long positions opened by non-commercial traders.
• Short non-commercial positions is a total number of short positions opened by non-commercial traders.
• The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.