FX.co ★ EUR/USD. July 10th. The U.S. reports from the previous week fell short of expectations

On Friday, the EUR/USD pair rebounded from the corrective level of 38.2% (1.0868), turned in favor of the European currency, and almost reached the level of 1.0977. The information background from America last week was quite contradictory. The ISM Manufacturing Index was weak, but the ISM Services Index was stronger than traders' expectations. The Nonfarm Payrolls report on Friday was below forecasts, but the ADP report on Thursday exceeded forecasts almost twofold, and the unemployment rate fell from 3.7% to 3.6%. The number of JOLTS job openings was only slightly below expectations, but unemployment benefit claims were also below forecasts. Thus, at the end of the week, it cannot be said that the information background for the dollar was 100% negative.

Nevertheless, on Friday, traders began to sell off the US currency, which could hardly be predicted if we look at Friday's data. As I already said, the payroll report was below traders' expectations, but at the same time, the unemployment rate was better. For most of the week, the dollar grew very weakly, but on Friday, it simply collapsed.

Wave and graphic analysis tell us the following. On Thursday, the low of the last downward wave did not break the low of the previous wave. At this point, the pair should grow. On Friday, the peak of the last ascending wave was broken, which was the second signal of growth. The pair was just a few points short of the 1.0977 level, which is also the wave's peak. Since June 26th, we have seen that the trend is horizontal. If a breakthrough and closing above the level of 1.0977 do not occur soon, I will expect a fall back to 1.0868 and 1.0840.

On the 4-hour chart, the pair performed a return to the Fibo level of 23.6% (1.0962) and rebounded from it. Thus, a reversal in favor of the US dollar may now be performed, and a new drop in quotes towards the corrective level of 38.2% (1.0878) may begin. The consolidation of the pair's rate above the level of 1.0962, considering the closing above the downward trend line, will increase the likelihood of continued growth towards the next Fibo level of 0.0% (1.1097). No emerging divergences are observed today with any indicators.

Commitments of Traders (COT) report:

During the last reporting week, speculators closed 2705 long and 514 short contracts. The sentiment of large traders remains "bullish," but it is slowly weakening. The total number of long contracts held by speculators now stands at 221 thousand, while short contracts are only 78 thousand. The "bullish" sentiment persists, but I believe the situation will continue to change in the opposite direction soon. The European currency has been falling more frequently than rising over the past two months. The high number of open long contracts indicates that buyers may start closing them soon (or have already started, as suggested by recent COT reports) - there is currently too strong a skew towards bulls. The current figures allow for a new drop in the euro soon.

News calendar for the US and the EU:

The economic events calendar for July 10th contains no important entries, although FOMC members Daly, Bostic, and Mester will speak throughout the day. The impact of the informational background on traders' sentiment for the remainder of the day could be very weak.

EUR/USD forecast and trading tips:

Sales can rebound from the 1.0977 level on the hourly chart or the 1.0962 on the 4-hour chart with targets of 1.0923 and 1.0868. After closing above the trend line on the 4-hour chart, I advised buying the pair. The nearest target of 1.0962 has been reached. I advise new purchases when closing above the level of 1.0962 with targets of 1.1012 and 1.1097.