FX.co ★ EUR/USD. August 8th. Inflation in Germany has slowed down slightly

The EUR/USD pair traded horizontally on Monday. Throughout the day, there were periods of growth and periods of decline. Traders didn't consider the corrective level of 76.4% (1.0984), but I attribute such behavior to the lack of significant news on Monday. Today, the pair has consolidated below the 1.0984 level, but this does not necessarily mean we will see a decline toward the Fibonacci level of 61.8% (1.0917) throughout the day. The news background is still absent today.

What do the waves currently tell us? Yesterday's movements were weak, so it's challenging to identify specific waves among them. There is no reason to categorize 50-60 point movements as individual waves. As it stands, we have the last upward wave that surpassed the last price peak. Such a situation suggests a potential emergence of a bullish trend, but the peak was only surpassed due to significant US data released on Friday. So, it happened by chance. Now, I intend to wait for the completion of the current downward wave to see where it ends. The bearish trend will continue if it's below the low of August 3rd.

Only one report was released on Tuesday, and no more interesting data is expected for the rest of the day. As traders expected, the Consumer Price Index in Germany dropped to 6.2% y/y. The Harmonized Index of Consumer Prices fell to 6.5%. It's hard to say whether this is good or bad since it's not the overall inflation in the European Union. Inflation is falling – perhaps that's good. Inflation is dropping rather slowly – perhaps that's bad. One thing is clear: it's not yet time for the ECB to pause the rate hikes. However, the European regulator might announce such a pause in September.

On the 4-hour chart, the pair has consolidated below the ascending trend line and rebounded from the Fibonacci level of 38.2% (1.1032). Consequently, the decline in quotes may resume toward the Fibonacci level of 61.8% (1.0882). The two charts point to different potential movement directions. A rebound in quotations from the 1.0957 level will make it possible to expect a growth resumption, but the "bearish" divergence of the CCI indicator suggests a continued decline. The 4-hour chart is more critical, so I anticipate a new decline in the pair.

Commitments of Traders (COT) Report:

During the last reporting week, speculators closed 10,573 long contracts and 5,405 short contracts. The sentiment among major traders remains "bullish" and has slightly weakened over the past week. The total number of long contracts held by speculators now stands at 240,000, while short contracts total 68,000. The "bullish" sentiment persists, but I believe the situation will likely reverse soon. The high number of open long contracts suggests buyers might start closing them soon – there's a strong bias toward the bulls. The current figures suggest a potential decline in the euro currency in the coming weeks. The ECB increasingly indicates an imminent end to its tightening procedure.

News calendar for the US and the European Union:

European Union - Consumer Price Index in Germany (06:00 UTC).

On August 8th, the economic events calendar has no noteworthy entries. The inflation data for Germany has already been released. The influence of the news background on traders' sentiment for the remainder of the day will be absent.

Forecast for EUR/USD and advice for traders:

I advised sales upon a rebound from the 1.1035 level on the hourly chart with targets at 1.0984 and 1.0917. Buying the pair was possible earlier upon a rebound from the 1.0917 level on the hourly chart with targets at 1.0984 and 1.1035. Both targets have been reached. New purchases are advised upon closing above 1.1035 or based on other signals.