FX.co ★ Outlook for EUR/USD on August 17. COT report. The GDP report did not help the euro

Analysis of EUR/USD 5M

On Wednesday, EUR/USD tried to start a new wave of corrective movement within the downtrend, but the euro's growth quickly ended. The pair was falling for most of the day, but volatility was low again, so the euro ended the day without significant losses. There were also few compelling reasons for it to trade higher during the past day. In the morning, the EU released reports on economic growth and industrial production, but the first was only a second estimate for the second quarter, which was no different from the forecast and the first estimate, and the second surpassed the forecast but was not a significant report anyway. Therefore, despite the positive nature of the reports, it generally had no effect on the pair's movements.

The US released minor reports, like industrial production and real estate market data. They could provide some support to the dollar, as they can be called "moderately positive" overall.

Speaking of trading signals, they were quite unfortunate. Although, it depends on how you look at it. Given the low volatility, maybe it was a good thing that there were no signals on Wednesday. The price approached important levels twice, but never reached them, even with an error. Therefore, you shouldn't have opened any trade.

COT report:

On Friday, a new COT report for August 8 was released. In the last 11 months, COT reports fully corresponded to what is happening in the market. The chart above clearly shows that the net position of major traders (the second indicator) began to grow in September 2022 and at about the same time the euro started climbing too. In the last 6-7 months, the net position has not risen but the euro remains at very high levels. At the moment, the net position of non-commercial traders is bullish and remains strong. The euro keeps climbing against the US dollar.

I have already mentioned the fact that a fairly high value of the net position signals the end of an uptrend. This is also confirmed by the first indicator where the red and green lines are very far from each other. Usually, it precedes the end of the trend. During the last reporting week, the number of long positions of the non-commercial group of traders fell by 12,000 and the number of short ones increased by 10,200. The net position decreased by another 22,200 contracts. The number of long positions is higher than the number of short ones of non-commercial traders by 150,000. This is a very large gap as the difference is almost threefold. Even without COT reports, it is obvious that the euro should decline but speculators are still in no hurry to sell.

Analysis of EUR/USD 1H

On the 1H chart, the pair broke out of the sideways channel, where it had spent two weeks, but this does not mean that the downward movement will be strong and stable. Most of this week's economic reports did not support the euro, but the dollar did not have many trump cards either.

On August 17, traders should pay attention to the following key levels: 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0943, 1.1043, 1.1092, 1.1137, 1.1185, as well as Senkou Span B (1.0987) and Kijun-sen (1.0934). The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits. Traders look for signals at rebounds and breakouts. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 15 pips. This will protect against possible losses if the signal turns out to be false.

Today, no economic reports or fundamental events lined up in the EU. The US will only release a report on unemployment benefit claims. Therefore, there isn't anything that can stir some significant market reaction, so we will probably see another attempt for the pair to edge up.

Description of the chart:

Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;

The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;

Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;

Yellow lines are trend lines, trend channels, and any other technical patterns;

Indicator 1 on the COT charts is the net position size for each category of traders;

Indicator 2 on the COT charts is the net position size for the Non-commercial group.