EUR/USD – 1H.
On February 25, the EUR/USD pair first resumed the growth of quotes in the direction of the corrective level of 76.4% (1.2255), however, it performed a reversal in favor of the US currency and began a powerful fall, which at the moment can be considered completed near the Fibo level of 50.0% (1.2151). The closing of the pair's exchange rate under the level of 50.0% will increase the probability of continuing the fall in the direction of the next corrective level of 38.2% (1.2104), and the rebound will work in favor of the US currency and resume growth in the direction of the levels of 1.2197 and 1.2255. What happened yesterday would not have surprised anyone a year ago. It was with the arrival of the pandemic that traders began to react to economic reports on a case-by-case basis or ignore them altogether. However, yesterday afternoon, when a whole package of statistical information was released in America, traders finally pulled themselves together and worked it out. By the way, the news that came from the United States was positive. GDP for the fourth quarter increased from 4.0% to 4.1%, the number of applications for unemployment benefits was significantly lower than traders expected, and the volume of orders for long-term goods exceeded the most optimistic expectations. Thus, the three most important reports of yesterday were strong, which gave optimism to bear traders. However, now they need to continue to build on their success. Otherwise, their entire rush may end around the level of 1.2150.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes also turned sharply in the second half of the day in favor of the US currency, while not performing a rebound from the level of 1.2204. Bull traders sought to continue buying the pair with targets near the corrective level of 200.0% (1.2353), however, the US reports made their adjustments. Thus, now the pair can expect a fall in the direction of the Fibo level of 161.8% (1.2027), however, I think it is better to pay attention to the hourly chart, which does not yet suggest such a strong drop in quotes.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed the second breakdown of the lower border of the upward trend corridor and also false. Therefore, at the moment, the pair still retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). Closing under the corridor will allow you to count on a long drop in quotes.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On February 25, there were no interesting events in the European Union, however, the statistics from the United States caused a strong reaction among traders.
News calendar for the United States and the European Union:
US - main index of personal consumption expenditures (13:30 GMT).
US - changes in the level of spending and income of the population (13:30 GMT).
On February 26, the calendar of economic events in the European Union is again empty, and only insignificant reports will be released in America. I don't expect the same violent reaction to the statistics today as I did yesterday.
COT (Commitments of Traders) report:
Last Friday, the next COT report was released and for the second week in a row, it turns out to be very calm. If a week earlier the "Non-commercial" category of traders increased long contracts and got rid of short contracts, but in small quantities, then in the last week they increased both long and short contracts, but in even smaller quantities. A total of 2,537 long contracts and 1,284 short contracts were opened. Thus, the mood of the major players became only slightly more "bullish". On the other hand, it has not become more "bearish", which means that the prospects for the European currency remain wonderful. In general, over the last reporting week, more short-contracts were opened, but we are more interested in the data on the group of speculators.
Forecast for EUR/USD and recommendations for traders:
Sales of the pair are recommended at the end of closing quotes under the Fibo level of 50.0% (1.2151) on the hourly chart with targets of 1.2104 and 1.2046. New purchases of the pair are recommended when the quotes rebound from the level of 50.0% (1.2151) on the hourly chart with targets of 1.2197 and 1.2255.
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.