EUR/USD – 1H.
On Wednesday, the EUR/USD pair performed a reversal in favor of the EU currency and the minimum growth in the direction of the corrective level of 76.4% (1.3837). However, all the movements and reversals of the last five days can be called conditional. The activity of traders these days was minimal. It is partly due to the almost complete absence of important economic data and events. However, today, traders will receive important information that can affect the prospects of the euro/dollar pair and significantly increase the activity of traders. The July meeting of the ECB, according to many experts, will be as uninteresting as possible. Although there are still several pressing questions to the ECB, the answers can cause quite strong euro/dollar exchange rate changes. By and large, all questions boil down to the reaction of the European regulator to the growing number of cases of coronavirus in the EU countries in recent weeks. It is not as high as in the UK.
However, the ECB may announce increased risks to the economy and increase the likelihood of introducing new quarantines in EU countries. Such information will be unfavorable for the euro. Traders can also get information on GDP, inflation, and unemployment forecasts for the next few years. The most interesting thing will be how much they will change compared to the previous ECB estimates and whether they will change. The PEPP program will also receive some attention. It is unlikely that its volume or timing will be changed. However, the regulator may announce an increase in the pace of buying bonds if it considers that the economic recovery is slowing down or may slow down in the near future. Thus, if Christine Lagarde provides the markets with new and important information on the issues listed above, the euro can be traded very actively today in the afternoon. If not – it is unlikely that the nature of the pair's movement will change.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a new fall to the corrective level of 76.4% (1.1782). But the movements are now so weak that the pair have not managed to perform either a rebound from this level or closure under it. Thus, even graphical analysis is now as ambiguous as possible. We need to wait for the ECB meeting and its results, which may revive the pair a little. No indicator is currently experiencing any emerging divergences.
Overview of fundamentals:
On July 21, there was no important event or economic report in America and the European Union. Thus, the information background was empty.
News calendar for the United States and the European Union:
EU - publication of the ECB decision on the main interest rate (11:45 UTC).
EU - monetary policy report (11:45 UTC).
EU - ECB press conference (12:30 UTC).
US - number of initial and repeated applications for unemployment benefits (12:30 UTC).
On July 22, the ECB's decision on monetary policy will be announced in the European Union, and a report on applications for unemployment benefits will be released in the United States. The information background will be strong today, but only due to the ECB meeting.
COT (Commitments of Traders) report:
The latest COT report showed that during the last reporting week, the mood of the "Non-commercial" category of traders again became more "bearish." Major players have opened 13,952 short contracts for the euro and a total of 2,332 long contracts. Thus, in the last four weeks, the number of short contracts focused on the hands of speculators has increased by 58,000, and the number of long contracts has increased by 1,000. Therefore, a further fall in the European currency is very likely. But bear traders need to put more pressure on the level of 1.1782. However, it should be noted that the total number of long and short contracts opened by all players is already almost the same. Recently, the "Commercial" category of traders has been actively getting rid of short positions.
EUR/USD forecast and recommendations for traders:
Sales of the pair are recommended with a target of 1.1704 if a close is made on the 4-hour chart below the level of 1.1782. I recommend buying the pair when it rebounds from the level of 1.1782 on the 4-hour chart with the targets of 1.1837 and 1.1890.
"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 ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.