EUR/USD – 1H.
The EUR/USD pair did not show anything supernatural on Thursday. After Christine Lagarde's speech began and the ECB announced the meeting results, the pair performed a small increase. However, it could not even reach the corrective level of 76.4% (1.1837). A reversal followed it in favor of the US currency and a return to the level of 1.1772, near which the pair likes to be very much this week. Thus, we can say that the quotes remained where they were before the meeting. Thursday was the most important day of this week in terms of the information background. However, the results of the ECB meeting disappointed traders. There was no doubt that the regulator would not change the parameters of monetary policy. However, there was hope for Lagarde's speech.
Unfortunately, the ECB president limited herself to a standard set of phrases that everyone has heard many times. According to Lagarde, the EU economy recovered well in the second quarter and will continue to grow in the third, as the coronavirus restrictions are slowly being lifted. It is expected that industrial production will continue to grow, and thanks to the recovery of all sectors of the economy, the most problematic service sector will also recover. Economic activity is expected to recover by the first quarter of 2022 fully. The labor market is still far from pre-crisis values. The highest interest of traders was in statements on inflation. However, Lagarde did not say anything overly important here either. Inflation will continue to rise in the next few months. However, it will begin to decline next year. Lagarde reiterated that the current increase in inflation is caused by rising energy prices and weak oil prices last year, which led to very weak inflation. Thus, we did not learn anything new from Lagarde's speech.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed one more drop to the corrective level of 76.4% (1.1782). However, the movements are now so weak that the pair can not perform either a rebound from this level or closure under it. Thus, even graphical analysis is now as ambiguous as possible. Yesterday's ECB meeting did not help the pair to start a more intelligible movement. No indicator is currently experiencing any emerging divergences.
Overview of fundamentals:
On July 22, 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 - index of business activity in the manufacturing sector (08:00 UTC).
EU - index of business activity in the services sector (08:00 UTC).
US - index of business activity in the manufacturing sector (13:45 UTC).
US - PMI index for the service sector (13:45 UTC).
On July 23, reports on business activity in the services and manufacturing sectors will be released in the European Union and America. However, they are not important for traders. Thus, the information background will be weak today.
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 thousand, and the number of long contracts has increased by 1 thousand. 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.
Forecast for EUR/USD and recommendations to traders:
At this time, the movements are very weak, and the information background does not help traders in any way. I recommend waiting for the pair to start moving in the usual mode.
"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.