EUR/USD. July 1. COT report: major players still do not force events and take a wait-and-see attitude. Powell and Mnuchin

EUR/USD – 1H.

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Hello, traders! The euro/dollar pair on June 30 tried to continue the process of falling, however, a new upward trend line restrained this rush of bear traders. And although the closing under this line still occurred, the pair’s quotes very quickly performed a reversal in favor of the European currency and returned above the trend line. Thus, at the moment, the “bullish” mood of traders is still maintained. In the first two days of the week, the pair traded without a certain trend, although there was an interesting background of information. However, it was in the nature of conversations. For example, yesterday in America, Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin made speeches. However, both did not give traders any new information. Powell reiterated concerns about the spreading coronavirus and believes that a full recovery will not happen until the epidemic is defeated. The Finance Minister, in turn, said that in the near future he is going to coordinate with Congress a new bill to provide assistance to the American economy in the amount of probably at least a trillion dollars. Let me remind you that there has been talk of a new aid package for a long time, however, Republicans and Democrats have not been able to agree on it.

EUR/USD – 4H.

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On the 4-hour chart, the quotes of the euro/dollar pair performed an increase to the corrective level of 76.4% (1.1294), rebounding from it and turning in favor of the US currency. Thus, a new process of falling began in the direction of the corrective level of 61.8% (1.1167). The pair is still unable to perform a closing under this level of correction that stops the further fall of quotes. A new rebound from the Fibo level of 61.8% will again work in favor of the EU currency and some growth in the direction of the corrective level of 76.4%.

EUR/USD – Daily.

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On the daily chart, the euro/dollar pair again performed a reversal in favor of the US currency and closed under the corrective level of 127.2% (1.1261), which allows traders to expect a continued fall in the direction of the Fibo level of 100.0% (1.1147).

EUR/USD – Weekly.

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On the weekly chart, the euro/dollar pair rebounded from the lower line of the “narrowing triangle”, which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the “triangle”). However, the lower charts are now in a more bearish mood, so working out this goal is being postponed for now.

Overview of fundamentals:

On June 30, the European Union released its June inflation report, which showed a decrease in the annual rate to 0.8% (core inflation). Core inflation unexpectedly increased to 0.3% y/y.

News calendar for the United States and the European Union:

Germany – unemployment rate (07:55 GMT).

Germany – manufacturing PMI (07:55 GMT).

EU – index of business activity in the manufacturing sector (08:00 GMT).

US – change in employment from ADP (12:15 GMT).

US – index of business activity in the manufacturing sector (13:45 GMT).

US – ISM manufacturing index (14:00 GMT).

US – publication of the minutes of the Fed meeting (18:00 GMT).

On July 1, there will be quite a lot of news in both the European Union and the US. The most important is the ISM manufacturing index and changes in the number of employees from ADP in the US.

COT (Commitments of Traders) report:

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The latest COT report, released last Friday, showed almost nothing. The “Non-commercial” group, which is the most important group and is considered to be the one that drives the market, has opened a total of only 5,000 contracts, of which 3,000 are long and 2,000 are short. The “Commercial” group (hedgers) were more active and opened almost 11,000 short-contracts, however, as we can see, in the period from June 17 to 23, the euro/dollar pair was trading first down, then up, then down again. In other words, it is impossible to conclude that the mood of traders during this period of time was the same and did not change. And the changes in the balance of forces that the latest COT report showed do not allow us to draw any conclusions for the long term.

Forecast for EUR/USD and recommendations to traders:

Today, I recommend buying the euro currency with the goal of 1.1294, if the rebound from the corrective level of 61.8% (1.1167) is performed. I recommend opening new sales of the pair with the target level of 61.8% (1.1167), if the closing is performed under the trend line on the hourly chart.

Terms:

“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.

“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.

“Non-reportable positions” – small traders who do not have a significant impact on the price.

The material has been provided by InstaForex Company – www.instaforex.com