The EUR/USD pair resumed the falling process on Tuesday, returned to the corrective level of 423.6% (0.9585), and today – it consolidated under the level of 0.9585, simultaneously updating its low for 20 years. Thus, after literally a one-day rest, bear traders went to business again and continued to get rid of the euro. In the first two days of the week, I would single out only two speeches by ECB President Christine Lagarde from the important events. You can say as much as you like that the ECB was late at the beginning of the fight against high inflation, but still, it has raised its interest rate twice and promised that there would be several more increases in 2022. From my point of view, this is "hawkish" rhetoric that could support the European currency. But how can you expect something positive from the euro currency if there are no bulls on the market and bears continue to sell daily? Thus, Lagarde's words that the ECB will continue to raise rates, continue to adhere to the course of price stability, and influence high demand did not affect traders.
And this means that the European currency will most likely continue to do so, which updates its lows in a day. It can also be assumed that the comments of the FOMC representatives force traders to continue selling euros. In particular, James Bullard said yesterday that the rate should be raised to at least 4.5%. However, when the dollar has been growing without stopping for months, it is unlikely to receive specific information support every day. Bullard's speech may or may not have had a favorable effect on the dollar. There is no difference since the US currency continues to grow anyway. But the news about possible sabotage on the Nord Stream pipeline could cause new sales of the euro currency, as it puts the heating season in the European Union under even greater threat. It is unclear who is behind this sabotage and whether it was a sabotage, but now gas supplies to Europe have been stopped through this pipeline.
On the 4-hour chart, the pair dropped to the corrective level of 161.8% (0.9581). Rebounding from this level will favor the EU currency and some growth in the direction of the upper line of the downward trend corridor. However, how strong will this growth be if the information background tells traders to do only one thing – sell euros? Fixing the pair's exchange rate below the level of 0.9581 will increase the chances of continuing the euro fall even more.
Commitments of Traders (COT) Report:
Last reporting week, speculators closed 1,214 long contracts and 46,500 short contracts. This means that the "bearish" mood of the major players has weakened and ceased to be so. The total number of long contracts concentrated in the hands of speculators now stands at 206 thousand, and short contracts – 173 thousand. So now the mood of the major players is bullish, but do you see the euro showing growth? In the last few weeks, the chances of the euro currency's growth have been gradually growing, but traders are more actively buying the dollar, not the euro. The euro currency has not been able to show strong growth in the last few months. Therefore, I would now bet on important descending corridors on the hourly and 4-hour charts. I recommend expecting the growth of the European currency after closing the quotes above them.
News calendar for the USA and the European Union:
EU - ECB President Lagarde will deliver a speech (07:15 UTC).
US - speech by the head of the Fed, Mr. Powell (14:15 UTC).
On September 28, the calendars of economic events of the European Union and the United States contain one interesting entry each. A new performance by Christine Lagarde and a new performance by Jerome Powell. The influence of the information background on the mood of traders today may be average in strength.
EUR/USD forecast and recommendations to traders:
I recommended selling the pair when rebounding from the level of 1.0173(1.0196) on a 4-hour chart with targets of 0.9900, 0.9782, and 0.9581. All these goals have already been worked out. New sales – at closing under 0.9585. I recommend buying the euro currency when fixing quotes above the level of 1.0173 on a 4-hour chart with a target of 1.0638.
Relevance up to 11:00 2022-09-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.