The euro/dollar pair moved without panic on Tuesday. Volatility was already "medium" in strength, and there were no strong jerks and sharp reversals. We can see that the market is slowly moving away from the news of last week, but we would not advise you to relax. Now the situation in the world is such that you absolutely do not know and do not understand where the next "smart" news will come from, after which a new "storm" will begin. If we return from geopolitics to economics, the first two days of the week were remembered only by the speeches of European Central Bank President Christine Lagarde, who, in short, assured the markets of her readiness to continue raising the key rate in order to effectively and quickly fight high inflation. This could be great news for the euro if the market didn't care about macroeconomics right now. The minds of traders and investors are busy with geopolitics, the development of the conflict between Ukraine and Russia and a possible nuclear war. In this state, they can continue to sell all risky assets and currencies, to which the euro belongs.
In regards to Tuesday's trading signals, the situation was as simple as possible, since not a single one was formed. It is even difficult to say whether this is good or bad, since the movements are now clearly uneasy and unstable. During the day, the pair did not approach either the critical line or the extreme level of 0.9553. There are very few levels in the current price area.
The Commitment of Traders (COT) reports on the euro in the last few months clearly reflect what is happening in the euro/dollar pair. For half of 2022, they showed a blatant bullish mood of commercial traders, but at the same time, the euro fell steadily. At this time, the situation is different, but it is NOT in favor of the euro. If earlier the mood was bullish, and the euro was falling, now the mood is bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions for the non-commercial group increased by 2,500, while the number of shorts decreased by 22,000. Accordingly, the net position grew by about 24,500 contracts. This is quite a lot and we can talk about a significant weakening of the bearish mood. However, so far this fact does not provide any dividends to the euro, which still remains "at the bottom". The only thing is that in recent weeks it has done without another collapse, unlike the pound. At this time, commercial traders still do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 12,000. This difference is no longer too large, so one could expect the start of a new upward trend, but what if the demand for the US dollar remains so high that even the growth in demand for the euro does not save the situation for the euro/dollar currency pair?
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. September 28. The euro still does not understand how to start growing. Geopolitics may still put pressure on the pair for a long time.
Overview of the GBP/USD pair. September 28. Theresa May is out, Boris Johnson is out, now Liz Truss is out? How much longer will the political turmoil in Britain continue?
Forecast and trading signals for GBP/USD on September 28. Detailed analysis of the movement of the pair and trading transactions.
The bears' prospects remain just fine on the hourly timeframe, given that now no one is even thinking about buying the euro. Therefore, with or without new data, with or without news, with or without reports, the euro may continue to fall. There may be some easing of tension after September 30, but there could also be a reverse effect. We highlight the following levels for trading on Wednesday - 0.9553, 0.9813, 0.9877, 0.9945, 1.0019, as well as Senkou Span B (1.0002) and Kijun-sen (0.9747). Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. Lagarde will deliver another speech in the European Union, which is unlikely to affect anything, and there will be nothing interesting at all in America. However, the market is now waiting for news of a completely different kind, not economic.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the non-commercial group.
Relevance up to 02:00 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.