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On Wednesday, the EUR/USD pair consolidated above the corrective level of 100.0% at 1.0917, which allows traders to expect further growth towards the next corrective level of 127.2% at 1.0984. Bulls continue their attacks, which have led to the price rising even above the ascending trend channel. Thus, bulls are attacking even stronger now than they were a week or two ago when we saw weak economic data from the US almost every day. For now, I do not see any graphical signals indicating a possible decline in the European currency.
The situation with the waves has become more complicated. The new upward wave broke the peak of the previous wave and continued to form, while the last completed downward wave failed to break the low of the previous wave. Therefore, two signs of a trend change from "bearish" to "bullish" were received simultaneously. The informational background has been supporting only bull traders for more than two weeks. Thus, bears currently do not have the opportunity to form even a corrective wave. There are no signs of a trend change to "bearish" at this time.
The informational background on Wednesday gave the bears at least a slight chance to recover. The final consumer price index in the EU for June showed no changes, and the American reports were stronger than traders' expectations for once. Specifically, the number of building permits issued was 1.446 million compared to the forecast of 1.4 million. The number of housing starts was 1.353 million, which is against the expectation of 1.3 million. Industrial production grew by 0.6% against the forecast of 0.3%. However, as we can see, all this positive information about the dollar did not allow it to show growth. The bears remain extremely weak; today, their decline may only strengthen. The ECB meeting is an important event. "Hawkish" decisions are certainly not expected, but the bulls may again take advantage of the bears' passivity.
On the 4-hour chart, the pair consolidated above the corrective level of 38.2% at 1.0876. Thus, the growth process may continue towards the next Fibonacci level of 23.6% at 1.0977. The CCI indicator has formed a "bearish" divergence. Until it is canceled, there is a slight chance of a decline in the European currency. On the hourly chart, there is also a need to form a corrective wave, but bears need to open trades for the pair to fall. And they currently have no such desire.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 1,460 long positions and closed 11,682 short positions. The sentiment of the "Non-commercial" group turned "bearish" a few weeks ago, but currently, there is an equilibrium between bulls and bears. The total number of long positions held by speculators now stands at 165,000, while the number of short positions is 162,000.
The situation will continue to change in favor of the bears. I do not see long-term reasons to buy euros since the ECB has begun easing monetary policy, which will reduce the yield on bank deposits and government bonds. However, they will remain at high levels in America for several months, making the dollar more attractive to investors. The potential for a decline in the European currency looks impressive, even according to the COT reports. Currently, the number of short positions among professional players is growing. However, one should remember graphic analysis, which at this time allows for opposite conclusions.
News calendar for the USA and the Eurozone:
The economic events calendar contains five entries on July 18th, with the ECB meeting and Lagarde's speech standing out. The informational background could have a strong impact on trader sentiment today.
Forecast for EUR/USD and advice to traders:
Selling the pair is possible if it consolidates on the hourly chart below 1.0917, with a target of 1.0858. Buying was possible on a close above 1.0917, with a target of 1.0984. These trades can currently be kept open.
The Fibonacci grid levels are built on 1.0917 - 1.0668 on the hourly chart and 1.0450 - 1.1139 on the 4-hour chart.
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