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EUR/USD 5M
The EUR/USD pair continued the downward movement on Wednesday. The pair passed about 60 points during the day, which is again a fairly "average" value, although on Tuesday the EU and the United States had macroeconomic statistics that deserved attention. However, first things first. In general, the pair continues its downward movement, which began a few weeks ago. As we discussed in our fundamental articles, the reasons for this rise in the US dollar lie solely in the technical factor of the 24-hour timeframe. Not a single trading signal was generated for the EUR/USD pair during the day. More precisely, one was formed, but at a time when it was already necessary to close all manually open transactions and leave the market. Recall that we do not recommend postponing trades to the next day in intraday trading (that is, on lower timeframes). Thus, the rebound from the extremum level of 1.1851 should not have been worked out. As well as the subsequent breakthrough of this level. The pair did not approach important lines and levels in the European session and in the first half of the US session. Therefore, not a single signal was generated. With regard to macroeconomic reports, the number "1" marks the time when the EU inflation report was released. This report turned out to be worse than forecasted, or rather below. Because the rise in inflation, on the contrary, is considered a negative factor for the economy. The consumer price index slowed down in June from 2% to 1.9% y/y, but, as we can see, traders ignored this information. The number "2" marks the moment when the ADP report on the change in the number of employees in the private sector will be published. After it, the quotes of the pair began to decline and by the evening went down by about 45 points. True, the downward movement was not abrupt, so it is impossible to make an unambiguous conclusion that it was this report that provoked the dollar's growth. Although the report is strong, it is above forecasts. But given the general downward trend, the US dollar could rise in price without this report.
Overview of the EUR/USD pair. July 1. The labor market and inflation as the main factors for the success of the dollar.
Overview of the GBP/USD pair. July 1. The third wave of COVID is gaining momentum in the UK.
EUR/USD 1H
The resumption of the downward movement is also clearly visible on the hourly timeframe, which corresponds to the general downward trend. Thus, so far, everything is going in accordance with our forecast, as we have repeatedly said recently that the pair may continue to fall down to the level of 1.1700. Yesterday, the euro/dollar pair reached the June 18 low, so, most likely, the downward movement will continue. We still recommend trading from important levels and lines on Thursday. The closest important levels at this time are 1.1800, 1.1851, 1.1922 and 1.1971, as well as the Senkou Span B (1.1997) and Kijun-sen (1.1913) lines. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. Signals can be rebounds or breakthroughs of these levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price moves 15 points in the right direction. This will protect you against possible losses if the signal turns out to be false. European Central Bank President Christine Lagarde will deliver a speech in the European Union, and the unemployment rate for May will also be published on Thursday. We believe that this data will not cause any market reaction, since Lagarde cannot provide the markets with any new information every time. In the United States today will be published the ISM Manufacturing PMI, jobless claims and Markit Manufacturing PMI. The ISM index can provoke a reaction from traders.
We also recommend that you familiarize yourself with the forecast and trading signals for the GBP/USD pair.
COT report
The EUR/USD pair fell by 200 points during the last reporting week (June 15-21). We recommended in previous articles to wait for the publication of the new Commitment of Traders (COT) report, since it should have included those days when traders were actively working out the results of the Fed meeting. It was then that the currency pair fell by 250 points, after which it is recovering at this time. According to the latest COT report, professional traders closed about 5,000 buy contracts (longs) and opened 24,000 sell contracts (shorts) during the reporting week. This means that the net position for the group of non-commercial traders dropped by 29 thousand at once, which is quite a lot. Thus, the bullish sentiment of the major players is still bullish, but continues to weaken. In principle, the weakening of the bullish sentiment is clearly visible both in the first indicator and in the second. On the first indicator, the green line (net position of the non-commercial group) began to approach the red line (net position of the commercial group), which means the end of the current trend. Perhaps it is the global trend that will not end, but there is no point in denying that a new round of the downward movement has now begun. The second indicator shows a decrease in the size of the net position for non-commercial traders over time. The same thing: since this indicator is falling, this means that the chances for the euro's growth are falling at this time. However, in general, we recall that the total number of Buy-positions for large players is now 210 thousand, and Sell-positions - 120 thousand. Therefore, the mood is still bullish.
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.
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