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Good afternoon, dear traders! The euro/dollar pair performed a downward reversal on Thursday. So, it slid down below Wednesday's low. Thus, in just half a day, bears recouped all Wednesday's losses when the euro unexpectedly jumped. Now, the pair is trading near 1.0808, the Fibonacci correction level of 100.0%. If the price consolidates below this level, it may decline to 1.0705, the next Fibo level of 127.2%. Yesterday, there was one crucial event. The ECB summed up the results of the meeting. After the release of these results and during a press conference with Christine Lagarde, the euro went down 160 pips. For this reason, analysts are certain that this was the main reason for the drop. However, I would like to note that this conclusion may not be entirely correct. The ECB left all the parameters of monetary policy unchanged. Christine Lagarde again spoke about the risks to the EU economy, the military conflict between Ukraine and Russia, and the completion of the stimulus program. She also said that the bank would not raise the key rate in the near future.
Thus, the ECB has not made any crucial changes. Christine Lagarde just repeated all the same statements that she had said in the last few months. Then why did the euro fall if traders did not get new hints? I assume that they used the ECB meeting as an excuse for new sales. A day earlier, the euro showed strong growth. Short positions would be more profitable on Thursday than on Wednesday. Apparently, speculators inflated the rate so that later they could sell it at higher prices. The fundamental background remained the same. There has also been no geopolitical news over the past few days. So, there have been no drivers for the euro and the US dollar.
On the 4H chart, the euro/dollar pair consolidated below 1.0865, the Fibonacci correction level of 200.0%. The CCI indicator signals the formation of a second bullish divergence. It means that the pair is likely to rise. However, a downtrend corridor has also appeared, which indicates the mood of traders is bearish. Thus, as long the pair does not grow above 1.0865, it will continue its downward movement.
Commitments of Traders (COT):
Last week, speculators opened 10,871 Long contracts and 4875 Short contracts. This means that the mood of the major market players has become more bullish. The total number of Long contracts concentrated in their hands now amounts to 211,000, while the number of Short contracts totals 183,000. Thus, the mood of the "Non-commercial" category of traders remains bullish. In this scenario, the euro is supposed to have been climbing for several weeks. Instead, it continues to either fall or trade at swing lows. To this end, it is hard to forecast its future trajectory based on COT reports. Geopolitical news and the US dollar as the main reserve currency greatly impact market sentiment.
Macroeconomic calendar for the US and the EU:
US – Industrial production (13:15 UTC).
On April 15, the economic calendar is almost empty. There will be only one crucial report. After two days of very active trading, I think that today, trading is going to be sluggish. The report on industrial production will hardly trigger volatility.
Outlook for EUR/USD and trading recommendations:
It is recommended to open short positions on the pair if it closes below 1.0808 on the 1H chart with a downward target of 1.0705. It is better to reframe from opening long positions as the probability of a new fall is too high.
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