EUR/USD. April 12th. ECB meeting: confidence in rate cut increased in June
April 12, 2024 1:23 pm
On Thursday, the EUR/USD pair continued its downward trend towards the corrective level of 0.0% (1.0696). Consolidation of quotes below this level will increase the probability of a further decline in the euro and signify the continuation of the “bearish” trend. A rebound of the pair’s rate from the level of 1.0696 is unlikely to lead to significant growth. Bearish traders have received enough information over the past two weeks to continue their attacks.
The wave situation remains unchanged. The last completed upward wave failed to surpass the peak of the previous wave (from March 21st), while the new downward wave broke the last low (from April 2nd). Thus, we are currently dealing with a “bearish” trend, and there is no sign of its completion. For such a sign to appear, the new upward wave (which has not even started forming yet) would need to surpass the peak of the previous wave (from April 9th).
The information background on Thursday was strong once again and supported the bears. On Wednesday, the US released an inflation report, which showed a new acceleration in the indicator, practically nullifying the possibility of the Fed’s easing in June. The market almost immediately after this report abandoned forecasts for a rate cut at the June meeting. Against this backdrop, demand for the dollar began to rise sharply. And yesterday’s ECB meeting results can be called “dovish” enough to keep the bears attacking. No, Christine Lagarde did not announce that rates would be lowered at the next meeting. However, her speech conveyed a similar message. Inflation in the EU continues to decline, and the economy is dismal. Both of these factors require an easing of monetary policy. Thus, the ECB will likely outpace the Fed in terms of starting policy easing, which many traders refused to believe just a week ago.
On the 4-hour chart, the pair experienced a new rebound from the corrective level of 50.0% (1.0862) after forming “bearish” divergences on the CCI and RSI indicators. A reversal in favor of the US dollar occurred, with consolidation below the Fibonacci level of 38.2% (1.0765). This closure suggests further declines towards the next corrective level of 23.6% (1.0644). No new imminent divergences are observed today for any of the indicators, and the trend remains “bearish.”
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 8065 long contracts and 22465 short contracts. The sentiment of the “non-commercial” group remains “bullish” but continues to weaken rapidly. The total number of long contracts held by speculators now stands at 188 thousand, while short contracts amount to 171 thousand. The situation will continue to shift in favor of the bears. The second column shows that the number of short positions has increased from 92 thousand to 171 thousand over the past three months. Long positions decreased from 211 thousand to 188 thousand during the same period. Bulls have dominated the market for too long, and now they need strong information support to resume the “bullish” trend. In the near future, I do not see such support.
News calendar for the US and the European Union:
EU – Consumer Price Index in Germany (06:00 UTC).
US – University of Michigan Consumer Sentiment Index (14:00 UTC).
On April 12th, the economic events calendar contains two “second-order” entries. The impact of the information background on traders’ sentiment today may be weak.
EUR/USD forecast and trader advice:
Sales of the pair were possible on a rebound from the level of 1.0862 on the 4-hour chart, with a target of 1.0785–1.0801. This target has been worked out. Since consolidation below the zone of 1.0785–1.0801 occurred, sales can be maintained with a target of 1.0696, which has also almost been reached. New sales – on consolidation below 1.0696. I will not consider purchases in the coming days, as the likelihood of continued decline is high.
The material has been provided by InstaForex Company – www.instaforex.com
On Thursday, the EUR/USD pair continued its downward trend towards the corrective level of 0.0% (1.0696). Consolidation of quotes below this level will increase the probability of a further decline in the euro and signify the continuation of the “bearish” trend. A rebound of the pair’s rate from the level of 1.0696 is unlikely to lead to significant growth. Bearish traders have received enough information over the past two weeks to continue their attacks.
The wave situation remains unchanged. The last completed upward wave failed to surpass the peak of the previous wave (from March 21st), while the new downward wave broke the last low (from April 2nd). Thus, we are currently dealing with a “bearish” trend, and there is no sign of its completion. For such a sign to appear, the new upward wave (which has not even started forming yet) would need to surpass the peak of the previous wave (from April 9th).
The information background on Thursday was strong once again and supported the bears. On Wednesday, the US released an inflation report, which showed a new acceleration in the indicator, practically nullifying the possibility of the Fed’s easing in June. The market almost immediately after this report abandoned forecasts for a rate cut at the June meeting. Against this backdrop, demand for the dollar began to rise sharply. And yesterday’s ECB meeting results can be called “dovish” enough to keep the bears attacking. No, Christine Lagarde did not announce that rates would be lowered at the next meeting. However, her speech conveyed a similar message. Inflation in the EU continues to decline, and the economy is dismal. Both of these factors require an easing of monetary policy. Thus, the ECB will likely outpace the Fed in terms of starting policy easing, which many traders refused to believe just a week ago.
On the 4-hour chart, the pair experienced a new rebound from the corrective level of 50.0% (1.0862) after forming “bearish” divergences on the CCI and RSI indicators. A reversal in favor of the US dollar occurred, with consolidation below the Fibonacci level of 38.2% (1.0765). This closure suggests further declines towards the next corrective level of 23.6% (1.0644). No new imminent divergences are observed today for any of the indicators, and the trend remains “bearish.”
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 8065 long contracts and 22465 short contracts. The sentiment of the “non-commercial” group remains “bullish” but continues to weaken rapidly. The total number of long contracts held by speculators now stands at 188 thousand, while short contracts amount to 171 thousand. The situation will continue to shift in favor of the bears. The second column shows that the number of short positions has increased from 92 thousand to 171 thousand over the past three months. Long positions decreased from 211 thousand to 188 thousand during the same period. Bulls have dominated the market for too long, and now they need strong information support to resume the “bullish” trend. In the near future, I do not see such support.
News calendar for the US and the European Union:
EU – Consumer Price Index in Germany (06:00 UTC).
US – University of Michigan Consumer Sentiment Index (14:00 UTC).
On April 12th, the economic events calendar contains two “second-order” entries. The impact of the information background on traders’ sentiment today may be weak.
EUR/USD forecast and trader advice:
Sales of the pair were possible on a rebound from the level of 1.0862 on the 4-hour chart, with a target of 1.0785–1.0801. This target has been worked out. Since consolidation below the zone of 1.0785–1.0801 occurred, sales can be maintained with a target of 1.0696, which has also almost been reached. New sales – on consolidation below 1.0696. I will not consider purchases in the coming days, as the likelihood of continued decline is high.
The material has been provided by InstaForex Company – www.instaforex.com
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