EUR/USD. April 17th. Jerome Powell supports the dollar
April 17, 2024 12:23 pm
On Tuesday, the EUR/USD pair traded horizontally near the corrective level of 127.2%-1.0619. Consolidating quotes below this level will allow further decline towards the next Fibonacci level at 161.8%-1.0519. There was no retreat from the level of 1.0619. Bears continue to maintain the initiative and exert pressure on the European currency.
The wave situation remains unchanged. The last completed upward wave failed to surpass the peak of the previous wave (from March 21), while the new downward wave broke the last low (from April 2). 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 begun its formation yet) must surpass the peak of the previous wave (from April 9). Or the new downward wave (which has also not yet begun) should fail to break the last low, which has not yet formed.
The background information on Tuesday could have been stronger, but it was still important. Several reports in the European Union and the US did not significantly impact the EUR/USD pair. However, Jerome Powell’s evening speech, although not reacted to by the market, could provide long-term support for the American currency. The Federal Reserve President noted that progress in further inflation reduction needs to be made. And this statement means a lot for the Federal Reserve, the market, and the dollar. It indicates that the Fed will postpone the rate cut to a later date. In recent weeks, traders expected monetary policy easing to start in June, but Powell clarified that this could be forgotten. Thus, the Fed will maintain the rate at its current level while the ECB gradually starts reducing it. The increasing difference in borrowing costs will support bearish traders.
On the 4-hour chart, the pair fell to the corrective level of 23.6%-1.0644 and consolidated below it. The “bullish” divergence on the CCI indicator and the RSI indicator dropping below 20 suggested some growth, but it has not started yet, and the divergence has already been canceled. Consolidation of quotes below the level of 1.0644 increases the probability of further decline towards the next corrective level at 0.0%-1.0450.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 12839 long contracts and 28768 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 175 thousand, while short contracts amount to 142 thousand. The situation will continue to change in favor of the bears. The second column shows that the number of short positions increased from 92 thousand to 142 thousand over the last three months. Long positions decreased from 211 thousand to 175 thousand during the same period. Bulls have dominated the market for too long, and now they need a strong background in information to resume the “bullish” trend. In the near future, I do not see such a background.
News Calendar for the US and the European Union:
European Union – Consumer Price Index (09:00 UTC).
On April 17, the economic events calendar contains only the inflation report in the EU in the final reading for March. The impact of the information background on traders’ sentiment today may be weak.
Forecast for EUR/USD and trader advice:
Sales of the pair were possible upon consolidation below the level of 1.0644 on the 4-hour chart, with a target of 1.0519. These trades can be maintained now. I currently do not see potential points for forming buy signals.
The material has been provided by InstaForex Company – www.instaforex.com
On Tuesday, the EUR/USD pair traded horizontally near the corrective level of 127.2%-1.0619. Consolidating quotes below this level will allow further decline towards the next Fibonacci level at 161.8%-1.0519. There was no retreat from the level of 1.0619. Bears continue to maintain the initiative and exert pressure on the European currency.
The wave situation remains unchanged. The last completed upward wave failed to surpass the peak of the previous wave (from March 21), while the new downward wave broke the last low (from April 2). 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 begun its formation yet) must surpass the peak of the previous wave (from April 9). Or the new downward wave (which has also not yet begun) should fail to break the last low, which has not yet formed.
The background information on Tuesday could have been stronger, but it was still important. Several reports in the European Union and the US did not significantly impact the EUR/USD pair. However, Jerome Powell’s evening speech, although not reacted to by the market, could provide long-term support for the American currency. The Federal Reserve President noted that progress in further inflation reduction needs to be made. And this statement means a lot for the Federal Reserve, the market, and the dollar. It indicates that the Fed will postpone the rate cut to a later date. In recent weeks, traders expected monetary policy easing to start in June, but Powell clarified that this could be forgotten. Thus, the Fed will maintain the rate at its current level while the ECB gradually starts reducing it. The increasing difference in borrowing costs will support bearish traders.
On the 4-hour chart, the pair fell to the corrective level of 23.6%-1.0644 and consolidated below it. The “bullish” divergence on the CCI indicator and the RSI indicator dropping below 20 suggested some growth, but it has not started yet, and the divergence has already been canceled. Consolidation of quotes below the level of 1.0644 increases the probability of further decline towards the next corrective level at 0.0%-1.0450.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 12839 long contracts and 28768 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 175 thousand, while short contracts amount to 142 thousand. The situation will continue to change in favor of the bears. The second column shows that the number of short positions increased from 92 thousand to 142 thousand over the last three months. Long positions decreased from 211 thousand to 175 thousand during the same period. Bulls have dominated the market for too long, and now they need a strong background in information to resume the “bullish” trend. In the near future, I do not see such a background.
News Calendar for the US and the European Union:
European Union – Consumer Price Index (09:00 UTC).
On April 17, the economic events calendar contains only the inflation report in the EU in the final reading for March. The impact of the information background on traders’ sentiment today may be weak.
Forecast for EUR/USD and trader advice:
Sales of the pair were possible upon consolidation below the level of 1.0644 on the 4-hour chart, with a target of 1.0519. These trades can be maintained now. I currently do not see potential points for forming buy signals.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: