EUR/USD. April 21st. The decision on the rate at the March meeting was made almost unanimously
April 21, 2023 12:23 pm
On Thursday, the EUR/USD pair showed indecisive movements without a clear direction. The pair traded all day between 1.0917 and 1.1000 without even trying to approach either of them. The previous two days were similar in content, but Thursday broke this week’s record in terms of weak movement. The movement has now become horizontal.
The background information from yesterday could have been more impressive. In the United States, literally two reports were released, which had no chance of attracting traders, but in the context of their low activity and the small number of news items this week, traders paid attention to them. The Philadelphia Manufacturing Business Activity Index unexpectedly fell to 31.3, and the number of home sales decreased by 2.4% in March after a 13.8% increase a month earlier. If these reports were significant, we would have seen a much stronger drop in the dollar. But in our case, a decline of a couple of dozen points is all the market could muster.
Also, yesterday, the ECB released the minutes of its March meeting. This document did not arouse any interest among traders, as it contained nothing. It became known that the decision to raise the rate by 0.50% was made almost unanimously. However, some ECB members still doubted the appropriateness of such a decision, preferring to take a break for the tension in the financial markets to subside. The minutes stated that the regulator has a long way to go to reduce inflation to 2%, and the key rate must be adjusted more than once. Inflation remains high, although a strong decline has been recorded in the last month. Core inflation has stayed the same, which causes the greatest concern within the ECB. Some managers noted that there are upside risks for inflation.
On the 4-hour chart, the pair consolidated above the sideways corridor, allowing for growth toward the corrective level of 61.8% (1.1273). Consolidation above the corrective level of 50.0% (1.0941) has also been achieved, increasing the chances of further growth. The “bullish” divergence of the CCI indicator similarly favored the euro. No new emerging divergences have been observed yet.
Commitments of Traders (COT) Report:
During the last reporting week, speculators opened 18,764 long contracts and closed 1,181 short contracts. The sentiment of large traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now stands at 244,000, while short contracts stand at 81,000. The European currency has been growing for more than six months, but the information background is starting to change, which could lead to a decline in the EU currency. The ECB may reduce the pace of rate hikes to 0.25% at the next meeting, which could lead to a decline in demand for the euro. The difference between the number of long and short contracts is threefold, indicating the proximity of the moment when bears will activate. For now, the strong “bullish” sentiment persists, but I think the situation will begin to change soon.
Economic news calendar for the US and the Eurozone:
Eurozone – Manufacturing PMI (08:00 UTC).
Eurozone – Services PMI (08:00 UTC).
US – Manufacturing PMI (13:45 UTC).
US – Services PMI (13:45 UTC).
On April 21, the economic event calendar contains only business activity indices. The influence of the background information on traders’ sentiment today may be weak.
EUR/USD forecast and tips for traders:
New sell orders for the pair can be opened upon a rebound from the 1.1000 level on the hourly chart, with a target of 1.0917. Or upon closing below 1.0917 with a target of 1.0843. Buying the pair was possible upon a rebound from the 1.0917 level with a target of 1.1000. This trade can now be closed. New purchases – upon a new rebound from 1.0917.
The material has been provided by InstaForex Company – www.instaforex.com
On Thursday, the EUR/USD pair showed indecisive movements without a clear direction. The pair traded all day between 1.0917 and 1.1000 without even trying to approach either of them. The previous two days were similar in content, but Thursday broke this week’s record in terms of weak movement. The movement has now become horizontal.
The background information from yesterday could have been more impressive. In the United States, literally two reports were released, which had no chance of attracting traders, but in the context of their low activity and the small number of news items this week, traders paid attention to them. The Philadelphia Manufacturing Business Activity Index unexpectedly fell to 31.3, and the number of home sales decreased by 2.4% in March after a 13.8% increase a month earlier. If these reports were significant, we would have seen a much stronger drop in the dollar. But in our case, a decline of a couple of dozen points is all the market could muster.
Also, yesterday, the ECB released the minutes of its March meeting. This document did not arouse any interest among traders, as it contained nothing. It became known that the decision to raise the rate by 0.50% was made almost unanimously. However, some ECB members still doubted the appropriateness of such a decision, preferring to take a break for the tension in the financial markets to subside. The minutes stated that the regulator has a long way to go to reduce inflation to 2%, and the key rate must be adjusted more than once. Inflation remains high, although a strong decline has been recorded in the last month. Core inflation has stayed the same, which causes the greatest concern within the ECB. Some managers noted that there are upside risks for inflation.
On the 4-hour chart, the pair consolidated above the sideways corridor, allowing for growth toward the corrective level of 61.8% (1.1273). Consolidation above the corrective level of 50.0% (1.0941) has also been achieved, increasing the chances of further growth. The “bullish” divergence of the CCI indicator similarly favored the euro. No new emerging divergences have been observed yet.
Commitments of Traders (COT) Report:
During the last reporting week, speculators opened 18,764 long contracts and closed 1,181 short contracts. The sentiment of large traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now stands at 244,000, while short contracts stand at 81,000. The European currency has been growing for more than six months, but the information background is starting to change, which could lead to a decline in the EU currency. The ECB may reduce the pace of rate hikes to 0.25% at the next meeting, which could lead to a decline in demand for the euro. The difference between the number of long and short contracts is threefold, indicating the proximity of the moment when bears will activate. For now, the strong “bullish” sentiment persists, but I think the situation will begin to change soon.
Economic news calendar for the US and the Eurozone:
Eurozone – Manufacturing PMI (08:00 UTC).
Eurozone – Services PMI (08:00 UTC).
US – Manufacturing PMI (13:45 UTC).
US – Services PMI (13:45 UTC).
On April 21, the economic event calendar contains only business activity indices. The influence of the background information on traders’ sentiment today may be weak.
EUR/USD forecast and tips for traders:
New sell orders for the pair can be opened upon a rebound from the 1.1000 level on the hourly chart, with a target of 1.0917. Or upon closing below 1.0917 with a target of 1.0843. Buying the pair was possible upon a rebound from the 1.0917 level with a target of 1.1000. This trade can now be closed. New purchases – upon a new rebound from 1.0917.
The material has been provided by InstaForex Company – www.instaforex.com
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