EUR/USD. April 27th. The euro continues to break its way up
April 27, 2023 11:22 am
On Wednesday, the EUR/USD pair made a new reversal in favor of the European currency and showed strong growth. The pair closed above the corrective level of 100.0% (1.1035), but by the end of the day, the quotes returned to it. A rebound from this level will allow traders to expect growth toward the 1.1105 level. Closing below it will favor the US dollar and cause some decline.
The background information for the pair needs to be stronger. It does not correspond to the strength of the pair’s movements in the last two days. Although the European currency manages to fall powerfully and grow no less powerfully, bullish traders still hold the initiative. They have support from frequently occurring hawkish predictions by ECB members that the interest rate will rise. This week, phrases like “the rate will rise until wage growth and core inflation rates start to decline” and “the ECB rate may be increased by 0.50% in May” were heard. Although the ECB will slow down the pace of monetary policy tightening to 0.25%, the market is not yet fully confident in this. Thus, the European currency is growing very expansively but still quite slowly. The pair was treading water all last week, but traders are showing activity this week.
However, frequent pullbacks and corrections do not knock bulls off course. No matter how much bears resist now, the pair confidently moves upward and has added about 550 points in a month and a half. Economic reports are rarely played out, and various speeches by senior US and EU officials do not give a clear reason to believe that traders react specifically to them. Yesterday it became known that the US is facing the problem of public debt again, but today information about Congress raising the limit has already been received. Yesterday, the dollar fell; today, it does not grow. Therefore, yesterday’s quote growth was unrelated to the public debt problem and Yellen’s speech.
On the 4-hour chart, the pair has consolidated above the sideways corridor, which allows us to expect a continuation of growth in the direction of the corrective level of 61.8% (1.1273). The pair also managed to consolidate above the corrective level of 50.0% (1.0941), which increases 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:
In the last reporting week, speculators closed 1,811 long contracts and 2,834 short contracts. The sentiment of large traders remains bullish and continues to strengthen overall. The total number of long contracts concentrated in the hands of speculators now amounts to 242 thousand, while short contracts amount to 78 thousand. The European currency has been growing for more than half a year, but the information background is starting to change, which may 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 is unlikely to please buyers. The difference between the number of long and short contracts is threefold, which speaks of the proximity of the moment when bears will become active. For now, a strong bullish sentiment persists, but the situation will begin to change soon.
News calendar for the US and the European Union:
US – GDP in the fourth quarter (12:30 UTC).
US – Number of initial claims for unemployment benefits (12:30 UTC).
On April 27, the US economic events calendar contains two medium-value entries. The influence of the information background on traders’ sentiment today will be weak.
Forecast for EUR/USD and advice for traders:
Selling the pair can be opened when closing below the 1.1035 level on the hourly chart with targets of 1.1000 and 1.0917. Purchases were possible when closing above the 1.1000 level on the hourly chart with a target of 1.1105. The pair has almost reached this level. New purchases – when rebounding from 1.1035 with the same target.
The material has been provided by InstaForex Company – www.instaforex.com
On Wednesday, the EUR/USD pair made a new reversal in favor of the European currency and showed strong growth. The pair closed above the corrective level of 100.0% (1.1035), but by the end of the day, the quotes returned to it. A rebound from this level will allow traders to expect growth toward the 1.1105 level. Closing below it will favor the US dollar and cause some decline.
The background information for the pair needs to be stronger. It does not correspond to the strength of the pair’s movements in the last two days. Although the European currency manages to fall powerfully and grow no less powerfully, bullish traders still hold the initiative. They have support from frequently occurring hawkish predictions by ECB members that the interest rate will rise. This week, phrases like “the rate will rise until wage growth and core inflation rates start to decline” and “the ECB rate may be increased by 0.50% in May” were heard. Although the ECB will slow down the pace of monetary policy tightening to 0.25%, the market is not yet fully confident in this. Thus, the European currency is growing very expansively but still quite slowly. The pair was treading water all last week, but traders are showing activity this week.
However, frequent pullbacks and corrections do not knock bulls off course. No matter how much bears resist now, the pair confidently moves upward and has added about 550 points in a month and a half. Economic reports are rarely played out, and various speeches by senior US and EU officials do not give a clear reason to believe that traders react specifically to them. Yesterday it became known that the US is facing the problem of public debt again, but today information about Congress raising the limit has already been received. Yesterday, the dollar fell; today, it does not grow. Therefore, yesterday’s quote growth was unrelated to the public debt problem and Yellen’s speech.
On the 4-hour chart, the pair has consolidated above the sideways corridor, which allows us to expect a continuation of growth in the direction of the corrective level of 61.8% (1.1273). The pair also managed to consolidate above the corrective level of 50.0% (1.0941), which increases 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:
In the last reporting week, speculators closed 1,811 long contracts and 2,834 short contracts. The sentiment of large traders remains bullish and continues to strengthen overall. The total number of long contracts concentrated in the hands of speculators now amounts to 242 thousand, while short contracts amount to 78 thousand. The European currency has been growing for more than half a year, but the information background is starting to change, which may 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 is unlikely to please buyers. The difference between the number of long and short contracts is threefold, which speaks of the proximity of the moment when bears will become active. For now, a strong bullish sentiment persists, but the situation will begin to change soon.
News calendar for the US and the European Union:
US – GDP in the fourth quarter (12:30 UTC).
US – Number of initial claims for unemployment benefits (12:30 UTC).
On April 27, the US economic events calendar contains two medium-value entries. The influence of the information background on traders’ sentiment today will be weak.
Forecast for EUR/USD and advice for traders:
Selling the pair can be opened when closing below the 1.1035 level on the hourly chart with targets of 1.1000 and 1.0917. Purchases were possible when closing above the 1.1000 level on the hourly chart with a target of 1.1105. The pair has almost reached this level. New purchases – when rebounding from 1.1035 with the same target.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: