EUR/USD. April 28th. The German economy is getting closer to a recession
April 28, 2023 1:24 pm
On Thursday, the EUR/USD pair reversed in favor of the US currency and consolidated below the corrective level of 100.0% (1.1035). And today, a rebound from this level was performed from below and closed below the 1.1000 level. Thus, the falling quotes may continue toward the next Fibonacci level of 76.4% (1.0917).
Yesterday was interesting for traders only because of one report. The preliminary US GDP indicator for the first quarter was released. It was significantly lower than traders’ expectations and amounted to only +1.1% q/q. This did not have any negative impact on the dollar. On the contrary, it slightly increased against the euro and the pound. This morning in Germany, the unemployment and GDP report for the first quarter was already released. Unemployment did not surprise traders – 5.6%, as a month earlier. GDP in the first quarter remained unchanged (growth of 0% m/m), and compared to the first quarter of last year, GDP shrank by 0.1%. Traders’ expectations were higher, so bearish traders took the lead today.
Bears could have taken the initiative long ago, as the news background of recent times supported not only bulls. There were many different reports, some of which supported the US dollar. But in most cases, bulls continued to pressure the pair, placing it at high price levels. However, today it became known that the results of another survey among leading world economists – show the ECB can raise the rate only two more times by 0.25%. Earlier, Bloomberg conducted a similar survey, and the majority of votes were given to the option with three increases. Thus, the euro is losing market support due to the deteriorating news.
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). Yesterday, a “bearish” divergence was formed at the MACD indicator, which worked in favor of the US currency, and a decline in the direction of the Fibonacci level of 50.0% (1.0941). A rebound of quotes from this level will allow for new growth and closing below it – to continue the decline toward the corrective level of 38.2% (1.0610).
Commitments of Traders (COT) report:
During 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, and short contracts – 78 thousand. The European currency has been growing for over half a year, but the news background is beginning to change, which may lead to a decline in the EU currency. The ECB may already reduce the rate hike pace 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 be activated. For now, a strong “bullish” sentiment persists, but I think the situation will change soon.
News calendar for the US and European Union:
Germany – Unemployment rate (07:55 UTC).
Germany – GDP for the first quarter (08:00 UTC).
European Union – GDP for the first quarter (09:00 UTC).
Germany – Consumer Price Index (12:00 UTC).
US – Core Personal Consumption Expenditure Price Index (12:30 UTC).
US – University of Michigan Consumer Sentiment Index (14:00 UTC).
On April 28, the economic events calendar contains many interesting entries, about half of which have already been published. The influence of the news background on traders’ sentiment for the rest of the day will be weak.
EUR/USD forecast and trading advice:
Selling the pair could be opened when closing below the 1.1035 level on the hourly chart with targets at 1.1000 and 1.0917. Now these trades can be kept open. Purchases are possible with a rebound from the 1.0917 level on the hourly chart, with targets at 1.1000 and 1.1035.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday was interesting for traders only because of one report. The preliminary US GDP indicator for the first quarter was released. It was significantly lower than traders’ expectations and amounted to only +1.1% q/q. This did not have any negative impact on the dollar. On the contrary, it slightly increased against the euro and the pound. This morning in Germany, the unemployment and GDP report for the first quarter was already released. Unemployment did not surprise traders – 5.6%, as a month earlier. GDP in the first quarter remained unchanged (growth of 0% m/m), and compared to the first quarter of last year, GDP shrank by 0.1%. Traders’ expectations were higher, so bearish traders took the lead today.
Bears could have taken the initiative long ago, as the news background of recent times supported not only bulls. There were many different reports, some of which supported the US dollar. But in most cases, bulls continued to pressure the pair, placing it at high price levels. However, today it became known that the results of another survey among leading world economists – show the ECB can raise the rate only two more times by 0.25%. Earlier, Bloomberg conducted a similar survey, and the majority of votes were given to the option with three increases. Thus, the euro is losing market support due to the deteriorating news.
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). Yesterday, a “bearish” divergence was formed at the MACD indicator, which worked in favor of the US currency, and a decline in the direction of the Fibonacci level of 50.0% (1.0941). A rebound of quotes from this level will allow for new growth and closing below it – to continue the decline toward the corrective level of 38.2% (1.0610).
Commitments of Traders (COT) report:
During 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, and short contracts – 78 thousand. The European currency has been growing for over half a year, but the news background is beginning to change, which may lead to a decline in the EU currency. The ECB may already reduce the rate hike pace 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 be activated. For now, a strong “bullish” sentiment persists, but I think the situation will change soon.
News calendar for the US and European Union:
Germany – Unemployment rate (07:55 UTC).
Germany – GDP for the first quarter (08:00 UTC).
European Union – GDP for the first quarter (09:00 UTC).
Germany – Consumer Price Index (12:00 UTC).
US – Core Personal Consumption Expenditure Price Index (12:30 UTC).
US – University of Michigan Consumer Sentiment Index (14:00 UTC).
On April 28, the economic events calendar contains many interesting entries, about half of which have already been published. The influence of the news background on traders’ sentiment for the rest of the day will be weak.
EUR/USD forecast and trading advice:
Selling the pair could be opened when closing below the 1.1035 level on the hourly chart with targets at 1.1000 and 1.0917. Now these trades can be kept open. Purchases are possible with a rebound from the 1.0917 level on the hourly chart, with targets at 1.1000 and 1.1035.
The material has been provided by InstaForex Company – www.instaforex.com
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