EUR/USD. August 25th. The dollar is rising, bears are attacking, and the news background doesn’t matter
August 25, 2023 1:23 pm
Yesterday, the EUR/USD pair rebounded from the corrective level of 50.0% (1.0864), turned in favor of the American currency, and fell below the level of 38.2% (1.0810). Thus, the decline in quotes might continue today towards the next corrective level of 23.6% (1.0744). A rebound of the pair’s rate from this level will favor the European currency and cause some growth. Closing quotes above 1.0810 will also suggest a slight rise in the euro.
Meanwhile, the waves continue to indicate a bearish trend every day. The last upward wave wasn’t close to the previous peak, and the last downward wave had already broken the previous low. Therefore, at this time, there’s no sign of ending the bearish trend. They might only appear today if the pair consolidates above the Fibonacci level of 50.0%.
Yesterday’s news background could have been more extensive and plentiful, but a few reports caught traders’ attention. The volume of orders for durable goods fell by 5.2% in July after a rise of 4.4% the previous month and with market expectations of -4%. Thus, the actual value of the report turned out to be weaker than the forecasts. At the same time, the number of unemployment benefit claims was 230,000, not 240,000 as traders expected. However, the first report is more significant and didn’t affect the dollar’s growth during the day. This is another factor favoring the pair’s continued decline.
Today, Christine Lagarde and Jerome Powell will speak, but the speech by the ECB President is scheduled for late in the evening. Thus, we will only be interested in Jerome Powell’s speech during the day.
On the 4-hour chart, the pair has fallen to the corrective level of 76.4% (1.0790). A rebound of the pair’s rate from this level will favor the EU currency and some growth towards the Fibonacci level of 61.8% (1.0882). Closing below would favor further decline towards the corrective level of 100.0% (1.0637). No emerging divergences are observed today from any indicator.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 4,418 long contracts and closed 5,634 short contracts. The sentiment of major traders remains bullish and is starting to strengthen again. The total number of long contracts held by speculators now stands at 232,000, while short contracts are at 72,000. The bullish sentiment persists, but the situation will reverse soon. The high number of open long contracts suggests that buyers might close them soon – there’s currently too strong a tilt towards the bulls. The current figures allow for continuing the euro’s decline in the coming weeks. The ECB is increasingly signaling the imminent end of the QE tightening procedure.
News calendar for the US and the European Union:
US – Consumer Sentiment Index from the University of Michigan (14:00 UTC).
US – Speech by the Fed Chairman Mr. Powell (14:05 UTC).
European Union – ECB President Lagarde will deliver a speech (19:00 UTC).
On August 25, the economic events calendar features several important entries. The influence of the news background on traders’ sentiment throughout the day could be strong.
Forecast for EUR/USD and tips for traders:
I advised selling at a rebound from the 1.0864 level on the hourly chart, with a target level of 1.0810. The target has been reached, and securing below it allows us to keep the sales at a target of 1.0744. Purchases are possible today if the market closes above the 1.0810 level or with a rebound from 1.0744. Be cautious: Powell’s speech can instantly change traders’ sentiment.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday, the EUR/USD pair rebounded from the corrective level of 50.0% (1.0864), turned in favor of the American currency, and fell below the level of 38.2% (1.0810). Thus, the decline in quotes might continue today towards the next corrective level of 23.6% (1.0744). A rebound of the pair’s rate from this level will favor the European currency and cause some growth. Closing quotes above 1.0810 will also suggest a slight rise in the euro.
Meanwhile, the waves continue to indicate a bearish trend every day. The last upward wave wasn’t close to the previous peak, and the last downward wave had already broken the previous low. Therefore, at this time, there’s no sign of ending the bearish trend. They might only appear today if the pair consolidates above the Fibonacci level of 50.0%.
Yesterday’s news background could have been more extensive and plentiful, but a few reports caught traders’ attention. The volume of orders for durable goods fell by 5.2% in July after a rise of 4.4% the previous month and with market expectations of -4%. Thus, the actual value of the report turned out to be weaker than the forecasts. At the same time, the number of unemployment benefit claims was 230,000, not 240,000 as traders expected. However, the first report is more significant and didn’t affect the dollar’s growth during the day. This is another factor favoring the pair’s continued decline.
Today, Christine Lagarde and Jerome Powell will speak, but the speech by the ECB President is scheduled for late in the evening. Thus, we will only be interested in Jerome Powell’s speech during the day.
On the 4-hour chart, the pair has fallen to the corrective level of 76.4% (1.0790). A rebound of the pair’s rate from this level will favor the EU currency and some growth towards the Fibonacci level of 61.8% (1.0882). Closing below would favor further decline towards the corrective level of 100.0% (1.0637). No emerging divergences are observed today from any indicator.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 4,418 long contracts and closed 5,634 short contracts. The sentiment of major traders remains bullish and is starting to strengthen again. The total number of long contracts held by speculators now stands at 232,000, while short contracts are at 72,000. The bullish sentiment persists, but the situation will reverse soon. The high number of open long contracts suggests that buyers might close them soon – there’s currently too strong a tilt towards the bulls. The current figures allow for continuing the euro’s decline in the coming weeks. The ECB is increasingly signaling the imminent end of the QE tightening procedure.
News calendar for the US and the European Union:
US – Consumer Sentiment Index from the University of Michigan (14:00 UTC).
US – Speech by the Fed Chairman Mr. Powell (14:05 UTC).
European Union – ECB President Lagarde will deliver a speech (19:00 UTC).
On August 25, the economic events calendar features several important entries. The influence of the news background on traders’ sentiment throughout the day could be strong.
Forecast for EUR/USD and tips for traders:
I advised selling at a rebound from the 1.0864 level on the hourly chart, with a target level of 1.0810. The target has been reached, and securing below it allows us to keep the sales at a target of 1.0744. Purchases are possible today if the market closes above the 1.0810 level or with a rebound from 1.0744. Be cautious: Powell’s speech can instantly change traders’ sentiment.
The material has been provided by InstaForex Company – www.instaforex.com
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