EUR/USD. August 3rd. Bears continue to exert pressure after the ADP report
August 3, 2023 1:23 pm
On Wednesday, the EUR/USD pair resumed its downward movement and reached the Fibonacci retracement level of 61.8% (1.0917) by the end of the day. The rebound from this level did not result in a significant euro rally, and the pair has returned to that level. Another rebound from this level indicates a potential reversal in favor of the European currency, leading to an upward movement toward the Fibonacci level of 76.4% (1.0984). A close below 1.0917 might increase the likelihood of further decline toward the next Fibonacci level at 50.0% (1.0864).
The wave analysis continues to suggest that the bearish trend remains intact. Although the downward wave on Tuesday failed to break the previous low, the new downward wave surpassed the previous lows. This indicates that the bulls had a slight chance to take control but did not seize the opportunity, as the last upward wave also failed to break the last price peak. The graphical pattern remains unchanged, and we should continue to anticipate a decline in quotes.
Yesterday, the news background was relatively scarce, but the ADP report alone was sufficient to prompt the bears to resume their pressure. This week, we have witnessed a moderate decline in the pair, which aligns with the prevailing news background. The ADP report showed an increase of 324,000 new jobs in July, surpassing the market’s expectation of no more than 200,000. It’s no surprise that the dollar showed strength following this report. The main concern for the American currency is to avoid any disappointing developments by the end of the week. As mentioned, major events like the Bank of England meeting and Nonfarm Payrolls could impact the pair’s direction.
On the 4-hour chart, the pair has stayed below the ascending trendline, signaling that the quote decline may continue toward the Fibonacci level of 76.4% (1.0908). The bullish trend has concluded on the 4-hour chart. A rebound from the level of 1.0908 indicates a minor upward movement, which could begin today and extend to tomorrow. No imminent divergences are observed in any indicators.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 13,867 long contracts and 12,265 short contracts. The sentiment among major traders remains bullish, but it has slightly weakened over the past week. The total number of long contracts held by speculators currently stands at 250,000, while short contracts total only 73,000. The bullish sentiment persists, but the situation will change in the opposite direction soon. The high number of open long contracts suggests that buyers might start closing them soon due to an excessively strong bullish bias at this time. The current figures imply a potential decline in the euro in the coming weeks. The ECB is increasingly signaling the approaching end of the monetary policy tightening procedure.
News calendar for the USA and the European Union:
European Union – Services PMI (08:00 UTC).
European Union – Composite PMI (08:00 UTC).
USA – Services PMI (13:45 UTC).
USA – Composite PMI (13:45 UTC).
USA – Services ISM (14:00 UTC).
On August 3rd, several interesting events are scheduled on the economic calendar, with the USA’s ISM index being particularly notable. The news background’s impact on traders’ sentiment today could be moderately significant.
Forecast for EUR/USD and trading advice:
I previously suggested selling the pair on the rebound from the 1.1035 level on the hourly chart, with targets at 1.0984 and 1.0917. Both targets have been achieved. New selling opportunities may arise if the pair closes below the 1.0917 level, with a target set at 1.0864. On the other hand, buying the pair is currently viable on a rebound from the 1.0917 level on the hourly chart, with targets at 1.0984 and 1.1035.
The material has been provided by InstaForex Company – www.instaforex.com
On Wednesday, the EUR/USD pair resumed its downward movement and reached the Fibonacci retracement level of 61.8% (1.0917) by the end of the day. The rebound from this level did not result in a significant euro rally, and the pair has returned to that level. Another rebound from this level indicates a potential reversal in favor of the European currency, leading to an upward movement toward the Fibonacci level of 76.4% (1.0984). A close below 1.0917 might increase the likelihood of further decline toward the next Fibonacci level at 50.0% (1.0864).
The wave analysis continues to suggest that the bearish trend remains intact. Although the downward wave on Tuesday failed to break the previous low, the new downward wave surpassed the previous lows. This indicates that the bulls had a slight chance to take control but did not seize the opportunity, as the last upward wave also failed to break the last price peak. The graphical pattern remains unchanged, and we should continue to anticipate a decline in quotes.
Yesterday, the news background was relatively scarce, but the ADP report alone was sufficient to prompt the bears to resume their pressure. This week, we have witnessed a moderate decline in the pair, which aligns with the prevailing news background. The ADP report showed an increase of 324,000 new jobs in July, surpassing the market’s expectation of no more than 200,000. It’s no surprise that the dollar showed strength following this report. The main concern for the American currency is to avoid any disappointing developments by the end of the week. As mentioned, major events like the Bank of England meeting and Nonfarm Payrolls could impact the pair’s direction.
On the 4-hour chart, the pair has stayed below the ascending trendline, signaling that the quote decline may continue toward the Fibonacci level of 76.4% (1.0908). The bullish trend has concluded on the 4-hour chart. A rebound from the level of 1.0908 indicates a minor upward movement, which could begin today and extend to tomorrow. No imminent divergences are observed in any indicators.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 13,867 long contracts and 12,265 short contracts. The sentiment among major traders remains bullish, but it has slightly weakened over the past week. The total number of long contracts held by speculators currently stands at 250,000, while short contracts total only 73,000. The bullish sentiment persists, but the situation will change in the opposite direction soon. The high number of open long contracts suggests that buyers might start closing them soon due to an excessively strong bullish bias at this time. The current figures imply a potential decline in the euro in the coming weeks. The ECB is increasingly signaling the approaching end of the monetary policy tightening procedure.
News calendar for the USA and the European Union:
European Union – Services PMI (08:00 UTC).
European Union – Composite PMI (08:00 UTC).
USA – Services PMI (13:45 UTC).
USA – Composite PMI (13:45 UTC).
USA – Services ISM (14:00 UTC).
On August 3rd, several interesting events are scheduled on the economic calendar, with the USA’s ISM index being particularly notable. The news background’s impact on traders’ sentiment today could be moderately significant.
Forecast for EUR/USD and trading advice:
I previously suggested selling the pair on the rebound from the 1.1035 level on the hourly chart, with targets at 1.0984 and 1.0917. Both targets have been achieved. New selling opportunities may arise if the pair closes below the 1.0917 level, with a target set at 1.0864. On the other hand, buying the pair is currently viable on a rebound from the 1.0917 level on the hourly chart, with targets at 1.0984 and 1.1035.
The material has been provided by InstaForex Company – www.instaforex.com
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