EUR/USD. August 7th. Bulls felt a surge of strength after the labor market reports
August 7, 2023 4:22 pm
On Friday, the EUR/USD pair continued its upward trend after rebounding from the corrective level of 61.8% (1.0917) on Thursday and ended the day around the 1.1035 level. The rebound from this level favored the American currency, and a decline began toward the 1.0917 level. There isn’t much more to say about the chart; the 1.0984 level didn’t offer any resistance to either the bulls or bears today.
The waves are finally altering the overall picture. The latest upward wave has a peak higher than the previous wave, indicating the end of a bearish trend. A downward wave is forming, and if it doesn’t break the last low, we can more confidently predict the start of a bullish trend. Predicting its length is fruitless; the waves will occasionally indicate what moves to expect in the future.
On Friday, the Nonfarm Payrolls report drove the pair’s growth. Notably, two other reports supported the dollar rather than pressurizing it. Salaries in July increased more than expected, and the unemployment rate dropped to 3.5%, which traders didn’t anticipate. However, the market focused only on the payrolls, which was slightly below forecasts. Additionally, the previous month’s figure was revised downwards, resulting in two consecutive months ending below the 200K mark. This fact likely disappointed traders, causing the dollar to fall significantly. Nevertheless, traders later recalled the other two reports, allowing the dollar to recover almost all its losses. Currently, it’s only slightly below its position last Thursday. If it weren’t for the waves, I wouldn’t expect a significant rise in the pair.
On the 4-hour chart, the pair secured below the ascending trendline and rebounded from the Fibonacci level of 38.2% (1.1032). Thus, the decline in quotes may resume toward the Fibonacci level of 61.8% (1.0882). The two charts point to different potential directions. A rebound in quotes from the 1.0957 level would suggest a resumption of growth, but the “bearish” divergence in the CCI indicator suggests a continuation of the decline. The 4-hour chart is more crucial, and I expect a new decline in the pair.
Commitments of Traders (COT) report:
In the last reported week, speculators closed 10,573 long contracts and 5,405 short contracts. The sentiment of large traders remains bullish but has slightly weakened over the past week. The total number of long contracts held by speculators now stands at 240,000, while short contracts are only 68,000. Bullish sentiment persists, but the situation will likely reverse soon. The high number of open long contracts suggests that buyers might begin closing them soon – there’s a strong bias toward the bulls. The current figures allow for a continued decline in the euro currency in the coming weeks. The ECB is increasingly signaling the imminent end of the QE tapering process.
News calendar for the USA and the European Union:
On August 7th, the economic events calendar has no significant entries. Today, the influence of the news background on traders’ sentiment is absent.
Forecast for EUR/USD and advice to traders:
On the hourly chart, I advised selling upon a rebound from the 1.1035 level with targets at 1.0984 and 1.0917. Purchases of the pair were possible upon a rebound from the 1.0917 level on the hourly chart, with targets at 1.0984 and 1.1035. Both targets have been reached. New purchases should be made upon closing above 1.1035 or other buying signals.
The material has been provided by InstaForex Company – www.instaforex.com
On Friday, the EUR/USD pair continued its upward trend after rebounding from the corrective level of 61.8% (1.0917) on Thursday and ended the day around the 1.1035 level. The rebound from this level favored the American currency, and a decline began toward the 1.0917 level. There isn’t much more to say about the chart; the 1.0984 level didn’t offer any resistance to either the bulls or bears today.
The waves are finally altering the overall picture. The latest upward wave has a peak higher than the previous wave, indicating the end of a bearish trend. A downward wave is forming, and if it doesn’t break the last low, we can more confidently predict the start of a bullish trend. Predicting its length is fruitless; the waves will occasionally indicate what moves to expect in the future.
On Friday, the Nonfarm Payrolls report drove the pair’s growth. Notably, two other reports supported the dollar rather than pressurizing it. Salaries in July increased more than expected, and the unemployment rate dropped to 3.5%, which traders didn’t anticipate. However, the market focused only on the payrolls, which was slightly below forecasts. Additionally, the previous month’s figure was revised downwards, resulting in two consecutive months ending below the 200K mark. This fact likely disappointed traders, causing the dollar to fall significantly. Nevertheless, traders later recalled the other two reports, allowing the dollar to recover almost all its losses. Currently, it’s only slightly below its position last Thursday. If it weren’t for the waves, I wouldn’t expect a significant rise in the pair.
On the 4-hour chart, the pair secured below the ascending trendline and rebounded from the Fibonacci level of 38.2% (1.1032). Thus, the decline in quotes may resume toward the Fibonacci level of 61.8% (1.0882). The two charts point to different potential directions. A rebound in quotes from the 1.0957 level would suggest a resumption of growth, but the “bearish” divergence in the CCI indicator suggests a continuation of the decline. The 4-hour chart is more crucial, and I expect a new decline in the pair.
Commitments of Traders (COT) report:
In the last reported week, speculators closed 10,573 long contracts and 5,405 short contracts. The sentiment of large traders remains bullish but has slightly weakened over the past week. The total number of long contracts held by speculators now stands at 240,000, while short contracts are only 68,000. Bullish sentiment persists, but the situation will likely reverse soon. The high number of open long contracts suggests that buyers might begin closing them soon – there’s a strong bias toward the bulls. The current figures allow for a continued decline in the euro currency in the coming weeks. The ECB is increasingly signaling the imminent end of the QE tapering process.
News calendar for the USA and the European Union:
On August 7th, the economic events calendar has no significant entries. Today, the influence of the news background on traders’ sentiment is absent.
Forecast for EUR/USD and advice to traders:
On the hourly chart, I advised selling upon a rebound from the 1.1035 level with targets at 1.0984 and 1.0917. Purchases of the pair were possible upon a rebound from the 1.0917 level on the hourly chart, with targets at 1.0984 and 1.1035. Both targets have been reached. New purchases should be made upon closing above 1.1035 or other buying signals.
The material has been provided by InstaForex Company – www.instaforex.com
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