EUR/USD. October 24th. Patrick Harker does not support an increase in the Fed’s rate
October 24, 2023 12:22 pm
The EUR/USD pair reversed in favor of the European currency on Monday, consolidating above the descending trend corridor and the level of 1.0637. Thus, the upward trend can continue towards the next corrective level of 127.2%–1.0714. A rebound of quotes from this level will favor the US currency, with a slight decline towards 1.0637. A consolidation above 1.0714 will increase the likelihood of further growth towards the next level of 1.0787.
The wave situation was clarified at the end of last week and at the beginning of the current one. The latest upward wave has broken through the peak of the previous wave, indicating the formation of a new bullish trend. To speak of a bearish trend, the pair needs to break the last low at 1.0566 or, alternatively, for the new upward wave not to break the last peak, which has not yet been formed, as the pair continues to rise. Currently, there are no signs of a weak bullish trend ending.
Monday was completely devoid of significant news, so such a strong rise in the European currency seems somewhat unusual. But, at the same time, there is a bullish trend. And what kind of movement can we expect on a bullish trend, if not an upward one? On Friday, Patrick Harker, the head of the Federal Reserve Bank of Philadelphia, stated that he supports keeping interest rates unchanged. In his view, in the current situation, “doing nothing means doing a lot.” “The current rate level seems reasonable. I have come to this conclusion based on all the information I have received recently,” Harker said.
Remember that this is not the first statement from FOMC members about their reluctance to vote for further tightening. The rhetoric of FOMC members is beginning to soften, which supports bullish traders who are buyers of the euro and sellers of the dollar.
On the 4-hour chart, the pair has returned to the corrective level of 100.0% (1.0639) and consolidated above it. Therefore, the upward trend can now continue towards the next Fibonacci level of 76.4% – 1.0790. A consolidation below the level of 1.0639 would allow us to expect a reversal in favor of the US currency and a slight decline. But the trend is currently bullish on the hourly chart. No imminent divergences are observed.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 6,791 long contracts and closed 87 short contracts. The sentiment of large traders remains bullish but has been noticeably weakening in recent weeks and months. The total number of long contracts held by speculators is now 214,000, while short contracts amount to 132,000. The gap is now less than double, whereas a few months ago, it was three times as large. I believe the situation will continue to shift in favor of bears. Bulls have dominated the market for too long, and they now need a strong news background to begin a new bullish trend. There is no such background at the moment. Professional traders may continue to close their long positions in the near future. I believe the current figures allow for a continued decline in the euro in the coming months.
News Calendar for the United States and the European Union:
European Union – Germany’s Purchasing Managers’ Index (PMI) for the Manufacturing Sector (07:30 UTC).
European Union – Germany’s Purchasing Managers’ Index (PMI) for the Services Sector (07:30 UTC).
European Union – Purchasing Managers’ Index (PMI) for the Manufacturing Sector (08:00 UTC).
European Union – Purchasing Managers’ Index (PMI) for the Services Sector (08:00 UTC).
European Union – ECB President Lagarde will deliver a speech (12:30 UTC).
USA – S&P Global Manufacturing Sector Business Activity Index (13:45 UTC).
USA – S&P Global Services Sector Business Activity Index (13:45 UTC).
On October 24th, the economic events calendar includes several interesting entries. The impact of the news on traders’ sentiment on Tuesday may be of moderate strength.
Forecast for EUR/USD and trader recommendations:
Buy opportunities for the pair were possible on the hourly chart, with a target at 1.0714 after closing above 1.0637. New purchases or holding existing positions can be considered upon closing above 1.0714 with a target of 1.0787. Selling may be considered on a rebound from the level of 1.0714 with a target of 1.0637.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD pair reversed in favor of the European currency on Monday, consolidating above the descending trend corridor and the level of 1.0637. Thus, the upward trend can continue towards the next corrective level of 127.2%–1.0714. A rebound of quotes from this level will favor the US currency, with a slight decline towards 1.0637. A consolidation above 1.0714 will increase the likelihood of further growth towards the next level of 1.0787.
The wave situation was clarified at the end of last week and at the beginning of the current one. The latest upward wave has broken through the peak of the previous wave, indicating the formation of a new bullish trend. To speak of a bearish trend, the pair needs to break the last low at 1.0566 or, alternatively, for the new upward wave not to break the last peak, which has not yet been formed, as the pair continues to rise. Currently, there are no signs of a weak bullish trend ending.
Monday was completely devoid of significant news, so such a strong rise in the European currency seems somewhat unusual. But, at the same time, there is a bullish trend. And what kind of movement can we expect on a bullish trend, if not an upward one? On Friday, Patrick Harker, the head of the Federal Reserve Bank of Philadelphia, stated that he supports keeping interest rates unchanged. In his view, in the current situation, “doing nothing means doing a lot.” “The current rate level seems reasonable. I have come to this conclusion based on all the information I have received recently,” Harker said.
Remember that this is not the first statement from FOMC members about their reluctance to vote for further tightening. The rhetoric of FOMC members is beginning to soften, which supports bullish traders who are buyers of the euro and sellers of the dollar.
On the 4-hour chart, the pair has returned to the corrective level of 100.0% (1.0639) and consolidated above it. Therefore, the upward trend can now continue towards the next Fibonacci level of 76.4% – 1.0790. A consolidation below the level of 1.0639 would allow us to expect a reversal in favor of the US currency and a slight decline. But the trend is currently bullish on the hourly chart. No imminent divergences are observed.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 6,791 long contracts and closed 87 short contracts. The sentiment of large traders remains bullish but has been noticeably weakening in recent weeks and months. The total number of long contracts held by speculators is now 214,000, while short contracts amount to 132,000. The gap is now less than double, whereas a few months ago, it was three times as large. I believe the situation will continue to shift in favor of bears. Bulls have dominated the market for too long, and they now need a strong news background to begin a new bullish trend. There is no such background at the moment. Professional traders may continue to close their long positions in the near future. I believe the current figures allow for a continued decline in the euro in the coming months.
News Calendar for the United States and the European Union:
European Union – Germany’s Purchasing Managers’ Index (PMI) for the Manufacturing Sector (07:30 UTC).
European Union – Germany’s Purchasing Managers’ Index (PMI) for the Services Sector (07:30 UTC).
European Union – Purchasing Managers’ Index (PMI) for the Manufacturing Sector (08:00 UTC).
European Union – Purchasing Managers’ Index (PMI) for the Services Sector (08:00 UTC).
European Union – ECB President Lagarde will deliver a speech (12:30 UTC).
USA – S&P Global Manufacturing Sector Business Activity Index (13:45 UTC).
USA – S&P Global Services Sector Business Activity Index (13:45 UTC).
On October 24th, the economic events calendar includes several interesting entries. The impact of the news on traders’ sentiment on Tuesday may be of moderate strength.
Forecast for EUR/USD and trader recommendations:
Buy opportunities for the pair were possible on the hourly chart, with a target at 1.0714 after closing above 1.0637. New purchases or holding existing positions can be considered upon closing above 1.0714 with a target of 1.0787. Selling may be considered on a rebound from the level of 1.0714 with a target of 1.0637.
The material has been provided by InstaForex Company – www.instaforex.com
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