EUR/USD. September 14th. The market doesn’t believe in the ECB rate hike
September 14, 2023 11:23 am
The EUR/USD pair experienced a new decline on Wednesday towards the level of 1.0697 but didn’t quite reach it. It also failed to grow to the correction level of 76.4% (1.0787). Thus, there were no signals yesterday, and more importance is placed on waves than the graphical picture. Today, everything is clear. The nature of the pair’s movement will depend on the outcome of the ECB meeting and the rhetoric of Christine Lagarde. Signals are only possible when reaching levels of 1.0697 or 1.0787. As for the waves, the situation is much more interesting.
Yesterday, the last upward wave failed to surpass the peak of the previous wave. However, the last downward wave also couldn’t break the previous low. Thus, we have all the signs of horizontal movement. To end this movement, we need a slight breakthrough of any of the lows or peaks and a strong move below or above. As long as horizontal movement can persist, even today, there are no guarantees that the outcome of the ECB meeting will be significant, unexpected, or simply interesting.
As everyone already knows, the ECB may leave the interest rate unchanged for the first time in a long time. For now, it’s just a probable scenario, and the market also considers the possibility of a 0.25% rate increase. Depending on the decision made, the pair may fall or rise. The speech by Christine Lagarde will also matter. It will force the bears back into the market if she leans towards a “hawkish” tone. It’s hard to expect a stronger “hawkish” tone from Lagarde, as in recent months, several members of the Monetary Policy Committee have suggested a slowdown in the tightening program.
On the 4-hour chart, the pair broke above the descending trend corridor but then resumed its decline. This is an unusual moment, but overcoming two levels on the way down and breaking the last low indicates a “bearish” trend. Thus, the decline in quotes may continue toward the next corrective level of 100.0% (1.0639). There are no looming divergences today in any of the indicators. The rise of the European currency can be expected after closing above the descending corridor.
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 5190 long contracts and 15638 short contracts. The sentiment among large traders remains “bullish,” but has weakened in recent weeks and months. The total number of long contracts concentrated in the hands of speculators is now 235,000, while short contracts amount to 99,000. The situation will continue to change in the opposite direction over time, but bearish traders are not actively attacking the bulls now. The high value of open Long contracts indicates that professional traders may close them soon – there is currently too strong an imbalance in favor of the bulls. I believe the current figures allow for continuing the euro’s decline in the coming weeks. The ECB increasingly signals the end of the tightening of monetary policy.
News Calendar for the US and the European Union:
European Union – ECB interest rate decision (12:15 UTC).
European Union – ECB monetary policy statement (12:15 UTC).
US – Retail sales core (12:30 UTC).
US – Producer price index (PPI) (12:30 UTC).
US – Retail sales (12:30 UTC).
US – Initial jobless claims (12:30 UTC).
European Union – ECB Press Conference (12:45 UTC).
European Union – ECB President Lagarde Speech (14:15 UTC).
On September 14th, the economic events calendar is filled with important entries in the US and the EU. The impact of the information background on traders’ sentiment today can be significant.
Forecast for EUR/USD and trader recommendations:
Sales of the pair are possible today on a breakout below the level of 1.0787 on the hourly chart, with a target of 1.0697. Buying today is possible on a breakout above the level of 1.0697, with a target of 1.0787.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD pair experienced a new decline on Wednesday towards the level of 1.0697 but didn’t quite reach it. It also failed to grow to the correction level of 76.4% (1.0787). Thus, there were no signals yesterday, and more importance is placed on waves than the graphical picture. Today, everything is clear. The nature of the pair’s movement will depend on the outcome of the ECB meeting and the rhetoric of Christine Lagarde. Signals are only possible when reaching levels of 1.0697 or 1.0787. As for the waves, the situation is much more interesting.
Yesterday, the last upward wave failed to surpass the peak of the previous wave. However, the last downward wave also couldn’t break the previous low. Thus, we have all the signs of horizontal movement. To end this movement, we need a slight breakthrough of any of the lows or peaks and a strong move below or above. As long as horizontal movement can persist, even today, there are no guarantees that the outcome of the ECB meeting will be significant, unexpected, or simply interesting.
As everyone already knows, the ECB may leave the interest rate unchanged for the first time in a long time. For now, it’s just a probable scenario, and the market also considers the possibility of a 0.25% rate increase. Depending on the decision made, the pair may fall or rise. The speech by Christine Lagarde will also matter. It will force the bears back into the market if she leans towards a “hawkish” tone. It’s hard to expect a stronger “hawkish” tone from Lagarde, as in recent months, several members of the Monetary Policy Committee have suggested a slowdown in the tightening program.
On the 4-hour chart, the pair broke above the descending trend corridor but then resumed its decline. This is an unusual moment, but overcoming two levels on the way down and breaking the last low indicates a “bearish” trend. Thus, the decline in quotes may continue toward the next corrective level of 100.0% (1.0639). There are no looming divergences today in any of the indicators. The rise of the European currency can be expected after closing above the descending corridor.
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 5190 long contracts and 15638 short contracts. The sentiment among large traders remains “bullish,” but has weakened in recent weeks and months. The total number of long contracts concentrated in the hands of speculators is now 235,000, while short contracts amount to 99,000. The situation will continue to change in the opposite direction over time, but bearish traders are not actively attacking the bulls now. The high value of open Long contracts indicates that professional traders may close them soon – there is currently too strong an imbalance in favor of the bulls. I believe the current figures allow for continuing the euro’s decline in the coming weeks. The ECB increasingly signals the end of the tightening of monetary policy.
News Calendar for the US and the European Union:
European Union – ECB interest rate decision (12:15 UTC).
European Union – ECB monetary policy statement (12:15 UTC).
US – Retail sales core (12:30 UTC).
US – Producer price index (PPI) (12:30 UTC).
US – Retail sales (12:30 UTC).
US – Initial jobless claims (12:30 UTC).
European Union – ECB Press Conference (12:45 UTC).
European Union – ECB President Lagarde Speech (14:15 UTC).
On September 14th, the economic events calendar is filled with important entries in the US and the EU. The impact of the information background on traders’ sentiment today can be significant.
Forecast for EUR/USD and trader recommendations:
Sales of the pair are possible today on a breakout below the level of 1.0787 on the hourly chart, with a target of 1.0697. Buying today is possible on a breakout above the level of 1.0697, with a target of 1.0787.
The material has been provided by InstaForex Company – www.instaforex.com
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