EUR/USD. September 27th. The ECB keeps the question of rate hikes open
September 27, 2023 2:25 pm
The EUR/USD pair continued its downward trend on Tuesday after consolidating below the correction level of 100.0% (1.0637) towards the level at 1.0533. The distance between these two levels is about 100 points, and trader activity is not very high at the moment. Bulls are currently taking a break, only occasionally indicating their presence in the market, while bears continue to sell the pair somewhat reluctantly but do so almost every day, which supports the strength of the dollar. A rebound from the 1.0533 level could lead to some upward movement towards the 1.0637 level, and a consolidation below it would favor further declines towards the 1.0483 level.
After some consideration, I have decided to include an upward wave that formed on September 21st–22nd. However, for several days now, a new downward wave has been forming that easily broke the previous low. Therefore, at the moment, there is no sign of the bearish trend ending. To see such signs, we would need two new waves or an increase in the pair to at least 1.0675.
The information background has been weak for several days in a row. This weak background is only expressed in the low activity of traders and does not affect the speed of the euro’s decline or the rise of the dollar in any way. Yesterday, the US released reports on new home sales and consumer confidence by CB. The first one turned out worse than expected, and the second one was also worse. However, the importance of these data was so low that they had no destructive impact on the dollar. Also, almost every day, representatives of the ECB make statements, 80% of which boil down to the fact that there is no expectation of further tightening of monetary policy in the near future. The interest rate will only rise if inflation begins to accelerate sharply.
On the 4-hour chart, the pair has consolidated below the corrective level of 100.0% (1.0639) and continues to trade within a descending trend corridor. Thus, the process of the quote’s decline can be continued towards the next corrective level of 127.2% (1.0466). I recommend counting on a noticeable rise in the euro only after it closes above the corridor. There are no emerging divergences in any of the indicators today.
Commitments of Traders (COT) Report:
In the last reporting week, speculators closed 4952 long contracts and opened 6147 short contracts. The sentiment of major traders remains bullish but has noticeably weakened in recent weeks and months. The total number of long contracts concentrated in the hands of speculators is now 207 thousand, while short contracts amount to 105 thousand. The difference is now only twofold. I believe that the situation will continue to shift towards the bears over time. Bulls have dominated the market for too long, and now they need a strong information background to maintain the bullish trend. Such a background is lacking. The high value of open long contracts indicates that professional traders may continue to close them in the near future. I believe that the current figures allow for the continuation of the euro’s decline in the coming months.
Economic Calendar for the US and the European Union:
US – Durable Goods Orders (12:30 UTC).
On September 27th, the economic events calendar contains just one entry, which can be considered fairly important. But it’s just one. The impact of the information background on trader sentiment today will be weak.
Forecast for EUR/USD and trader recommendations:
Selling the pair today was possible when closing below the 1.0637 level on the hourly chart, with targets at 1.0575 and 1.0533. Buying can be considered on a rebound from the 1.0533 level on the hourly chart, with a target of 1.0637.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD pair continued its downward trend on Tuesday after consolidating below the correction level of 100.0% (1.0637) towards the level at 1.0533. The distance between these two levels is about 100 points, and trader activity is not very high at the moment. Bulls are currently taking a break, only occasionally indicating their presence in the market, while bears continue to sell the pair somewhat reluctantly but do so almost every day, which supports the strength of the dollar. A rebound from the 1.0533 level could lead to some upward movement towards the 1.0637 level, and a consolidation below it would favor further declines towards the 1.0483 level.
After some consideration, I have decided to include an upward wave that formed on September 21st–22nd. However, for several days now, a new downward wave has been forming that easily broke the previous low. Therefore, at the moment, there is no sign of the bearish trend ending. To see such signs, we would need two new waves or an increase in the pair to at least 1.0675.
The information background has been weak for several days in a row. This weak background is only expressed in the low activity of traders and does not affect the speed of the euro’s decline or the rise of the dollar in any way. Yesterday, the US released reports on new home sales and consumer confidence by CB. The first one turned out worse than expected, and the second one was also worse. However, the importance of these data was so low that they had no destructive impact on the dollar. Also, almost every day, representatives of the ECB make statements, 80% of which boil down to the fact that there is no expectation of further tightening of monetary policy in the near future. The interest rate will only rise if inflation begins to accelerate sharply.
On the 4-hour chart, the pair has consolidated below the corrective level of 100.0% (1.0639) and continues to trade within a descending trend corridor. Thus, the process of the quote’s decline can be continued towards the next corrective level of 127.2% (1.0466). I recommend counting on a noticeable rise in the euro only after it closes above the corridor. There are no emerging divergences in any of the indicators today.
Commitments of Traders (COT) Report:
In the last reporting week, speculators closed 4952 long contracts and opened 6147 short contracts. The sentiment of major traders remains bullish but has noticeably weakened in recent weeks and months. The total number of long contracts concentrated in the hands of speculators is now 207 thousand, while short contracts amount to 105 thousand. The difference is now only twofold. I believe that the situation will continue to shift towards the bears over time. Bulls have dominated the market for too long, and now they need a strong information background to maintain the bullish trend. Such a background is lacking. The high value of open long contracts indicates that professional traders may continue to close them in the near future. I believe that the current figures allow for the continuation of the euro’s decline in the coming months.
Economic Calendar for the US and the European Union:
US – Durable Goods Orders (12:30 UTC).
On September 27th, the economic events calendar contains just one entry, which can be considered fairly important. But it’s just one. The impact of the information background on trader sentiment today will be weak.
Forecast for EUR/USD and trader recommendations:
Selling the pair today was possible when closing below the 1.0637 level on the hourly chart, with targets at 1.0575 and 1.0533. Buying can be considered on a rebound from the 1.0533 level on the hourly chart, with a target of 1.0637.
The material has been provided by InstaForex Company – www.instaforex.com
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