Relevance up to 10:00 2021-10-21 UTC–4
EUR/USD – 1H.
The EUR/USD pair moved without a definite direction on Tuesday. After the quotes rebound from the upper border of the upward trend corridor, a reversal was made in favor of the US currency. The process of falling began, which continues at this time in the direction of the lower border of the corridor. A rebound from the lower border will allow us to count on a reversal in favor of the EU currency and a resumption of growth in the direction of the corrective level of 100.0% (1.1704). Fixing quotes under the corridor will increase the likelihood of a further fall in the euro. The information background of yesterday was practically zero. During the day, there were three speeches by FOMC members, who generally speak quite often and quite rarely while sharing new or important information with traders. Yesterday was no exception. FOMC member Chris Waller said that the beginning of the curtailment of the QE program might indeed be announced in early November, and the current high inflation is temporary.
We have heard the same thing repeatedly from Jerome Powell and other FOMC members. Michelle Bowman, Chairman of the Board of Governors, said that inflation could remain persistently high for longer than previously expected. It is all the most interesting for yesterday. Traders did not see any hints of concrete steps from the Fed in these statements. The QE program may still begin to decrease in November, but at the same time, there was not a single statement from the Fed representatives that this would be the case. Many FOMC members suggest that it would be advisable to start reducing its volume at the next meeting. However, this does not mean anything since the governing council may not support this proposal by a simple vote. Thus, the US dollar can be said to have grown slightly after these speeches, but in the same way, it can be stated that it grew for technical reasons, since earlier there was an important rebound from the border of the corridor.
EUR/USD – 4H.
On the 4-hour chart, the quotes closed above the corrective level of 100.0% (1.1606). Thus, the growth process can now be continued toward the next Fibo level of 76.4% (1.1782). Emerging divergences are not observed in any indicator today. Fixing the pair’s exchange rate below the level of 100.0% will work in favor of the US currency and the resumption of the fall in the direction of the corrective level of 127.2% (1.1404).
News calendar for the USA and the European Union:
EU – consumer price index (09:00 UTC).
US – FOMC member Charles Evans will deliver a speech (16:00 UTC).
US – FOMC member Rafael Bostic will deliver a speech (16:00 UTC).
US – FOMC member Randal Quarles will deliver a speech (17:00 UTC).
On October 20, an inflation report has already been released in the European Union, which fully coincided with traders’ expectations. Three more speeches by FOMC members will take place a little later. Nevertheless, the information background will be weak again today.
COT (Commitments of Traders) report:
The latest COT report showed that during the reporting week, the mood of the “Non-commercial” category of traders practically did not change. Speculators have opened 5,733 long contracts on the euro currency and 2,420 short contracts. Thus, the total number of long contracts in the hands of speculators has grown to 203 thousand, and the total number of short contracts – to 222 thousand. Over the past few months, the “Non-commercial” category of traders has tended to eliminate long contracts on the euro and increase short contracts. Or increase short at a higher rate than long. This process continues now, and the European currency, meanwhile, continues to fall slightly. Thus, the actions of speculators affect the behavior of the pair at this time. The fall may resume.
EUR/USD forecast and recommendations to traders:
Traders are still not trading the pair too actively. Earlier, I recommended buying the pair when closing over a descending corridor on a 4-hour chart with targets of 1.1629 and 1.1704. Now, these deals can be kept open. I recommend selling the pair if a closure is under the descending corridor on the hourly chart with a target of 1.1552.
“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.
“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy foreign currency not to make speculative profits, but to ensure current activities or export-import operations.
“Non-reportable positions” are small traders who do not have a significant impact on the price.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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