EUR/USD. February 19. COT report. Traders are waiting for the approval of America's bailout plan and the start of the distribution

EUR/USD – 1H.

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On February 18, the EUR/USD pair continued the growth process started a day earlier, in the direction of the corrective level of 38.2% (1.2104). Although the graphic picture is "pleasing to the eye", at this time it is very difficult for traders to explain the nature of the movement of the euro/dollar currency pair. Yesterday, for example, there was no single important economic report. There were no speeches from high-ranking officials like Christine Lagarde or Jerome Powell. There was no news from the US Congress regarding the new aid package for the US economy. So, on what basis did the markets buy the European currency yesterday? This question is difficult to answer. Of course, there is always technical analysis or indicator analysis. However, I would like to remind you that both of these types of analyses mostly visualize what is happening in the market. For example, after the fall of quotes by 145 points, a correction was brewing. But then today, there should be a resumption of the fall in quotes. Do traders want to invest in the dollar again? In the last year, the US currency has been growing extremely rarely and analysts called a whole list of reasons that could cause such a movement. In recent weeks, nothing happened that could radically change the information background and the mood of traders. By and large, traders are now waiting for the new package of assistance to the US economy to be officially approved and when the European Union will begin distributing the recovery fund, for which there were wars between the 27 EU member states last year. This money, which will be raised through loans or printed, should help both economies recover faster. However, how will this affect the dollar, for example? The US economy is recovering faster than the European economy even without the new aid package, but the US currency is falling.

EUR/USD – 4H.

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On the 4-hour chart, the pair's quotes performed a fall to the corrective level of 161.8% (1.2027), a rebound from it, and a reversal in favor of the European currency. Thus, the growth process can be continued in the direction of the level of 1.2204. Bullish divergence also increases the likelihood of further gains. Closing the pair's exchange rate at the level of 161.8% will work in favor of the US currency and resume falling in the direction of the corrective level of 127.2% (1.1729).

EUR/USD – Daily.

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On the daily chart, the quotes of the EUR/USD pair performed the second breakdown of the lower border of the upward trend corridor. Therefore, at the moment, the pair still retains the chances of continuing the growth process in the direction of the corrective level of 423.6% (1.2496). Closing under the corridor will allow you to count on a drop in quotes.

EUR/USD – Weekly.

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On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle", which preserves the prospects for further growth of the pair in the long term.

Overview of fundamentals:

On February 18, there were no economic reports in the European Union, and in the United States - only data on primary and secondary applications for unemployment benefits.

News calendar for the United States and the European Union:

EU - index of business activity in the manufacturing sector (09:00 GMT).

EU - index of business activity in the service sector (09:00 GMT).

US - index of business activity in the manufacturing sector (14:45 GMT).

US - PMI index for the service sector (14:45 GMT).

On February 19, the European Union and the United States will release business activity indices in the service and manufacturing sectors. The indices for the service sector will attract the most attention, as they are the ones that suffer the most in the context of the pandemic and quarantine.

COT (Commitments of Traders) report:

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Last Friday, another COT report was released. And it turned out to be much calmer than the previous one. The "Non-commercial" category of traders, which I consider the most important, opened 4,722 long contracts and got rid of 2,606 short contracts. Thus, the mood of speculators again became more "bullish". Accordingly, the prospects of the European currency are improving again after the report of a week ago, when speculators got rid of 23 thousand long contracts and many believed that the upward trend would be completed. However, I warned that this behavior of large players may be an accident. It is still too early to talk about the end of the upward trend. In total, during the last reporting week, all categories of players closed approximately 11 thousand contract positions. Consequently, interest in the euro currency has decreased slightly.

Forecast for EUR/USD and recommendations for traders:

Sales of the pair are recommended when closing quotes under the level of 161.8% (1.2027) on the 4-hour chart with a target of 1.1952. It was recommended to buy the pair in case of a rebound from the level of 1.2027 on the 4-hour chart with a target of 1.2104. New purchases – when closing above 1.2104 with a target of 1.2151.

Terms:

"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 for speculative profit, but to support current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

The material has been provided by InstaForex Company - www.instaforex.com

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