EUR/USD – 1H.
Hello dear traders! On Monday, the pair EUR/USD continued rising after the rebound from the correction level of 127.2% - 1.1552 towards 1.1629. However, I would like to focus traders' attention on another fact. At the moment, the pair's quotes are back to square one since last Thursday, after the ECB announced its meeting results and a very weak US GDP report was released in the third quarter. Later, on Friday the pair dropped significantly to 1.1552. However, at the moment the pair is at the same level as on Thursday morning. Consequently, strong moves made on Thursday and Friday are irrelevant now. The yesterday's information background is likely to be insignificant either. The euro was recovering from Friday's collapse. Therefore, the economic reports did not play any key role concerning the EUR/USD pair.
Notably, on Friday traders also did not pay any attention to significant reports on EU inflation, as well as on GDP. Thus, nowadays traders' reaction is not always caused by the information background. However, yesterday the US manufacturing activity index was released. It declined from 59.2 to 58.4 in October. At the same time, the ISM manufacturing index, which is a more important analogue of the PMI index, decreased from 61.1 to 60.8. Consequently, both indexes are down slightly. Therefore, the drop in the US currency can even be considered as traders' reaction to these reports. However, much more significant events and reports are due this week. Tomorrow, the Fed meeting's outcome will be announced in the USA, which may exert a profound influence on the EUR/USD pair. If traders react the same they did at the ECB meeting last Thursday, another move of 100 pips or more is likely. Notably, on Friday the US labor market report is scheduled, which is now highly significant as the GDP report.
EUR/USD – 4H.
On the 4-hour chart, the quotes closed under the 100.0% correction level at 1.1606. Thus, the falling of the euro quotes may resume towards the next Fibo level of 127.2% at 1.1404. However, the pair has been moving around the level of 1.1606 for a long time and its moves for the last two days of the previous week did not conform to the current situation. Consequently, the level of 1.1606 can not be considered a target at the moment.
US and EU news calendar:
EU - Manufacturing Purchasing Managers' Index (09-00 UTC).
On November 2, there is only one entry in the EU economic calendar and none at all in the US. The EU manufacturing Purchasing Managers' Index has already been released. Besides, it went down slightly from 58.5 to 58.3 in October. Consequently, this morning the slight drop of the euro might have been caused by this report.
COT report (Commitments of traders):
The latest COT report showed that the sentiment of "non-commercial" traders was stable during the reporting week. Speculators opened 4058 long euro contracts and 3861 short contracts. Thus, the total number of long contracts held by speculators has increased to 199,000. Besides, the total number of short contracts was up to 210,000. During the last several months "non-commercial" traders tend to divest of long euro contracts and increase short contracts, or they try to expand short contracts at a higher rate than long ones. Overall, this process is going on now. However, the European currency tends to demonstrate weak growth for the last three weeks (not taking into account the last day of the previous week). In general, the fall of the euro is still considered more preferable.
EUR/USD forecast and recommendations for traders:
The EUR/USD pair is still not trading very actively. Thursday and Friday's moves were strong, but it is likely a one-time action. I recommend buying the pair if a rebound from 1.1552 with a target of 1.1629 chart is performed on the hourly. These trades should be kept open now. I recommend selling the pair, if the rebound from 1.1629 with the target at 1.1552 will be completed.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency not for speculative profit, but for ensuring current activities or export-import operations.
"Non-reportable positions" - small traders who have no significant influence on the price.
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