EUR/USD 1H
The euro/dollar pair returned to the resistance level of 1.1911 on the hourly timeframe of August 6, which it had previously reached. However, yesterday this level was not overcome, so sellers again have the chance of forming a new downward trend or at least a noticeable downward correction. However, at the same time, we have to admit that the bears are now extremely weak and have no desire to sell the currency pair. Bulls can resume active trading if they still manage to overcome the resistance area of 1.1886-1.1910.
EUR/USD 15M
The lower channel turned down again on the 15-minute timeframe, which should be expected, given the next rebound from the 1.1911 level. The latest Commitments of Traders (COT) report showed a significant increase in bullish sentiment among major traders. The category of non-commercial traders opened 36,000 new Buy-contracts during the reporting week (July 22-28). This category has opened only 3,700 Sell-contracts. Thus, the net position (the difference between purchases and sales) immediately increased by 32,000, which indicates a sharp strengthening of the bullish mood. However, this was obvious even without the COT report, since the euro continued to grow non-stop over the past four weeks. As for other categories of traders, their actions in the currency market do not matter much now. Mostly commercial traders opened Sell positions, which did not affect the chart of the currency pair in any way. But commercial traders usually trade against the trend. This is not surprising. The most interesting thing now is what will be the actions of professional traders according to a new report that will be released this Friday. The euro began to decline at the beginning of the trading week and it even seemed that a downward trend would now begin. However, on Wednesday, the pair recovered all the losses of the previous days and reached its local and at the same time two-year highs of about $1.19. Thus, logically, the mood of professional traders should not have changed much. Recall that the next COT report will include data for July 29-August 4. In other words, the rest of this week will not be counted in it.
The "four US crises" remain sources of pressure on the US dollar: epidemiological, economic, social and political. During these crises, the US dollar has fallen very much against the euro over the past three months, but it is not a fact that market participants are ready to continue selling the greenback. However, US President Donald Trump is doing everything to ensure that its national currency continues to depreciate. For those who do not remember, Trump wanted the dollar to be as "cheap" as possible from the very beginning of his presidential term, so the current weakening of the US currency is in his favor. At the same time, it is unlikely that Trump is doing everything he does specifically to make the dollar cheaper. For example, Trump has previously openly stated that China does not want him to win the election and openly supports the party of Joe Biden, even regularly holding talks with them and funding them. Now Trump has accused Russia of the same, though as the reasons he called the increase in military spending to ensure NATO in Europe, which is not beneficial to Moscow, since it wants to weaken the EU. Today, we advise you to closely monitor the report on Nonfarm Payrolls, which will be released in the afternoon.
Based on the above, we have two trading ideas for August 7:
1) Buyers continue to hold the initiative and have returned once again to the 1.1911 level. Now, in order to continue making purchases, you need to wait for the price to be pinned above this level. Then we will recommend new purchases with the target at the resistance level of 1.2043. In this case, the potential Take Profit is about 100 points.
2) The bears failed to use their chances. Now the same 1.1911 is the key level for them. If the bulls fail to overcome it, then the downward movement may resume. However, for greater confidence, we recommend waiting for the price to be pinned below the critical line (1.1806) and only after that open shorts with the first target of the Senkou Span B line (1.1724). The potential Take Profit in this case is about 50 points.
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