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EUR/USD. March 17. COT report. What to expect from the Fed today?

EUR/USD – 1H.

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On March 16, the EUR/USD pair rebounded from the corrective level of 100.0% (1.1952), turned in favor of the US currency, and began a new process of falling in the direction of the Fibo level of 127.2% (1.1873), which very quickly stopped. At the moment, the market is again completely calm. Traders are waiting for the outcome of the Fed meeting and the speech of its chairman. Inflation - increased by the end of February from 1.4% to 1.7% per annum, but at the same time, core inflation, which does not take into account food and energy, on the contrary, decreased from 1.4% to 1.3% y/y. This suggests that the increase in inflation was mainly due to the rise in oil prices on world markets. This is hardly the growth the Fed wants to achieve. The labor market. The latest Nonfarm Payrolls report showed an increase of 379,000 jobs outside of agriculture, and the unemployment rate fell to 6.2%. Thus, the labor market continues to recover and this is undoubtedly a plus for the dollar. GDP. At the end of the fourth quarter, growth of 4.1% is likely to be recorded. For example, in the European Union, GDP is negative for the same period. Thus, Jerome Powell and the company will have enough reasons to be optimistic at the March meeting. The long-term economic forecasts may be raised. However, traders will also look forward to Powell's comments on the growth in the yield of 10-year treasuries in the United States, as well as changes in the volume of the asset repurchase program, which currently amounts to about $ 120 billion per month. Many experts believe that with the growth of treasury yields, the QE program will have to be expanded even more, but until today, Powell and his colleagues at the Fed have never talked about such a scenario. In general, I believe that the Fed will be positive today, which can support the US currency.

EUR/USD – 4H.

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On the 4-hour chart, after the formation of a bearish divergence in the CCI indicator, the pair's quotes continue the process of falling in the direction of the corrective level of 127.2% (1.1729). Fixing the pair's exchange rate above the level of 161.8% (1.2027) will work in favor of the euro and resume the growth process in the direction of the level of 1.2223.

EUR/USD – Daily.

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On the daily chart, the quotes of the EUR/USD pair performed a consolidation under the upward trend corridor, so the mood on the traffic was "bearish". The descending trend line confirms this. Fixing the pair's rate under the Fibo level of 261.8% will increase the chances of a further fall in the direction of the corrective level of 200.0% (1.1566).

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 March 16, the ZEW business sentiment index was released in the European Union, which caused more reaction from traders than the much more important US reports on retail trade and industrial production.

News calendar for the United States and the European Union:

EU - consumer price index (10:00 GMT).

US - FOMC decision on the main interest rate (18:00 GMT).

US - FOMC accompanying statement (18:00 GMT).

US - FOMC economic forecast (18:00 GMT).

US - FOMC press conference (18:30 GMT).

On March 17, before the results of the Fed meeting begin to be summed up, the European Union will still release a fairly important inflation indicator for February.

COT (Commitments of Traders) report:

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Last Friday, the next COT report was released and for the second week in a row, it turns out to be quite aggressive. This time, the "Non-commercial" category of traders reduced 14,000 long contracts on their hands and opened 12,000 new short contracts. It follows that the mood of speculators has become much more "bearish". Consequently, the chances of a further fall in the euro currency quotes are growing. We are much less concerned about other categories of traders since it is speculators who set the tone for trading.

EUR/USD forecast and recommendations for traders:

It was recommended to sell the pair again at the closing of quotes under the ascending corridor with a target of 1.1873 on the hourly chart. These transactions should now be kept open. I recommend buying the pair when closing above the level of 100.0% (1.1952) on the hourly chart with targets of 1.2021 and 1.2063.

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