EUR/USD 1H
The EUR/USD pair continued to move upward on the hourly timeframe on July 30. The minimum correction did take place, however, the bears remain extremely weak. In fact, the pair has never even approached the Kijun-sen line over the past days and even weeks, which just means the absence of tangible corrections and puts an end to the prospects of bears to build a downward trend. At this time, the pair has overcome the first resistance level of 1.1741 and slightly slowed down the upward movement. However, the pair could not even go below this level within the circle of the corrective movement. Thus, the trend remains unambiguously upward, and buyers continue to dominate the market.
EUR/USD 15M
The lower linear regression channel turned down on the 15-minute timeframe, however, it does not seem like a correction at the moment. Bulls quickly blocked the minimal downward movement. The latest Commitments of Traders (COT) report showed a dramatic change in favor of buyers. Professional traders (non-commercial) opened 9,500 new Buy-contracts and closed 8,000 Sell-contracts during the reporting week (from 15 to 21 July). The net position for this category of traders, which is the most important, grew by 17,500 at once. In general, the European currency continued to rise in price even after July 21, and it does so to this day. Thus, non-commercial traders continue to increase their purchases of the euro. Consequently, the COT report does not give any reason to suppose the end of the upward trend for the euro. A new COT report will be released today in the afternoon, in which we will most likely see another increase in the net position of non-commercial traders, as well as an increase in Buy contracts for this category of traders.
The fundamental background for the EUR/USD pair remained unchanged on Wednesday and Thursday. The day before yesterday there was an important event - the Federal Reserve meeting, during the summing up of the results of which the US currency did not receive any support. Fed Chairman Jerome Powell only said how bad everything is now in the country and with the economy, and it is difficult to disagree with his opinion. In addition, the Fed chairman promised to do everything necessary to keep the American economy afloat. The words that the regulator is not going to raise the key rate in the near future sounded like a mockery. The US released a report on GDP for the second quarter of 2020, which we talked about from the very beginning of the week, calling it extremely important. Despite the fact that the value of the indicator turned out to be slightly better than the forecasts, this did not in any way affect the mood of traders. Buyers continued to do their thing after it was announced that the US economy had contracted by only 32.9% instead of the expected 35%. It is difficult to call the figure -32.9% optimistic or positive. A conditionally important report on inflation in the European Union is scheduled for the last trading day of the week. "Conditionally" because inflation is far from the most significant indicator, in a pandemic and crisis. However, a much more significant report will also be published in the EU - GDP for the second quarter, which, according to experts' expectations, will decline by 12% in quarterly terms. As reported, -33% in the United States and -12% in the EU. Basically, this is an answer to the question of what state the two competing economies are in now. And also to the question why the dollar is falling now.
Based on the above, we have two trading ideas for July 31st:
1) Buyers continue to completely dominate the market. Buy orders remain relevant with the targets at resistance levels 1.1827 and 1.1996, the first of which has already been reached. Thus, now traders are advised to either stay in purchases with the second goal, or wait until the first one is overcome and open new buy positions. In this case, the potential Take Profit is about 150 more points.
2) Bears continue to rest and wait for the bulls to give them at least a minimal chance to seize the initiative in the market. This requires consolidating the price below the Kijun-sen line (1.1712). In this case, you are advised to sell the pair with the targets Senkou Span B line (1.1575) and the support level of 1.1486. You are advised to seriously consider sales after the price consolidates below the rising channel. Potential Take Profit in this case is from 120 to 210 points.
