EUR/USD 5M

The EUR/USD pair fell again on Monday. Despite the fact that yesterday there were no fundamental and macroeconomic backgrounds, traders found grounds for new short positions, which caused the euro to fall by more than 100 points. Thus, the euro got just a "wonderful" start to the new week. Recall that this week, in fact, there will be only one report that deserves attention. This is US inflation on Wednesday. On all other days, the macroeconomic background will be extremely weak. And if, with a completely empty calendar of events, the euro fell by 100 points on Monday, what will happen on the rest of the days? By the way, the US inflation report can save the euro. The effect may be the same as on Friday after Nonfarm, when the US currency showed a decline instead of growth. Another thing is that the very next trading day, the dollar again moved to growth, so on Wednesday-Thursday there could be a little advantage for the euro in any case. Only if inflation shows a strong slowdown, then it will be possible to count on a significant fall in the US dollar.

As for trading signals on Monday, none of them were formed. Recall that the pair has not been at current price levels for 20 years, so there is simply not a single level here. Senkou Span B and Kijun-sen lines are far above the price. Unfortunately, a good movement has to be missed, but we would not want to deviate from the trading system and come up with signals on the go.

COT report:

The latest Commitment of Traders (COT) reports on the euro over the past six months have raised a huge number of questions. The chart above clearly shows that they showed a blatant bullish mood of professional players, but at the same time, the euro was falling at the same time. At this time, the situation has changed, and NOT in favor of the euro. If earlier the mood was bullish, but the euro was falling, now the mood has become bearish and... the euro is also falling. Therefore, for the time being, we do not see any grounds for the euro's growth, because the vast majority of factors remain against it. During the reporting week, the number of long positions increased by 7,700, and the number of shorts in the non-commercial group increased by 14,000. Accordingly, the net position decreased again, by almost 7,000 contracts. The mood of the big players remains bearish and has even increased slightly in recent weeks. From our point of view, this fact very eloquently indicates that at this time even commercial traders do not believe in the euro. The number of longs is lower than the number of shorts for non-commercial traders by 17,000. Therefore, we can state that not only the demand for the US dollar remains high, but also the demand for the euro is quite low. This may lead to a new, even greater fall of the euro. In principle, over the past few months or even more, the euro has not been able to show even a tangible correction, not to mention something more. The highest upward movement was about 400 points.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. July 12. Report on US inflation may provoke a new growth of the dollar.

Overview of the GBP/USD pair. July 12. The British pound is dreading the US inflation report.

Forecast and trading signals for GBP/USD on July 12. Detailed analysis of the movement of the pair and trading transactions.

EUR/USD 1H

The downward trend continues on the hourly timeframe. Monday already showed that the market is quite ready for new short positions on the euro, even if there are no grounds for this. Thus, we might observe the pair's decline this week as well. We allocate the following levels for trading on Tuesday - 1.0072, 1.0340-1.0366, 1.0485, as well as Senkou Span B (1.0387) and Kijun-sen (1.0188) lines. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. There are also secondary support and resistance levels, but no signals are formed near them. Signals can be "rebounds" and "breakthrough" extreme levels and lines. Do not forget about placing a Stop Loss order at breakeven if the price has gone in the right direction for 15 points. This will protect you against possible losses if the signal turns out to be false. Not a single important event is planned in the European Union and in the US again on July 12. Thus, the pair may start to correct, but the bearish mood in the market is so strong now that we would not be surprised if the euro loses 100 points or so today. The US will publish the most important report on inflation, which may provoke a strong reaction of the market.

Explanations for the chart:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the non-commercial group.