EUR/USD. September 11. The ECB Is Not an Enemy of the Euro

Ben Graham · Setembro 11

Good day, traders! On Wednesday, EUR/USD made several bounces from the 76.4% correction level at 1.1695, but as of Thursday morning, it has returned to test this level again. Another bounce from here would support the euro and renew the uptrend toward the resistance zone at 1.1789–1.1802. Consolidation below 1.1695 would increase the chances for further decline toward the support zone at 1.1637–1.1645.

The wave structure on the hourly chart remains simple and clear. The last completed wave up broke a previous top, while the latest down wave failed to break the prior low. This means the current trend is bullish—though not particularly strong or assured. Recent US labor market data and changing Fed policy outlook only support the bulls.

On Wednesday, there were a few important events in the US and EU, so the news flow had little impact on trader sentiment. The US PPI had a chance to support bulls, but they instead ignored this report and shifted their focus to today's ECB meeting and the US inflation report. What to expect from the ECB? In my view, rate changes are unlikely, and the key pre-meeting question is whether the ECB is ready to keep cutting rates going forward. At present, there are no solid reasons to pursue an easier policy: Eurozone inflation has stabilized. Rate cuts would only be warranted if inflation continues to fall below 2%. With no sign of that happening now, I believe the ECB will not cut further this year. Nevertheless, Christine Lagarde and the Governing Council may have a different perspective, which we'll hear at the press conference. Don't forget to watch the US CPI in the afternoon.

On the H4 chart, the pair broke out above a horizontal channel, letting traders hope for further growth to the 161.8% correction level at 1.1854. There are no emerging divergences to warn of a reversal on any indicator. A bounce from 1.1854 would favor the dollar and a correction down, while consolidation above this level would improve prospects for continued growth toward 1.2066.

Commitments of Traders (COT) Report:

In the last reporting week, professional traders closed 2,726 Long contracts and opened 751 Short contracts. "Non-commercial" sentiment remains bullish thanks to Donald Trump, and keeps strengthening. Total Longs now amount to 255,000 vs Shorts at 136,000—almost a twofold difference. Also, note the number of green cells in the upper table, reflecting strong position building in EUR. In most cases, interest in the euro is rising while it fades for the dollar.

For thirty weeks straight, big players have reduced Shorts and added Longs. Trump's policy remains the biggest factor for traders, as it may cause lasting, structural issues for the US. Even with some important trade deals signed, key economic indicators are sliding.

News Calendar for the US and the EU:

Eurozone – ECB Rate Decision (12:15 UTC)
US – Consumer Price Index (12:30 UTC)
US – Initial Jobless Claims (12:30 UTC)
Eurozone – ECB Press Conference (12:45 UTC)
September 11 offers four economic events—three of which are major. The news flow could have a substantial impact on Thursday's market mood.

EUR/USD Forecast and Tips:

Consider selling after an hourly close below 1.1695, targeting the 1.1637–1.1645 zone. Consider buying after a bounce from 1.1695, targeting 1.1789–1.1802.

Fibonacci grids: