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EUR/USD – 1H.
Hello, traders! The euro/dollar pair performed a reversal in favor of the US dollar on the hourly chart on May 21 and began falling. Yesterday, I built a new upward trend corridor, which was very narrow and short-term. Today, the pair's quotes have secured under it, so the current mood of traders is characterized as "bearish". The latest most high-profile news in the world concerns one figure – the personality of Donald Trump. The American president, who hopes to be re-elected this year, understands that it will be extremely difficult to do this now because of the coronavirus pandemic. Thus, Trump daily accuses and almost insults the "culprits", that is, China, the Democrats, former US President Barack Obama, the current Democratic candidate Joe Biden. At the same time, his charges are not confirmed in 90% of cases. Trump just says: "China is guilty," that's all. The end of the story. However, this is not economic news at all, so I don't recommend paying much attention to all this controversy. There is little economic news right now.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair also performed a reversal in favor of the US dollar and began falling in the direction of the upward trend line. On the 4-hour chart, I built a horizontal trend line, from which the pair rebounded the day before. Thus, traders have recently been trading a pair between two trend lines, the distance between which is approximately 160 points. Today, I expect the quotes to continue falling in the direction of the corrective level of 23.6% (1.0840). Fixing the pair's rate above the horizontal trend line will work in favor of the EU currency and increase the probability of further growth.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair rebounded from the Fibo level of 38.2% (1.0965) and began falling towards the corrective level of 23.6% (1.0840). The 4-hour chart is more accurate and informative now, so I recommend considering it first.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair continues to trade near the bottom line of the "narrowing triangle". The rebound of quotes from this line still allows us to expect some growth in the long term in the direction of the level of 1.1600 (the upper line of the "triangle"). Closing the pair under the "triangle" will work in favor of the US currency and a new, possibly long fall.
Overview of fundamentals:
On May 21, the European Union released business activity indices in the manufacturing and services sectors. The same indices were released in the US. In May, all 4 indices showed improvement compared to April but still show very low values. The number of repeated applications for unemployment benefits in the US was 25 million, and the number of new applications – 2.4 million.
News calendar for the United States and the European Union:
No news or reports are scheduled for May 22 in Europe and America. Thus, today the information background will be empty.
COT (Commitments of Traders) report:
The latest COT report again showed minimal changes. The new COT report, which will be released today, may also show minimal changes, since the pair's quotes have remained in a very narrow corridor limited by two trend lines over the past week. Thus, major players are unlikely to have increased short or long contracts. However, changes in the number of contracts in the hands of the "Non-commercial" group will be able to tell traders in which direction professional speculators of the currency market are now looking. In recent weeks, they have been increasing both long and short contracts. In order for the pair to break out of the designated corridor, a sharp increase in any type of contract from the "Non-commercial" group is needed.
Forecast for EUR/USD and recommendations to traders:
I suggest that new sales of the euro be made after the pair closes under the upward trend line on the 4-hour chart with the goal of 1.0638. I recommend buying the pair after closing above the horizontal trend line with goals of 1.1065 and 1.1167.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
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