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EUR/USD – 1H.
During the last trading day, the EUR/USD pair performed a reversal in favor of the US dollar and a strong fall, which continues in the direction of the corrective level of 100.0% (1.1989). The drop in quotes broke the entire graphical picture on several timeframes at once. And the most interesting thing is that there were no good reasons for such a fall. But there was a strong information background that could and should have caused such a strong movement. The most interesting reports on Friday came out in the European Union. In particular, this is the GDP report for the first quarter. The report showed that the EU economy contracted by 0.6% q/q and 2.0% y/y in the first quarter. The forecasts were worse, but in any case, the fall of the European economy is a negative factor for the euro. There was also a report on unemployment, which unexpectedly fell from 8.2% to 8.1%, although traders expected it to increase to 8.3-8.4%. Inflation for April also came out, which rose to 1.6% y/y, but core inflation, on the contrary, decreased to 0.8% y/y. In general, traders could indeed interpret these reports as negative, especially considering that until last Friday, the European currency had been growing steadily for a long period. The fall in quotes began a few hours before releasing these reports, but with their release - it intensified. Thus, we can conclude that traders reacted with sales to the European reports, as well as the fact that they were in any case set up to sell the euro last Friday. On the hourly chart, there are currently no graphical constructions. Thus, no special conclusions can be drawn. We need to consider older graphs.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US dollar and closed under the ascending trend line. Thus, the mood of traders is now characterized as "bearish," and the chances of a further fall have increased and will grow even stronger if traders manage to close under the Fibo level of 161.8% (1.2027). There are no emerging divergences in any indicator today.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair performed such a drop on Friday, which led to the cancellation of the descending trend line and the revision of the Fibonacci grid. But even with these changes, it has not become clearer and easier. Thus, I recommend paying more attention to the 4-hour schedule for the time being, where the picture is more or less clear.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair performed a consolidation above the "narrowing triangle," which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On April 30, the European Union released important reports that allowed the dollar to grow, but reports from America only helped the dollar continue to grow on Friday.
News calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (08:00 UTC).
US - ISM manufacturing index (14:00 UTC).
US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (18:20 UTC).
On May 3, reports on business activity in manufacturing will be released in the US and the European Union. However, the more important event of the day will be Jerome Powell's speech in the evening.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed that the "bullish" mood of the major players is increasing, which means that the European currency gets new opportunities to continue the growth process. The number of new long contracts opened by the "Non-commercial" category of traders is 5,568, and the number of short contracts is 2,938. Thus, the "bullish" mood of this category of traders has increased, but not too much. Let me remind you that since the beginning of this year, the gap between the total number of long and short contracts among speculators has been decreasing, which indicates a weakening of the "bullish" mood. But in the last three weeks, it has steadily increased.
EUR/USD forecast and recommendations for traders:
I recommended selling the pair if the closing is made under the trend line on the 4-hour chart with the targets of 1.1989 and 1.1922. At this time, you can leave these transactions open. Buying a pair today is not recommended, as there are no guidelines for purchases.
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.
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