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EUR/USD – 1H.
The EUR/USD pair was trading exclusively near the corrective level of 127.2% (1.2068) yesterday and failed to close below it. Thus, there was no clear direction during yesterday. The failure of bear traders to close at 1.2068 may mean that bull traders will return to the market. However, closing at 1.2068 will increase the probability of a further fall in the quotes in the direction of the next corrective level of 100.0% (1.1990). The information background for the euro/dollar pair was frankly weak yesterday. The producer price index rose even more strongly than inflation in April, and the number of applications for unemployment benefits was slightly below forecasts. That's all the news for the whole day.
Thus, in some ways, the dynamics of yesterday's trading corresponds to the information background. There is relatively good news from the European Commission for the European currency, which has raised its forecasts for economic growth for the whole world and the European Union in particular. According to the European Commission, the EU economy will grow by 4.2% in 2021 and by 4.4% in 2022. European Commissioner for Economic Affairs Paolo Gentiloni said that for the first time since the beginning of the pandemic worldwide, the recovery of the EU economy had become a reality. However, Gentiloni also noted that the European economy still faces many risks and uncertainties that could negatively affect the pace of recovery in 2021-2022. Thus, the economic situation in the EU is improving. However, it is doing so at a slower pace than in the US. In the first quarter, the EU economy shrank by 0.6%, while the US economy grew by 6.4%. The difference, as they say, is on the face. However, the European currency is still growing, which is especially evident on the 4-hour chart.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes fell to the ascending trend line, from which at the moment, according to all signs, there was a rebound. If this is the case, the pair will perform a reversal in favor of the European and resume the growth process in the direction of the nearest level of 1.2223. Closing the pair's rate under the trend line will favor the US currency and the continuation of the fall in the direction of the next level of 1.1836.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair quotes closed above the level of 161.8% (1.2027). Upward trends are now resumed on all charts. On the daily chart, the target is the corrective level of 200.0% (1.2356).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle," which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On May 13, the calendars of economic events in the European Union and the United States contained some interesting entries. The information background on this day was weak.
News calendar for the United States and the European Union:
US - retail trade volume change (12:30 UTC).
US - change in industrial production (13:15 UTC).
US - consumer sentiment index from the University of Michigan (14:00 UTC).
On May 14, the calendar of economic events in the European Union is empty, and in the United States – a rather important report on retail trade will be released.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed that speculators actively increased both long contracts and short in the reporting week. The first number increased by 7,033 contracts, and the second – by 6,148. Thus, almost complete equality. In general, the number of long contracts focused on the hands of the "Non-commercial" category still exceeds the number of short contracts by almost two times. The mood of speculators remains "bullish," which is confirmed by the euro/dollar pair's movement, which has resumed upward trends on all charts. For other categories, the changes are minimal.
EUR/USD forecast and recommendations for traders:
I recommended selling the pair if there is a rebound from the Fibo level of 161.8% (1.2166) on the hourly chart. Both goals (1.2117 and 1.2068) have been achieved. New sales at the close under 1.2068 on the hourly chart or under the trend line on the 4-hour chart with targets of 1.1990 and 1.1923. I recommend buying the pair today if there is a rebound on the hourly chart from the level of 1.2068 or the trend line on the 4-hour chart with targets of 1.2117 and 1.2166.
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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