Stay 
Trading Conditions
Products
Tools
The EUR/USD pair reversed in favor of the European currency on Thursday and consolidated above the corrective level of 38.2% (1.0726). Thus, the upward movement can continue towards the next Fibonacci level at 50.0% (1.0785). A rebound of the pair's exchange rate from the level of 1.0785 will work in favor of the US currency and may lead to a slight decline toward the level of 1.0726. Closing above 1.0785 increases the probability of further growth towards the next corrective level at 61.8% (1.0843).
Yesterday was filled with important reports and events, which many analysts have already covered. I want to draw the readers' attention to another significant event - lifting the US debt ceiling until 2025. On Thursday, both chambers of the US Congress voted in favor of canceling the limit. It is worth noting that America could have faced default for the first time in its history if the limit had not been raised or canceled, as in such a case, the Treasury would not have been able to fulfill its obligations to creditors and make social payments. However, such situations have occurred frequently in the United States in recent years, and a solution has always been found. In other words, the US Congress has always raised the available "ceiling." The same happened this time.
314 out of 435 members of the House of Representatives approved lifting the limit until 2025, thus achieving the necessary majority. The voting in the Senate, controlled by the Democrats, went even more smoothly: 63 out of 100 senators voted in favor. In both the lower and upper chambers, many Republicans supported the bill, so both parties can accept it. Now the law must be signed by Joe Biden, after which it will be enacted. Yesterday's decline in the dollar was associated with this event, as both pairs rose simultaneously and equally.
On the 4-hour chart, the pair reversed favor of the euro, falling just a few points short of the 38.2% correction level. The second bullish divergence allowed for the reversal, and the upward movement can now continue toward the Fibonacci level at 50.0% (1.0941). If the pair's exchange rate remains below 1.0610, it will favor the US dollar and may lead to a renewed decline toward the Fibonacci level at 23.6% (1.0201).
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 8,666 long contracts and opened 4,687 short contracts. The sentiment of large traders remains bullish and continues to strengthen overall. The total number of long contracts held by speculators now stands at 250,000, while short contracts amount to only 76,000. Currently, there is a strong bullish sentiment, but the situation will start to change soon. The euro has already started to decline. The high value of open long contracts suggests that buyers may close them soon (or may have already started, as indicated by the latest COT report). There is currently an excessive bias toward bulls. The current figures indicate a potential decline in the euro soon. I would also like to point out that a larger number of contracts are held by the "Commercial" group, which means they have a greater influence on the pair's exchange rate.
News calendar for the US and the Eurozone:
US - Average Hourly Earnings (12:30 UTC).
US - Nonfarm Payrolls Change (12:30 UTC).
US - Unemployment Rate (12:30 UTC).
On June 2nd, the economic events calendar contains three entries for the US. All three are significant. The impact of the news background on traders' sentiment today can be significant.
Forecast for EUR/USD and trading advice:
New pair sales can be opened on a rebound from the 1.0785 level on the hourly chart, with targets at 1.0726 and 1.0652. I recommended buying when closing above the descending trend corridor on the hourly chart, with targets at 1.0726 and 1.0785. Currently, the second target is almost reached.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
