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EUR/USD – 1H.
Hello, traders! The euro/dollar pair continued to grow on the hourly chart on June 4. Thus, a graphic picture of the euro/dollar remains a bullish sentiment. Consequently, during yesterday's day, the "bullish" mood of traders became even stronger. All economic reports and Thursday's events are very difficult to interpret unambiguously. Expanding the PEPP program, which was decided by the European Central Bank, by 600 billion euros – is this a good or bad thing? On the one hand, this is good, since the EU economy will receive additional assistance to recover from the crisis. On the other hand, this means that the initial 750 billion euros were not enough, which means that the scale of the economy's decline is much higher than initially expected. In fact, this is exactly what ECB President Christine Lagarde herself said yesterday. According to her, the EU economy will decline by 8.7% in 2020. Earlier, it stated that the drop will be from 8% to 12%. In pre-crisis times, any easing of monetary policy or stimulating the economy was regarded by traders as a "bearish" factor. Now we see the opposite picture.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair continue the growth process and yesterday secured above the corrective level of 76.4% (1.1294). Thus, the growth process can be continued towards the next corrective level of 100.0% (1.1496). There are no emerging divergences today, but there is no point in tracking them on such a strong trend - they are not being worked out. Thus, bear traders now need to wait for the rebound from the Fibo level of 100.0% or close under the upward trend corridor on the hourly chart.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair made a consolidation above the corrective level of 76.4% (1.1293). Therefore, the growth process can be continued towards the next level of 1.1495. The grid of Fibo levels on the 4-hour and daily charts are the same.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair rebounded from the lower line of the "narrowing triangle", which still allows traders to expect growth in the direction of the 1.1600 level (the upper line of the "triangle"). Given the growth of the euro currency in recent days, this goal can be "taken" in the next week.
Overview of fundamentals:
On June 4, the European Union released a report on retail trade volumes, which recorded a decrease of 19.6% y/y. In America, the report on applications for unemployment benefits was no better: an additional 1.9 million initial applications and 21.5 million repeat applications.
News calendar for the United States and the European Union:
US - unemployment rate (14:30 GMT).
US - change in the number of people employed in the non-agricultural sector (14:30 GMT).
US - change in average hourly earnings (14:30 GMT).
No reports are scheduled for June 5 in Europe, and important data on Nonfarm Payrolls and the unemployment rate will be released in America. The latest report could show unemployment of almost 20%.
COT (Commitments of Traders) report:
During the current week, the European currency was in demand and probably not only by small traders and players. Major players have also been actively increasing long contracts, so the new COT report, which will be released this afternoon, should show a significant increase in the number of long contracts. The only question is whether there will be a strong increase in the number of long-term contracts in the hands of the "Non-commercial" group? If so, this will mean that the mood of speculators has changed to "bullish" and now we can expect further growth of the euro currency. If the increase is not large, then the current growth of the euro can be attributed to the category of unjustified movements.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend selling the euro currency with the goal of 1.1167, if it is fixed under the ascending channel on the hourly chart. I recommend supporting the pair's purchases with the goal of 1.1496 before closing under the upward trend corridor on the hourly chart.
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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