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EUR/USD – 1H.
Hello, traders! On May 26, the euro/dollar pair on the hourly chart continued the growth process that started earlier. However, while approaching the maximum of the previous day, it performed a reversal in favor of the US currency and began falling. Thus, traders faced a clear problem of fixing above the level of 1.0988. Yesterday, the markets were stirred by the information that US President Donald Trump is preparing a retaliatory strike against China for the bill concerning the autonomy of Hong Kong. America believes that Hong Kong should maintain its autonomy, otherwise Washington may cancel some preferences for this district. Washington is categorically against the return of Hong Kong to total Chinese control. Beijing, which rightly considers Hong Kong its territory, wants more power and levers to manage the district, since recently, especially before the epidemic, there were mass riots and protests against the new laws of the Chinese government. What exactly Donald Trump is preparing, China does not yet know. One thing is for sure, Beijing and Washington are getting more and more points of conflict.
EUR/USD – 4H.
As seen on the 4-hour chart, the quotes of the euro/dollar pair performed growth to the horizontal trend line and rebound from it. Thus, a new reversal was made in favor of the US currency and a new fall began in the direction of the corrective level of 23.6% (1.0840). Also yesterday, a bearish divergence was formed at the CCI indicator, which also allowed the pair to perform a reversal. Before closing quotes above the horizontal trend line, I do not expect a stronger growth of the European currency. The same applies to a stronger fall in the pair until the closing is performed under the upward trend line.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair made a return to the Fibo level of 38.2% (1.0965), but according to the data from the 4-hour chart, it is now ready to start a new fall in the direction of the corrective level of 23.6% (1.0840).
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 26, the European Union and the United States did not have any economic reports or important news. The world continues to closely monitor the controversy between Washington and Beijing, waiting for the beginning of the "cold war".
News calendar for the United States and the European Union:
European Union - ECB President Christine Lagarde will deliver a speech (09:30 GMT).
On May 27 in Europe, only the ECB President Christine Lagarde is scheduled to speak in the morning. In America, the calendar of economic events is empty. However, the performance of Christine Lagarde can have a strong impact on the mood of traders.
COT (Commitments of Traders) report:
All recent COT reports have shown minimal changes. In general, we can say that over the past 5 weeks, large traders have been increasing mainly short-contracts. Their total number has increased by about 15 thousand. The number of long-term contracts in the hands of the Commercial group has practically not increased over the same period, thus, there is a strengthening of the "bearish" mood among professional speculators. And despite the fact that the total number of long contracts on their hands is almost twice the number of short contracts, the mood is changing in favor of the bears and the pair is increasingly dependent on their desire or not to sell.
Forecast for EUR/USD and recommendations to traders:
Today, I recommend selling the euro currency with the goal of 1.0840, since the rebound was made from an important horizontal trend line on the 4-hour chart. I recommend that you buy a pair after the quotes break off from the upward trend line or after they are fixed above the horizontal trend line.
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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