EUR/USD – 1H.
Hello, traders! The euro/dollar pair spent the entire Monday in strong growth on the hourly chart on May 18. Nothing has changed since the beginning of Tuesday, and the pair's quotes are still showing growth. Let me remind you that earlier quotes left the upward trend corridor, which in theory should have indicated a change in the "bullish" mood to "bearish". However, instead of falling prices, we saw new growth. And I think it is quite unexpected, and most traders did not plan it. It only remains to figure out what caused the growth of the euro currency on Monday, when there were no economic reports. I will immediately note that not only the euro currency has been growing, but also the British currency, which has been very weak recently. So the reasons probably lie in America. By and large, there can be only one reason for the weakening of the US currency. At a time when the US economy is experiencing serious problems, and the number of cases of coronavirus is the highest in the world, political parties and the US President are busy arguing with each other and blaming each other. Thanks to the complete absence of "team play", the new $ 3 trillion aid package that Jerome Powell almost asked for was not accepted. This event could lead to a drop in the dollar across the entire spectrum of the market.
EUR/USD – 4H.
As seen on the 4-hour chart, the quotes of the euro/dollar pair after another rebound from the upward trend line performed a reversal in favor of the EU currency and began a fairly strong growth in the direction of the corrective level of 38.2% (1.0964). I do not believe that this growth was caused by the rebound itself since in recent weeks everything has been saying just in favor of the fact that sooner or later the pair will perform a close under the trend line. Most likely, fundamental factors played in favor of the euro. The rebound of the pair's exchange rate from the Fibo level of 38.2% will allow traders to expect a reversal in favor of the US currency and a resumption of the fall in the direction of the trend line. Closing the pair above the 38.2% Fibo level will increase the pair's chances of further growth towards the next corrective level of 50.0% (1.0964).
EUR/USD – Daily.
On the daily chart, the euro/dollar pair performed a new consolidation above the corrective level of 23.6% (1.0840), which is not a strong level at this time. Thus, according to this close, the growth of the pair's exchange rate can be continued in the direction of the next Fibo level of 38.2% (1.0965).
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 18, there were no economic publications in America and the European Union. There was no informational economic background.
News calendar for the United States and the European Union:
Germany - index of business sentiment from the ZEW Institute (11:00 GMT).
Germany - current situation index from the ZEW Institute (11:00 GMT).
EU - index of business sentiment from the ZEW Institute (11:00 GMT).
US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (16:00 GMT).
On May 19, several not-so-important indices from the ZEW Institute on investor sentiment are scheduled in Europe. A more important event is Jerome Powell's speech to Congress in the afternoon.
COT (Commitments of Traders) report:
The latest COT report, released on Friday, again showed minimal changes. In the reporting week of May 12, the total number of contracts for purchase and sale among major market players decreased by 4,781 and 3,543, respectively. Thus, the activity of professional market participants is reduced. In principle, this is clearly visible on the steam schedule itself, especially on the 4-hour schedule. In recent weeks, the pair has been trading in a very narrow side corridor. At the same time, large traders (speculators) began to build up long positions, but the "Commercial" group, on the contrary, got rid of purchase contracts. Based on this, we can conclude that speculators are beginning to change their mood to "bullish". More contracts focused on their hands are also purchase contracts. Thus, I would say that the COT report gives the euro currency an excellent chance of growth in the coming weeks. But the graphical analysis is also powerful and closing the pair's quotes below the trend line will work in favor of the US currency.
Forecast for EUR/USD and recommendations for traders:
I suggest that new sales of the euro currency be made after the pair closes under the upward trend line on the 4-hour chart with the goal of 1.0638 or in the case of a rebound from the Fibo level of 38.2% with the goal of the trend line. I still do not recommend buying a pair, as the current growth of quotes looks too unstable and unreasonable.
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.
