EUR/USD – 1H.
Hello, traders! The euro/dollar pair continued to grow on the hourly chart on May 19. Only at the end of the day, a reversal was made in favor of the US currency, and a weak fall of quotes began. There are also certain signals about the end of growth on older charts. The recent growth of the euro currency is challenging to associate with any fundamental event or news. Recently, traders have been discussing the plan to create a recovery fund, proposed by Emmanuel Macron and Angela Merkel a couple of days ago. It implies the creation of a trust fund of 500 billion euros, which will be raised through contributions from all EU countries. After accumulating funds, they will be sent to the countries most affected by the COVID-2019 epidemic. However, not in the form of loans, but in the form of grants. Thus, innovation consists precisely in the irrevocability of funds. However, this plan has already been opposed by several countries that do not want to provide free assistance to those in need. Thus, the entire plan is still only a plan, and it is still a long way from being adopted by all 27 EU countries.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair, after another rebound from the ascending trend line, performed an increase to the corrective level of 38.2% (1.0964). The rebound of quotes from this Fibo level will work in favor of the US dollar and start falling again in the direction of the upward trend line. Fixing the pair's exchange rate above the corrective level of 38.2% will increase the chances of continuing growth towards the next corrective level of 50.0% (1.1065). There are no emerging divergences yet. The general mood of traders remains "bullish", as the trend line restrained traders and sellers.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair performed a new consolidation above the corrective level of 23.6% (1.0840) and an increase to the Fibo level of 38.2% (1.0965). The rejection of quotes from this level will work in favor of the US currency and the beginning of a fall in the direction of the 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 19, there were few interesting reports in America and the European Union. The ZEW Institute conducted research, the results of which showed that the assessment of current economic conditions in Germany has deteriorated even more, but at the same time investors are optimistic about the future. The two corresponding indices for Germany and the EU were significantly higher than the traders' expectations. Jerome Powell's speech to Congress is not interesting.
News calendar for the United States and the European Union:
EU - consumer price index (11:00 GMT).
US - publication of the minutes of the Fed meeting (20:00 GMT).
On May 20, Europe is scheduled to report on inflation for April, and in America, a report from the last FOMC meeting will be released.
COT (Commitments of Traders) report:
The latest COT report 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", and this hypothesis is confirmed by trading this week, where the euro currency is prone to growth. 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 recommend buying the pair with a short target of 1.1020, if the close above the 38.2% level is completed.
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.
