EUR/USD – 1H.
The EUR/USD pair fell to the corrective level of 127.2% (1.2068) during the last trading day. The rebound of quotes from this level will favor the European currency and some growth in the direction of the levels of 1.2117 and 1.2166. Closing the pair's exchange rate below the level of 127.2% will increase the probability of a further fall in the quotes in the direction of the next Fibo level of 100.0% (1.1990). The information background of yesterday was extremely rich. The European news was not very important, and traders did not pay enough attention to it. However, the European Commission's forecasts for economic growth in the EU, the US, and worldwide were quite optimistic for 2021-2022. The forecast says that the US and Chinese economies are recovering at the fastest pace. Thus, these countries will pull the GDP of the whole world. Also, in the European Union, a report on industrial production was released, which was weaker than traders' expectations. However, as I said, the traders themselves did not pay enough attention to this data. But traders were so impressed that US inflation rose to 4.2% y/y in April that they were even confused at first. I also note that core inflation, which does not consider changes in energy and food prices, also increased decently to 3.0% y/y. The euro/dollar pair changed direction several times during a short period but eventually fell to 1.2068. Traders will now look forward to comments from Jerome Powell and other members of the FOMC. The latter have repeatedly made it clear that they are not too worried about the acceleration of inflation and will wait for data for six months or more to conclude.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US dollar and began the process of falling in the direction of the ascending trend line, which still characterizes the current mood of traders as "bullish." The rebound of quotes from this line will allow traders to count on the resumption of growth in the direction of the level of 1.2223. Closing the rate below the trend line will increase the chances of the pair falling further in the direction of 1.1836.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair quotes closed above the level of 161.8% (1.2027). Upward trends are now resumed on all charts. On the daily chart, the target is the corrective level of 200.0% (1.2356).
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair has made a consolidation above the "narrowing triangle," which preserves the prospects for further growth of the pair in the long term.
Overview of fundamentals:
On May 12, the calendars of economic events in the European Union and the United States contained many interesting entries, but the inflation report had a greater impact on traders.
News calendar for the United States and the European Union:
US - number of initial applications for unemployment benefits (12:30 UTC).
US - producer price index (12:30 UTC).
On May 13, in the European Union, the calendar of economic events is empty, and in the United States - not the most important reports. The information background will be weak today.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed that speculators actively increased both long contracts and short in the reporting week. The first number increased by 7,033 contracts, and the second – by 6,148. Thus, almost complete equality. In general, the number of long contracts focused on the hands of the "Non-commercial" category still exceeds the number of short contracts by almost two times. The mood of speculators remains "bullish," which is confirmed by the euro/dollar pair's movement, which has resumed upward trends on all charts. For other categories, the changes are minimal.
EUR/USD forecast and recommendations for traders:
I recommended selling the pair if there is a rebound from the Fibo level of 161.8% (1.2166) on the hourly chart. Both goals (1.2117 and 1.2068) have been achieved. New sales at the close under 1.2068 with a target of 1.1990. I recommend buying the pair today if there is a rebound on the hourly chart from the level of 1.2068 with targets of 1.2117 and 1.2166.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
