EUR/USD – 1H.
Hello, traders! The euro/dollar pair continued to grow on the hourly chart on May 28, and the upward trend corridor continues to characterize the current mood of traders as "bullish". Thus, before the closing of quotes of the pair below this ascending corridors, the market bears will be in the shadows. In recent weeks, it often happens that there are no economic reports, however, there is a lot of general news that is important for the currency market. Yesterday there wasn't such a situation, as important reports came out and there was important news. First of all, I would like to note that the plan announced recently by the European Commission to save the European economy may well not be adopted. German Chancellor Angela Merkel said just yesterday that she does not expect the plan to be approved soon by all EU member states. Thus, the negotiations will last for a month or even several months, and perhaps in August or September, this package will be approved. The snag, as before, is in several countries called "northern", which refuse to provide free funds to Italy, Spain, Portugal, and other most affected countries. And the European Commission plans to distribute more than 500 billion euros out of the planned 750 on the basis of grants.
EUR/USD – 4H.
On the 4-hour chart, the quotes of the euro/dollar pair were fixed above the horizontal trend line, and then above the corrective level of 50.0% (1.1065). Thus, the growth can be continued towards the next corrective level of 61.8% (1.1167). However, at this time, a bearish divergence is also brewing in the CCI indicator, which may allow the pair to perform a reversal in favor of the US currency and start falling. However, do not forget about the ascending corridor on the hourly chart as it can show when the "bullish" mood runs out.
EUR/USD – Daily.
On the daily chart, the euro/dollar pair made a consolidation above the corrective level of 50.2% (1.1064), as well as above the downward trend corridor, which is no longer working. Therefore, the growth can be continued in the direction of the corrective level of 61.8% (1.1167).
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 1.1600 level (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 27, there were no important economic reports in the European Union, and there were several in the US. GDP in the first quarter fell by 5%, rather than by 4.8% y/y, as previously expected. The volume of orders for long-term products in all categories has lost significant value. The US dollar quite rightly fell out of favor with traders yesterday.
News calendar for the United States and the European Union:
EU - consumer price index (11:00 GMT).
US - change in the level of expenditure and income of the population (14:30 GMT).
US - consumer sentiment index from the University of Michigan (16:00 GMT).
On May 29, Europe will release the consumer price index for May, which may fall to 0.1% y/y. In America today, less important statistics are the incomes and expenditures of Americans and the mood of consumers.
COT (Commitments of Traders) report:
All recent COT reports have shown minimal changes. In general, we can say that over the past 5 weeks, major 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 not increased significantly over the same period, thus indicating 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. This week, the euro currency still shows some growth, so the new COT report, which will be released tomorrow, may show a decrease in the "bearish" mood.
Forecast for EUR/USD and recommendations for traders:
Today, I recommend selling the euro currency with the goal of 1.0964, if it is fixed under the ascending channel on the hourly chart. You could buy the pair by fixing the quotes above the horizontal trend line with the goal of 1.1065, and at the moment the goal is already the level of 1.1167.
"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.
*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.
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