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04.06.2020 09:34 AM
EUR/USD. June 4. COT report. Is the bull time coming to an end? Easing of the ECB's monetary policy may lead to a fall in the euro

EUR/USD – 1H.

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Hello, traders! The euro/dollar pair continued to grow on the hourly chart on June 3. Thus, the graphic picture of the euro/dollar pair remains the same – the "bullish" mood of traders, a neat and confident movement within the trend corridor. Traders will be able to count on a slight drop in quotes only after the pair is fixed under the trend corridor. Today, the results of the meeting of the European Central Bank will be summed up, and traders can expect that the reaction to this event will follow. The euro currency has been growing for too long because of mass riots in the US alone. It is time for it to pay attention to its own problems, as well as to the economy. Despite the fact that the ECB will most likely leave rates unchanged, it is expected that Christine Lagarde will announce the expansion of the program to counter the economic shock of PEPP and extend its duration. At the moment, the volume of this program is 750 billion euros and in the first two months of its implementation, more than 200 billion have already been spent. Thus, the money until the end of the year (when the program should be completed) is unlikely to be enough.

EUR/USD – 4H.

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On the 4-hour chart, the quotes of the euro/dollar pair continue the growth process after fixing above the corrective level of 61.8% (1.1167), in the direction of the next corrective level of 76.4% (1.1294). There are no new divergences brewing today in any indicator, however, they do not contribute to the pair's reversal at the moment, since the movement is too strong. The rebound of the pair's exchange rate from the Fibo level of 76.4% will work in favor of the US dollar and the beginning of a fall in quotes.

EUR/USD – Daily.

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On the daily chart, the euro/dollar pair made a consolidation above the corrective level of 61.8% (1.1167), as well as above the downward trend corridor, which is no longer working. Therefore, the growth process can be continued in the direction of 1.1293.

EUR/USD – Weekly.

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On the weekly chart, the euro/dollar pair performed a rebound from the lower line of the "narrowing triangle", which still allows traders to expect 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 June 3, the European Union released data on unemployment. In Germany, unemployment rose to 6.2%, while in the European Union it increased to 7.4%. In America, reports on the change in the number of employees from ADP – 2760 thousand workers, and the ISM composite index for the service sector – 45.4 in May. In general, all reports were weak and did not support either the euro or the dollar.

News calendar for the United States and the European Union:

EU - change in retail trade volume (11:00 GMT).

EU - publication of the ECB's decision on the main interest rate (13:45 GMT).

EU - monetary policy report (13:45 GMT).

EU - ECB press conference (14:30 GMT).

US - number of initial and repeated applications for unemployment benefits (14:30 GMT).

On June 4, Europe is scheduled to summarize the results of the ECB meeting, and in America, an interesting report on unemployment benefits will be released.

COT (Commitments of Traders) report:

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The latest COT report, which was released last Friday, showed a very unexpected increase in the number of long contracts in the hands of the "Commercial" group. Their number increased by 7,500. Although this increase was "unexpected" only if we looked at the data from previous COT reports. For most of the past week, the European currency has been growing, so it could be assumed that demand among major market players for the euro is growing. I also note the overall increase in both long and short contracts by 9,000 and 10,500. As you can see, the total number of short contracts even showed a greater increase than long. This suggests that the markets are now driven by speculators. Namely, speculators opened short-contracts very reluctantly.

Forecast for EUR/USD and recommendations to traders:

Today, I recommend selling the euro currency with the goal of 1.1065, if it is fixed under the ascending channel on the hourly chart. I recommend supporting the pair's purchases with the goal of 1.1294 before closing under the upward trend corridor on the hourly chart.

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.

Samir Klishi,
Analytical expert of InstaForex
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