Yesterday, traders received several signals to enter the market. Let's take a look at the trading chart to clear up the market situation. A false break of 1.0687 led to a buy signal. However, data from Germany turned out to be quite pessimistic. As a result, pressure on the euro remained intact and traders suffered losses. Closer to midday, bears managed to push the pair to 1.0645. However, high bullish activity and a false break of this level gave traders a perfect long signal, thus allowing the pair to jump to 1.0687. As a result, traders earned about 40 pips. A false break of 1.0687 and a sell signal pushed the price lower by 30 pips.

Conditions for opening long positions on EUR/USD:

Germany's GDP report for the first quarter met the forecast, whereas comments provided by European politicians failed to stop a decline in the euro ahead of the publication of the FOMC meeting minutes. Today, the eurozone is not going to disclose any reports. That is why pressure on the euro will return, but the pair is likely to trade within a wide range of 1.0645-1.0747. The level of 1.0700 is located in the middle of the channel. I recommend taking into account this level when making a trade decision. It will be better to open buy positions near the support level of 1.0645. A false break of this level may give a buy signal with the target at 1.0700. A break and a downward test of this level may give a new buy signal, allowing the pair to hit a new weekly high of 1.0747, where it is recommended to lock in profits. A farther target is located at 1.0779. However, the euro/dollar pair will be able to reach it only in case of weak data on the US GDP. If the euro/dollar pair drops and buyers fail to protect 1.0645, it will be better to avoid buy orders. Bulls may start locking in profits, expecting a bigger downward correction. It will be wise to wait for a false break of the low of 1.0603. It is also possible to go long after a rebound from 1.0561 or lower – from 1.0521, expecting a rise of 30-35 within one day.

Conditions for opening short positions on EUR/USD:

Sellers continue gaining control over the market. To retain the euro under pressure, they should keep the price below 1.0799. In case of a rise, only a false break of this level will give a perfect sell signal with the target at the support level of 1.0645. If during the European session, the price fails to reach 1.0700, it will mean that the pair is losing upward momentum and traders should search for signals to open short orders. A break and settlement below 1.0645 as well as an upward test of this level may lead to a sell signal, which will affect buyers' stop orders and cause a decline to 1.0603. It is recommended to lock in profits at this level. A farther target is located at 1.0561, but the pair will hardly reach it amid the absence of important macroeconomic reports. If the euro/dollar pair increases in the first part of the day and bears fail to protect 1.0700, the uptrend is likely to continue, thus allowing bulls to hit new highs. Against the backdrop, it will be better to open short positions after a false break of 1.0747. Traders may also go short after a bounce off 1.0779 or higher – off 1.0811, expecting a decline of 30-35 pips.

COT report

According to the COT report from May 17, the number of long positions continued rising, whereas the number of short positions dropped. Traders continue buying the asset at a rather low price amid the ECB's announcements about the upcoming key interest rate hike. The intention was proved by various ECB's representatives. Now, traders expect that the regulator will raise the deposit rate by 0.25% as early as July. Then, they are planning to raise the rate up to 0.2% in September and in December. However, some European politicians are criticizing this plan. They are demanding more aggressive actions from the ECB to combat the surging inflation. It is anticipated that the benchmark rate will be hiked in September and December up to 0.5% from the current zero level. The euro's upward potential could be boosted by rumors that the US Fed may slacken its monetary policy tightening in September. According to the COT report, the number of long non-commercial positions increased by 2,540 to 230,770 from 228,230. Meanwhile, the number of short non-commercial positions dropped by 1,270 to 210,431 from 211,701. As I have already mentioned, a low price of the euro is making it more attractive for traders. The weekly results showed that the total non-commercial net position increased to 20,339 against 16,529 a week earlier. The weekly closing price also inched up to 1.0556 from 1.0546.

Signals of indicators:

Moving Averages

Trading is performed slightly below 30- and 50-day moving averages, thus pointing to the existing pressure on the euro.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

In case of a decline, the lower limit of the indicator located at 1.0645 will act as support. If the pair grows, the resistance level will be located at 1.0700.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 30. It is marked in green on the graph.
• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
• Bollinger Bands. The period is 20.
• Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions is a total number of long positions opened by non-commercial traders.
• Short non-commercial positions is a total number of short positions opened by non-commercial traders.
• The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.