EUR/USD – 1H.
During the last trading day, the EUR/USD pair performed a fall to the corrective level of 161.8% (1.2166), a rebound from it, and a reversal in favor of the EU currency. But all these movements still took place in a very narrow range, in which the pair had been moving for a couple of weeks. At the moment, the pair's quotes can continue the growth process in the direction of the level of 1.2238, which they have already reached three times over the past two weeks. Thus, the mood of traders is now "neutral." Christine Lagarde expressed the same neutral mood during yesterday's speech. Since this was almost the only event of the past day, heightened attention was drawn to it. In general, the ECB president is now expected to do the same as other central banks. Namely, talk about inflation, its prospects, and the regulator's reaction to the economic recovery, the labor market, and inflation with unemployment. Christine Lagarde said yesterday that the ECB will continue to ensure a smooth transition from a pandemic to a full recovery of the economy and plans to maintain favorable financing conditions throughout this period. In other words, the ECB plans to continue its QE and PEPP programs by buying up government bonds. From my perspective, this is the logical behavior of the ECB since there are no prerequisites for curtailing the stimulus program now. The EU economy is at the very beginning of its recovery, and inflation has accelerated recently and does not have the same growth prospects as in the United States. In general, the European economy is recovering at a moderate pace and will probably not reach its pre-crisis levels until 2023.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes completed a new close under the ascending trend line and under the level of 1.2223, which again allows traders to count on the continuation of the fall in quotes in the direction of the corrective level of 161.8% (1.2027). However, from my perspective, the hourly chart is still more significant now since we see the sideways trend corridor on it, which plays the most important role.
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair closed above the level of 161.8% (1.2027), which still allows us to count on continued growth in the direction of the corrective level of 200.0% (1.2356). However, a trend change is now emerging on the lower charts.
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 June 2, the European Union and America did not have a single economic report. And Christine Lagarde did not tell traders anything extraordinary. Thus, the information background was practically absent yesterday.
News calendar for the United States and the European Union:
EU - index of business activity in the service sector (08:00 UTC).
US - change in the number of employees from ADP (12:15 UTC).
US - number of initial and repeated applications for unemployment benefits (12:30 UTC).
US - ISM service sector PMI (14:00 UTC).
On June 3, there will be no important reports in the European Union, and in the United States, three publications at once should arouse the interest of traders. The information background today should be of medium strength.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed an increase in the "bullish" mood among speculators. The category of "Non-commercial" traders again increased long contracts, which were opened in 3781. In addition, speculators also got rid of 1,442 short contracts. Thus, large traders show their desire to continue buying the European currency, leading to even greater growth. In addition, I note that the total number of contracts for the European currency continues to grow and during the reporting week increased by 29 thousand, which indicates an increase in the interest of traders.
EUR/USD forecast and recommendations for traders:
I recommend selling the pair at a new close under the trend line on the 4-hour chart with targets of 1.2166 and 1.2117. In this case, you should set the Stop Loss above the level of 1.2245. I do not recommend buying the pair now, as there is a high probability of a change in the direction of the trend in the near future.
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.
