EUR/USD – 1H.
During the last trading day, the EUR/USD pair continued the process of falling in the direction of the corrective level of 100.0% (1.1990), although the fall has stopped over the past 20 hours. However, the US dollar may still rise to the level of 1.1990. Yesterday was quite a hectic day, although the calendars of economic events in the European Union and the United States were empty. However, in the middle of the day, there were comments from US Treasury Secretary Janet Yellen, who said that given the trillions of dollars poured into the economy, the Fed has no other way but to raise rates. Otherwise, the economy will overheat. But Yellen did not say when to expect the first rate hike after the crisis and said that the rate increase would be "very modest." However, traders picked out from all Yellen said the phrase that "rates may rise" and regarded it as a concrete hint of an increase in the near future. That is why yesterday there was a sharp increase in the US currency, which was short-lived. Traders began to buy the dollar on emotions, as the rate increase is a serious incentive to further economic growth. It shows that the economy is doing well, so it needs to cool down a bit and contain inflation. However, most traders also quickly concluded that Yellen did not name any specific dates for raising the rate, and more attention in this matter should still be paid to the statements of Jerome Powell. The latter recently makes it clear that the rate will begin to rise no earlier than 2023. In any case, for the rate to start rising, you first need to curtail the quantitative stimulus program. And now, even this is out of the question.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a reversal in favor of the US dollar and closed under the ascending trend line and the Fibo level of 161.8% (1.2027). Thus, the process of falling can now be continued in the direction of the next level of 1.1836. There are no emerging divergences today. The most accurate picture of what is happening is on this chart.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair quotes closed at the level of 161.8% (1.2027). But even with this consolidation, the current picture has not become clearer and easier. Thus, I recommend paying more attention to the 4-hour schedule for the time being, where the picture is most clear and understandable.
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 4, the calendars of economic events in the European Union and America were empty, so the information background did not affect the pair's movement.
News calendar for the United States and the European Union:
EU - index of business activity in the service sector (08:00 UTC).
EU - economic forecast from the European Commission (09:00 UTC).
US - change in the number of employees from ADP (12:15 UTC).
US - ISM service sector PMI (14:00 UTC).
On May 5, there will be much more interesting events in the United States and the European Union. I recommend paying attention to the forecast for the economy from the European Commission and the ISM index in the service sector.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed that the "bullish" mood of the major players is increasing, which means that the European currency gets new opportunities to continue the growth process. The number of new long contracts opened by the "Non-commercial" category of traders is 5,568, and the number of short contracts is 2,938. Thus, the "bullish" mood of this category of traders has increased, but not too much. Let me remind you that since the beginning of this year, the gap between the total number of long and short contracts among speculators has been decreasing, which indicates a weakening of the "bullish" mood. But in the last three weeks, it has steadily increased.
EUR/USD forecast and recommendations for traders:
I recommended selling the pair if it closes below the trend line on the 4-hour chart with targets of 1.1990 and 1.1923. At this time, you can leave these transactions open. I recommend buying the pair today if there is a rebound from the level of 100.0% (1.1990) on the hourly chart with a target of 1.2068.
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.
