EUR/USD – 1H.
During the last trading day, the EUR/USD pair performed a reversal in favor of the US currency and a new fall to the corrective level of 161.8% (1.2166). The rebound of quotes from this level will work in favor of the euro and the resumption of growth in the direction of 1.2238, from which the rebound has already been performed twice. Closing the pair's exchange rate below the level of 161.8% will increase the chances of a further fall towards the next level of 1.2117. On Friday, the information background favored the US currency. Although economic data was released in the US and the European Union, they were quite strong. The main event of the day (the speech of ECB President Christine Lagarde) determined the fate of the pair on Friday. The chairwoman of the European Central Bank has informed the markets that there is no reason to expect a curtailment of the PEPP program and standard QE in the near future.
According to the head of the ECB, the economy is still very weak to deprive it of such an important support tool. And it is difficult to disagree with her opinion since the latest economic reports are just beginning to show an improvement in the situation in the Eurozone. The only exceptions are business activity indices, which are usually ahead of the main indicators of the state of the economy. The business and economic activity of the population increases, and only then does inflation begin to accelerate and GDP begins to grow. So, business activity in the European Union increased in May to 62.8 points in the production sector and 55.1 points in the service sector. But the same improvements were noted in the United States, where the manufacturing sector grew to 61.5 points, and the service sector – to 70.1. Thus, I believe that the fall in the European currency quotes on Friday was very logical, given the entire information background.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a new rebound from the level of 1.2223 and a slight drop in the direction of the ascending trend line. Rebounding from it will allow traders to count on a new turn in favor of the EU currency and the resumption of growth, which has recently been experiencing problems. Closing the pair's rate under the trend line will significantly increase the chances of the pair falling strongly in the direction of the Fibo level of 161.8% (1.2027).
EUR/USD – Daily.
On the daily chart, the quotes of the EUR/USD pair closed above the level of 161.8% (1.2027), which allows us to expect continued growth in the direction of the corrective level of 200.0% (1.2356). Upward trends continue on all charts now.
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 21, the calendars of economic events in the European Union and the United States contained quite a lot of interesting entries. The information background was strong and traders did not pass it by.
News calendar for the United States and the European Union:
On May 24, the calendars of economic events in the European Union and America are empty, so today the information background will be absent.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which showed not only a new strengthening of the "bullish" mood of speculators but also a sharp increase in the interest of all categories of traders in contracts for the euro currency. The "Non-commercial" category of traders opened 10,696 long contracts and a total of 1,588 short contracts during the reporting week. Thus, speculators continue to increase the number of purchases. Consequently, they continue to believe in the European currency, whatever the information background from the European Union. I also note that in the reporting week, the total number of open contracts increased sharply – by almost 67 thousand. The interest of all market players is growing in the euro currency.
EUR/USD forecast and recommendations for traders:
I recommend selling the pair when closing under the trend line on the 4-hour chart with the targets of 1.2068 and 1.1990. Purchases of the pair are again recommended when rebounding from the level of 1.2166 on the hourly chart with targets of 1.2238 and 1.2275.
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.
