EUR/USD – 1H.
During the last trading day, the EUR/USD pair reversed in favor of the US currency and fell to the lower border of the upward trend corridor. The rebound of the pair's rate from this line or the 161.8% Fibonacci level will allow traders to count on a reversal in favor of the European currency and some growth in the direction of the levels of 1.2238 and 1.2275. Closing the pair's exchange rate under the upward trend corridor will work in favor of the US dollar in global terms and will allow us to expect a long drop in the pair's quotes. The information background of the third day of the week was no different from the previous two. There was no news, economic reports, or events at all. It was even a little strange to observe quite a strong movement during Wednesday. However, do not forget that traders make trading decisions based on different information backgrounds and the basis of technical factors. On the 4-hour chart, a long upward trend is visible, within which corrections occur from time to time. Thus, yesterday's decline in the pair's quotes is just a correction. But today, traders will finally get enough important information that can make the pair move a little more cheerfully. In America, reports on GDP, applications for unemployment benefits, and orders for durable goods will be released today. And in the European Union – there will be a speech by Luis de Guindos, Vice-president of the ECB. In addition, as early as this week, the G7 countries may decide to introduce a single corporate tax for all countries, the rate of which may be 15%. Thus, it will become much more difficult for large corporations to withdraw their profits from taxation with the help of countries with a low-income tax rate or even zero rates.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes began a new process of falling in the direction of the ascending trend line. A new rebound of quotes from this line will again work in favor of the euro and the resumption of weak growth in the direction of the corrective level of 200.0% (1.2353). Closing the pair's rate under the trend line will favor a further drop in quotes and change the current mood of traders to "bearish."
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 26, the calendars of economic events in the European Union and the United States did not contain any interesting entries. The information background was absent on Wednesday.
News calendar for the United States and the European Union:
EU - ECB Vice President Luis de Guindos will deliver a speech (09:45 UTC).
US - number of initial applications for unemployment benefits (12:30 UTC).
US - change in GDP for the quarter (12:30 UTC).
US - change in the volume of orders for long-term goods (12:30 UTC).
On May 27, the calendars of economic events in the European Union and America are finally not empty. Thus, the information background will have an impact on traders today.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which showed a new strengthening of the "bullish" mood of speculators and 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. Therefore, they continue to believe in the European currency, whatever the information background from the European Union. I also note that the total number of open contracts increased sharply in the reporting week – by almost 67 thousand. That is, 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 recommended at a new rebound 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.
