EUR/USD – 1H.
Hello, traders! On May 13, the EUR/USD pair rebounded from the upper line of the upward trend corridor and fell to its lower line on the hourly chart. Thus, this line can also be rebound with a reversal in favor of the European currency and the beginning of new growth in the direction of the upper area of the corridor. Fixing the pair's exchange rate under the corridor will work in favor of the US currency and continue the fall in quotes. The goals of this fall will be determined on the higher charts. Yesterday was quite rich in information background. The most important thing to note is the speech of Jerome Powell, who was extremely gloomy in his forecasts for the US economic recovery. The Fed President said that the recovery period may be very long, and the growth rate may be weak. The main factor on which recovery will depend is the COVID-2019 pandemic. There was also information from Donald Trump, who again began to put verbal pressure on the Fed, calling on the Central Bank to continue to cut rates, "as they do in other countries."
EUR/USD – 4H.
On the 4-hour chart, the EUR/USD pair quotes again performed a reversal in favor of the US dollar and began a new process of falling in the direction of the upward trend line. A new rebound of quotes from this line will again work in favor of the EU currency and some growth. However, judging by all the recent growth segments of the pair, it will be very short-lived. Closing quotes below the trend line will significantly increase the probability of continuing the fall in the direction of the corrective level of 0.0% (1.0638), and may also increase the activity of traders. Today, the divergence is not observed in any indicator.
EUR/USD – Daily.
On the daily chart, the EUR/USD pair performed a new consolidation under the corrective level of 23.6% (1.0840), which is not a strong level at the moment. Thus, according to this closure, the fall of quotes can be continued in the direction of the lower line of the descending corridor, but this signal is weak. Stronger signals are on the hourly and 4-hour charts.
EUR/USD – Weekly.
On the weekly chart, the EUR/USD pair continues to trade near the bottom line of the "narrowing triangle". The rebound of quotes from this line still allows us to expect some growth in the long term in the direction of the level of 1.1600 (the upper line of the "triangle"). Closing the pair under the "triangle" will work in favor of the US currency and a new, possibly long fall.
Overview of fundamentals:
On May 13, Jerome Powell's speech, which I mentioned at the beginning of this article, took place in America. No more news or reports came from either the US or the European Union.
News calendar for the United States and the European Union:
US - number of initial and repeated applications for unemployment benefits (14:30 GMT).
On May 14 in the US, only a report on initial and repeated applications for unemployment benefits is scheduled. The first indicator may grow by another 2.5 million, and the second one will total of 25.1 million. The numbers are huge and the dollar may be under pressure in the afternoon.
COT (Commitments of Traders) report:
The latest COT report again showed minimal changes. It became known that in the reporting week of May 5, professional players increased short-contracts, the number of which increased by almost 6,000. But speculators bought the euro very reluctantly, only +763 contracts. Thus, for three weeks in a row, large speculators have been increasing sales for the euro, although the total number of long contracts remains twice as large as short and over the past 7 weeks, the "Non-commercial" group has been increasing them too. Thus, we can say that both types of contracts are in demand among large traders. During the reporting week, the "Commercial" group got rid of short contracts. In general, during the reporting week, the number of both long and short contracts decreased (due to the closing of opposite positions "spreads" and short positions by hedgers). And the overall advantage remains with sales contracts.
Forecast for EUR/USD and recommendations to traders:
I suggest that new sales of the euro currency be made after the pair closes under the upward trend line on the 4-hour chart with the goal of 1.0638. I still do not recommend buying a pair, even if it breaks away from the trend line or the lower line of the corridor on the hourly chart.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
