EUR/USD – 1H.
Hello, traders! On May 14, the euro/dollar pair made a consolidation under the upward trend corridor on the hourly chart. Thus, the mood of traders, according to this signal, has changed to “bearish”, and the process of falling quotes can be continued today. Meanwhile, all the world’s media continue almost to broadcast live from the White House, where the American leader, Donald Trump, shares new comments every day about China and possible sanctions against it for the spread of coronavirus across the planet. Of course, “all over the planet” does not interest Donald too much, but “all over America” – very much. According to the latest statements of Trump, the US can generally stop any cooperation with Beijing for an indefinite period. This will be the answer to China’s inappropriate behavior on the issue of the pandemic. Also, do not forget about the bill of one of the Republican senators, which will allow the President to impose serious sanctions against China, Chinese officials, and Chinese companies, severely restricting their access to American markets.
EUR/USD – 4H.
As seen on the 4-hour chart, the quotes of the euro/dollar pair fall again to the ascending trend line and a new rebound from this line. This time, the quotes rolled back up very slightly and in the coming hours may make a new attempt to consolidate under the trend line. In this case, on this chart, the mood of traders will also change to “bearish”, and so far it does not confirm the readings of the hourly chart, so the further fall in quotes is questionable. Today, the divergence is not observed in any indicator. Closing the euro/dollar exchange rate under the trend line will increase the probability of continuing to fall towards the next Fibo level of 0.0% (1.0638).
EUR/USD – Daily.
On the daily chart, the euro/dollar pair performed a new consolidation under the corrective level of 23.6% (1.0840), which is not a strong level at this time. Thus, according to this close, the drop in quotes can be continued in the direction of the lower line of the descending corridor, but this signal is weak and the 4-hour chart does not yet confirm it.
EUR/USD – Weekly.
On the weekly chart, the euro/dollar pair continues to trade near the bottom line of the “narrowing triangle”. The rebound of quotes from this line still allows us to count on 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 14, a report on primary and secondary applications for unemployment benefits was released in America. It turned out that the number of the first increased by another 2.98 million, and the second was 22.8 million. However, the US dollar did not come under pressure from traders after this report.
News calendar for the United States and the European Union:
Germany – change in GDP (08:00 GMT).
EU – change in GDP (11:00 GMT).
US – change of the volume of retail trade (14:30 GMT).
US – change in the volume of industrial production (15:15 GMT).
On May 15, several major reports are planned, but most attention will be drawn to the report on GDP in the European Union for the first quarter. It is expected that the figure will decrease by 3.3% y/y and 3.8% in the previous quarter.
COT (Commitments of Traders) report:
The latest COT report again showed minimal changes. In the reporting week of May 5, major players increased short-contracts, the number of which increased by 6,000. Speculators bought the euro currency very reluctantly, only +763 contracts. Thus, for three weeks in a row, large speculators have increased sales for euros, although the total number of long contracts remains twice as large as short and over the past 7 weeks, the “Non-commercial” group has increased 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.
“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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.