EUR/USD – 1H.
The EUR/USD pair reversed in favor of the euro currency during the last trading day after rebounding from the corrective level of 161.8% (1.2166). It has already completed a close above the level of 1.2224, which now allows us to count on further growth in the direction of the Fibo level of 200.0% (1.2275). Thus, in the next few hours, the previous peak can be updated. In general, the European currency continues to grow quite actively, which can be seen on all the pair charts. I still can't conclude that this growth has anything to do with the information background. For example, this week, a small increase in the dollar was caused by the publication of the Fed minutes, which contained hints of possible curtailment of the quantitative stimulus program in the future. But if this document caused the dollar's strengthening, what was the reason for the new strengthening of the European currency?
The following picture is obtained: when there is a corresponding information background, the dollar can strengthen. It indicates a serious imbalance between the supply and demand of the euro and the dollar in the foreign exchange market. It speaks about much deeper factors that affect the movement of the pair at a given time. I can only say that all the charts now have trends. However, it is best seen on the 4-hour chart. There is also a clear trend line, which does not allow the quotes to close lower. Thus, I expect that the pair will trade in the same way in the future: on the news in favor of the dollar, there will be pullbacks down.
EUR/USD – 4H.
On the 4-hour chart, the pair's quotes performed a rebound from the level of 1.2223 and a slight drop. However, it already turned up and resumed the growth process, completing a close above the level of 1.2223. Thus, the growth of quotes can be continued at the corrective level of 200.0% (1.2353). The consolidation of the pair's rate under the ascending trend line will allow traders to expect a strong fall.
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 20, the calendar of economic events in the European Union contained a speech by Christine Lagarde. However, once again, no interesting information was received from the ECB chairwoman.
News calendar for the United States and the European Union:
EU - index of business activity in the manufacturing sector (08:00 UTC).
EU - index of business activity in the service sector (08:00 UTC).
EU - ECB President Christine Lagarde will deliver a speech (11:00 UTC).
US - index of business activity in the manufacturing sector (13:45 UTC).
US - PMI index for the service sector (13:45 UTC).
On May 21, the next speech of ECB President Christine Lagarde will take place in the European Union, which hypothetically can cause a reaction of traders. In addition, both the US and the EU will release reports on business activity.
COT (Commitments of Traders) report:
Last Friday, another COT report was released, which again showed that speculators actively increased long contracts in the reporting week. A week earlier, the category of "Non-commercial" traders increased both types of contracts. Now the number of longs was 16,908, and the number of short - 5,319. Thus, the mood of the major players again becomes more "bullish," which indicates a possible continuation of the growth of the European currency. It is noteworthy that the total number of positions (Total) is higher for short contracts. However, I remind you that we are more interested in the "Non-commercial" column.
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 were recommended yesterday at the rebound from the level of 1.2166 on the hourly chart with targets of 1.2224 and 1.2275. The first goal is currently achieved. We are waiting for the second one to be worked out.
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.