EUR/USD: plan for European session on June 15. COT report. EUR settles near low of 1.0398

Yesterday, traders received several signals to enter the market. Let us take a look at the 5-minute chart to find out what happened. During the European session, we did not find any good entry point. However, the second part of the day was much more interesting. A break and test of 1.0441 gave a good sell signal, but all the positions turned out to be losing. Only in the middle of the US trade, after bulls failed to regain control over the market, a false break of 1.0441 gave another short signal. As a result, the pair dropped by 30 pips.

Conditions for opening long positions on EUR/USD:

An unexpected decline in the US producer price index surprised traders and prevented the euro from dropping below the low of 1.0398 ahead of today's FOMC meeting. In the first part of the day, the pair may recover, but the technical picture is likely to remain the same until the Fed's meeting. April data on the eurozone trade balance and industrial production may support the euro only if it considerably exceeds forecasts. Announcements that will be made by the ECB's representative Panetta and its Chair Christine Lagarde may also support buyers of risk assets. Today, bulls should protect the nearest level of 1.0398, where traders are trying to find a bottom. If the euro/dollar pair drops, only a false break of 1.0398 and strong data from the eurozone will give a long signal with the target at the intermediate resistance level of 1.0441. A break and a downward test of the level will affect sellers' stop orders, thus forming a long signal with the target at the upper limit of the sideways channel at 1.0480. Since the trading is performed near moving averages, the euro may soon leave the range. The next target is located at 1.0525, where it is recommended to lock in profits. The pair will be able to hit this level only after the FOMC meeting. If the euro/dollar pair continues falling and buyers fail to protect 1.0398, pressure on the euro will increase. The execution of buyers' stop orders below this level may push the price to 1.0353. That is why it will be better to go long after a false break of this level. It is also possible to buy from 1.0306 or lower – from 1.0255, expecting a rise of 30-35 pips.

Conditions for opening short positions on EUR/USD:

Sellers have taken a pause, but they will obviously do their best to protect the upper limit of the sideways channel at 1.0480. However, before the limit, there is an important level of 1.0441. If the pair advances in the first part of the day, only a false break of the intermediate resistance level of 1.0441 will give a short signal with the target at the monthly low of 1.0398. A break and settlement below this range and weak eurozone data as well as an upward test may give a sell signal, thus affecting buyers' stop orders. In this case, the pair may slide to 1.0353. However, traders should remain cautious when opening short positions, expecting a break of local lows. The fact is that the eurozone retail sales figures and the Fed's decision on the benchmark rate may change the market sentiment. A break and settlement below 1.0353, will allow the pair to tumble to 1.0306 and 1.0255, where it is recommended to leave the market. If the euro/dollar pair climbs during the European session and bears fail to protect 1.0441, it will be wise to avoid trading until the price hits 1.0480. A false break of this level will be a sign of a further decline. It is also possible to sell the asset from the high of 1.0525 or higher – from 1.0559, expecting a decline of 30-35 pips.

COT report

According to the COT report from June 7, the number of both long and short positions slumped. The fact is that most traders were very cautious expecting the ECB meeting. That is why market activity was very low. The time showed that it was a perfect idea to avoid trading. Last week, the ECB's representatives said that the regulator would raise the benchmark rate at the following meeting. However, even this announcement failed to prop up the euro. The US inflation data published on Friday caused a decline in risk assets, including the euro. A further trend of the euro/dollar pair depends on the Fed's decision on monetary policy and forecasts for the next few years. If the regulator's stance remains aggressive, the euro is likely to slide deeper to new yearly lows. The COT report unveiled that the number of long non-commercial positions declined by 6,305 to 230,248, while the number of short non-commercial positions dropped by 4,576 to 179,705. Although the euro is rather cheap, traders are not very interested in it. According to the week's results, the total non-commercial net position decreased to 50,543 against 52,272 a week earlier. The weekly closing price dropped to 1.0710 compared to 1.0742.

Signals of indicators:

Moving Averages

Trading is performed near 30- and 50-day moving averages, thus pointing to the sideways movement.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

In case of a decline, the support level will be located at a lower indicator's limit at 1.0398. If the pair increases, the resistance level will be located at the higher limit of the indicator at 1.0460.