The EUR/USD pair continued the falling process and even closed a bit below the corrective level of 76.4% (1.0917), but couldn't continue to fall after that. Thus, the pair is still being held back from a significant collapse, and the movement on the older charts is still horizontal. A battle between bears and bulls for the initiative in the coming weeks is starting. If the pair confidently closes below the level of 1.0917, further decline will be very likely. If the bulls hold the platform, the euro can quickly return to 1.1092.
Yesterday was not saturated with news. At least, from the USA and the EU. The producer price index in April slowed to 2.3% y/y, which will certainly affect the two main inflation indicators. If producer prices slow down, retail prices will also slow down. Thus, the current inflation indicators allow us to conclude that we saw the last FOMC rate hike in May. This is not very good news for the dollar, but traders have been actively getting rid of it in recent months. The graphic analysis may come to the fore, according to which the pair should roll back down. The rollback on the older charts is currently weak, which means the dollar can continue to grow.
The number of jobless claims for the past week increased by 264 thousand, about 20 thousand more than traders expected. Traders were not too upset about this, and the US currency rose in price yesterday. Also note the Bank of England meeting, which was more related to the British pound. The pound fell but could have pulled the euro down, as these currencies often move similarly. Today, the news background will be very weak. If the dollar continues to grow, we can discuss the bears taking over.
On the 4-hour chart, the pair confirmed its position below the ascending trend corridor. However, to confirm the bears' intentions, they must close confidently below the corrective level of 50.0% (1.0941), allowing for a continued fall toward the next corrective level of 38.2% (1.0610). A rebound from the level of 1.0941 will work in favor of the euro and a resumption of growth towards the level of 1.1273. For now, the horizontal movement is preserved.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 3,316 long contracts and closed 773 short contracts. The mood of major traders remains "bullish" and continues to strengthen generally. The total number of long contracts concentrated in the hands of speculators is now already 247 thousand, and short contracts - only 73 thousand. The European currency has been growing for more than half a year, but the information background only sometimes supports further strong growth of the pair. The ECB reduced the rate hike step to 0.25% last week, but bulls have not yet retreated from the market. The threefold difference between the number of long and short contracts speaks for itself about the proximity of the moment when bears will go on the offensive. The strong "bullish" mood persists for now, but I think the situation will change soon. In recent weeks, the euro has maintained high positions but has not grown further.
News calendar for the US and the EU:
USA - University of Michigan Consumer Sentiment Index (14:00 UTC).
On May 12, the economic events calendar contains only one entry. The influence of the news background on the mood of traders for the rest of the day can be very weak.
Forecast for EUR/USD and advice to traders:
You can open sell positions for the pair when it closes below the level of 1.0917 on the hourly chart, with a target of 1.0843. Purchases are possible when the price bounces off the level of 1.0917 on the hourly chart with a target of 1.1035.