On Wednesday, the EUR/USD pair experienced a new rise toward the corrective level of 38.2% (1.0726), followed by a rebound and a slight decline. On Thursday morning, the upward movement resumed back toward the level of 1.0726. A new rebound will lead to a further decline toward the Fibonacci level of 23.6% (1.0652). If the pair consolidates above the 38.2% level, it increases the chances of continued growth towards the next corrective level of 50.0% (1.0784).
Yesterday was the most uneventful day of the week in terms of information. There were no significant events throughout the day, but today the situation will improve slightly. The key report of the day will be the GDP in the first quarter in its final value. I want to remind you that each quarterly GDP report has three estimates, and the last third estimate is the most important. Traders expect the economic growth in the first quarter will be 0%. The future monetary policy decision by the ECB will depend on the value of this report, as a decline in the economy may necessitate a reconsideration of the current tightening policy.
No one is expecting a positive surprise for the first quarter's GDP. The annual figure may reach 1.2%, but it is slowing down faster than the quarterly figure. Therefore, the quarterly report is more important. The report on initial jobless claims in the US will be released in the second half of the day, but it is unlikely to interest traders. The FOMC meeting is scheduled for next week, but the consumer price index for May will be announced just a day before it. It is difficult to say whether the new inflation figure will be considered. It is also difficult to say whether the US regulator will raise rates again in June. Market opinions are divided approximately 50-50. However, the recent statements from FOMC members indicate that the rates will continue to rise soon.
On the 4-hour chart, the pair experienced a reversal in favor of the euro, but the upward movement was short-lived. The decline in quotes may resume toward the corrective level of 38.2% (1.0610). A pair rebound from this level will again give traders hope for a slight rise toward the Fibonacci level of 50.0% (1.0941). If the quotes consolidate below the level of 1.0610, it increases the chances of continuing the decline toward the Fibonacci level of 23.6% (1.0201). The movement is increasingly resembling a horizontal pattern with each passing day.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 8,253 long and 242 short contracts. The sentiment of major traders remains "bullish" but has slightly weakened in recent weeks. The total number of long contracts speculators hold is 242,000, while short contracts amount to only 76,000. The strong bullish sentiment still prevails, but the situation will change soon. The European currency has been declining for two consecutive weeks. The high value of open long contracts suggests that buyers may start closing them soon (or may have already started, as indicated by the last two COT reports). There is currently an excessive bias toward bulls. The current figures allow for a continuation of the euro's decline soon.
News calendar for the US and the European Union:
European Union - GDP in the first quarter (09:00 UTC).
US - Initial jobless claims (12:30 UTC).
On June 8th, the economic events calendar includes two entries, which are not the most important, but the GDP report should still be carefully examined. The impact of the information background on traders' sentiment today may be weak.
Forecast for EUR/USD and advice for traders:
New pair sales can be initiated on a breakout below the level of 1.0726 on the hourly chart, with targets at 1.0652 and 1.0609. I recommend buying the pair on a breakout above the level of 1.0610 on the 4-hour chart, with targets at 1.0726 and 1.0784.