The EUR/USD pair continued its upward movement on Wednesday, reaching the corrective level of 76.4%–1.0892. A rebound of the pair's rate from this level will favor the American currency and some decline towards the Fibonacci level of 61.8% (1.0837). I want to note that at this time, the "bullish" trend is maintained, and the pair's quotes have also significantly exceeded the ascending trend corridor. Bulls continue to attack, disregarding anything and feeling no boundaries. Consolidation of quotes above the level of 1.0892 will allow for further growth towards the next corrective level of 100.0%–1.0982.
The wave situation remains unchanged. The last downward wave ended on May 1st and failed to approach the low of the previous wave, while the new upward wave has already broken the peak of the previous wave and continues to form. Thus, a "bullish" trend has formed, and bull traders attack almost every day. This trend is quite weak, and does not believe it will last long. However, the quotes have been rising for a month now, and bears cannot push the pair even to the lower line of the corridor. Thus, there are no signs of the end of the "bullish" trend.
The background information on Wednesday was very important for the US dollar. And, as we see, it could not benefit from it. Traders were prepared for a slight decrease in the consumer price index in April, and they were also prepared to see a decrease in core inflation by 0.2% to 3.6% y/y. If they were prepared, why did the US dollar fall by 60 pips after the report? The reason is that bulls dominate the market. As long as they are not satisfied, we will not see a decline in quotes (i.e., a rise in the American currency). I do not believe that yesterday, the information background in the US was so bad that the dollar fell so sharply. Nevertheless, the fact remains: the "bullish" trend persists and is still far from being fixed below the channel.
On the 4-hour chart, the pair consolidated above the "wedge" and rose to the Fibonacci level of 50.0% - 1.0862. The last segment of the euro's rise looks ambiguous, so I am not confident in the continuation of the quotes' growth. However, signals for sales are needed to expect a decline, which is currently absent. Emerging divergences are also not observed today. The growth process may continue towards the next correction level of 61.8%–1.0959.
Commitments of Traders (COT) report:
During the last reporting week, speculators opened 3409 long contracts and closed 7958 short contracts. The sentiment of the "non-commercial" group turned "bearish" a couple of weeks ago, but now there is a balance between bulls and bears. The total number of long contracts concentrated in the hands of speculators is now 170 thousand, and short contracts - 166 thousand. However, the situation will continue to change in favor of bears. In the second column, the number of short positions has increased from 140 thousand to 166 thousand over the last three months. Over the same period, the number of long positions decreased from 202 thousand to 170 thousand. Bulls have dominated the market for too long, and now they need a strong information background to resume the "bullish" trend. A series of bad reports from the US supported the euro, but in the long run, this is not enough.
News calendar for the US and the Eurozone:
US - Building Permits (12:30 UTC).
US - Housing Starts (12:30 UTC).
US - Philadelphia Fed Manufacturing Index (12:30 UTC).
US - Initial Jobless Claims (12:30 UTC).
On May 16th, the economic events calendar contains several entries, none of which stand out. The impact of the information background on traders' sentiment for the remaining part of the day may be moderate.
EUR/USD forecast and trader advice:
Sales of the pair are possible on a rebound of quotes from the level of 1.0892 on the hourly chart, with targets at 1.0837 and the lower line of the ascending corridor. Euro purchases could be opened after the pair is fixed above the level of 1.0806 on the hourly chart, with targets at 1.0837 and 1.0892. Both targets have been hit. New purchases - on a rebound from the level of 1.0837 or on closing above the level of 1.0892 with a target of 1.0982.