FX.co ★ Forecast for EUR/USD on May 31. COT report. America is going to spend more than $ 6 trillion in fiscal year 2022.

EUR/USD – 1H.

The EUR/USD pair still closed under the upward trend corridor during the last trading day. However, the fall in the pair's quotes did not continue after that. Instead, a reversal was made in favor of the European currency, and the growth process resumed in the direction of the level of 1.2238. Thus, at this time, I can not make a clear conclusion that the bull traders have retreated from the market, and now the strengthening of the US currency will begin. Friday's fall generally looks like an accident, which the traders themselves corrected in the next hour.

Meanwhile, in the United States, Joe Biden submitted a draft budget for 2022 to Congress for consideration. Spending in the next fiscal year should be increased to $ 6 trillion. The budget contains a lot of programs to protect the lower and middle classes. Joe Biden himself noted that the prosperity of the American economy depends on its lower and middle class, on people who get up early in the morning, work hard, raise their children and pay taxes. Thus, Joe Biden believes that the best way for the economy to grow is "from the bottom up, not the other way around." By this, the US president wanted to say that he would primarily care about poor Americans and the middle class and not about the rich, for whom the new budget includes tax increases. It is worth noting that so far, this is only a draft budget, which can be reworked several more times. It is unlikely that the Republicans will support it in the form in which it exists now. We have already said that the main stumbling block is raising taxes for large companies and wealthy Americans. This idea is not supported even by some Democrats. However, if Biden manages to win over all the members of the same party, he will not even need the help of the Republicans.

EUR/USD – 4H.

On the 4-hour chart, the pair's quotes completed a close under the ascending trend line, and this is already a severe bid for a reversal in favor of the US currency and a new strong drop in the pair's quotes in the direction of the corrective level of 1.2027. Thus, I believe that bull traders will feel more confident above the levels of 1.2238 and 1.2266. However, bear traders will cheer up as soon as the quotes return under the trend line. In general, the situation is not the most unambiguous at this time.

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). However, a trend change is now emerging on the lower charts.

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 28, the calendar of economic events in the European Union was empty, and the reports from the United States did not interest traders. And trading on the euro/dollar pair was already quite active.

News calendar for the United States and the European Union:

On May 31, the calendars of economic events are empty in the European Union and the United States, so that the information background will be absent today.

COT (Commitments of Traders) report:

Last Friday, another COT report was released, which again showed an increase in the "bullish" mood among speculators. The category of "Non-commercial" traders again increased long contracts, which were opened in the number of 3,781. In addition, speculators also got rid of 1,442 short contracts. Thus, large traders show their desire to continue buying the European currency, leading to even greater growth. In addition, I note that the total number of contracts for the European currency continues to grow and during the reporting week increased by 29 thousand, which indicates an increase in the interest of traders.

EUR/USD forecast and recommendations for traders:

I recommend selling the pair at a new close under the trend line on the 4-hour chart with targets of 1.2068 and 1.1990. I do not recommend buying the pair now, as there is a high probability of a change in the direction of the trend in the near future.

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.