EUR/USD. May 29. The dollar finds market support again
May 29, 2023 11:23 am
The EUR/USD pair continued downward movement within the descending trend corridor on Friday. The nearest target is the corrective level of 23.6% (1.0726). If the pair consolidates above the corridor, it will favor the European currency and initiate growth towards levels 1.0785 and 1.0843. Since the pair has been falling since May 4, almost a month now, it is time for a correction.
On Friday, we witnessed a significant amount of economic information. Durable Goods Orders in the US increased by 1.1% in April, surpassing traders’ more modest expectations. Personal incomes rose by 0.4% m/m, while personal spending increased by 0.8% m/m. The University of Michigan, Consumer Sentiment Index, decreased from 63.5 to 59.2, but forecasts were even worse. Thus, one report was strong, one was weak, and two were neutral. However, among traders, the report that had the greatest impact was the Durable Goods Orders, which turned out to be the strongest. Such goods are expensive, so an increase in volume indicates consumer demand and money flow, which is positive for the economy. The dollar’s rise after the release of this particular report was expected.
Therefore, the correction could have started on Friday if it weren’t for the US statistics. But what didn’t happen on Friday may occur on Monday or Tuesday. Today, the economic events calendar is empty, and nothing will hinder traders from buying if they desire to do so. Important reports on inflation in the Eurozone and the US labor market will be released this week. These data will not support the euro currency, but a correction is still needed. Traders will try to seize any opportunity to buy. The hourly chart shows a trend reversal in the descending corridor.
On the 4-hour chart, the pair has consolidated below the ascending trend corridor and the corrective level of 50.0% (1.0941), indicating a continuation of the decline towards the next corrective level of 38.2% (1.0610). The “bullish” divergence on the MACD indicator suggests a slight increase, but it can be canceled anytime. A rebound of the pair from the level of 1.0610 will favor the euro currency and some growth.
Commitments of Traders (COT) report:
In the last reporting week, speculators closed 8,666 long contracts and opened 4,687 short contracts. The sentiment of major traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now stands at 250,000, while short contracts amount to only 76,000. Strong bullish sentiment is still present, but the situation will change soon. The European currency has already started to decline. The high value of open long contracts suggests that buyers may close them soon (or have already started, as indicated by the latest COT report). There is currently an excessive bias toward bulls. The current figures indicate a decline in the euro soon. I would also like to point out that more contracts are concentrated in the hands of the “Commercial” group. This means they have a greater influence on the pair’s exchange rate.
News calendar for the US and the European Union:
On May 29, the economic events calendar contains no important entries. The impact of the information background on traders’ sentiment for the remaining part of the day will be absent.
Forecast for EUR/USD and advice for traders:
New sales of the pair can be initiated on a breakout below the upper line of the corridor on the hourly chart with a target of 1.0652. I recommend buying after the price closes above the descending trend corridor on the hourly chart, with targets at 1.0785 and 1.0843.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD pair continued downward movement within the descending trend corridor on Friday. The nearest target is the corrective level of 23.6% (1.0726). If the pair consolidates above the corridor, it will favor the European currency and initiate growth towards levels 1.0785 and 1.0843. Since the pair has been falling since May 4, almost a month now, it is time for a correction.
On Friday, we witnessed a significant amount of economic information. Durable Goods Orders in the US increased by 1.1% in April, surpassing traders’ more modest expectations. Personal incomes rose by 0.4% m/m, while personal spending increased by 0.8% m/m. The University of Michigan, Consumer Sentiment Index, decreased from 63.5 to 59.2, but forecasts were even worse. Thus, one report was strong, one was weak, and two were neutral. However, among traders, the report that had the greatest impact was the Durable Goods Orders, which turned out to be the strongest. Such goods are expensive, so an increase in volume indicates consumer demand and money flow, which is positive for the economy. The dollar’s rise after the release of this particular report was expected.
Therefore, the correction could have started on Friday if it weren’t for the US statistics. But what didn’t happen on Friday may occur on Monday or Tuesday. Today, the economic events calendar is empty, and nothing will hinder traders from buying if they desire to do so. Important reports on inflation in the Eurozone and the US labor market will be released this week. These data will not support the euro currency, but a correction is still needed. Traders will try to seize any opportunity to buy. The hourly chart shows a trend reversal in the descending corridor.
On the 4-hour chart, the pair has consolidated below the ascending trend corridor and the corrective level of 50.0% (1.0941), indicating a continuation of the decline towards the next corrective level of 38.2% (1.0610). The “bullish” divergence on the MACD indicator suggests a slight increase, but it can be canceled anytime. A rebound of the pair from the level of 1.0610 will favor the euro currency and some growth.
Commitments of Traders (COT) report:
In the last reporting week, speculators closed 8,666 long contracts and opened 4,687 short contracts. The sentiment of major traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now stands at 250,000, while short contracts amount to only 76,000. Strong bullish sentiment is still present, but the situation will change soon. The European currency has already started to decline. The high value of open long contracts suggests that buyers may close them soon (or have already started, as indicated by the latest COT report). There is currently an excessive bias toward bulls. The current figures indicate a decline in the euro soon. I would also like to point out that more contracts are concentrated in the hands of the “Commercial” group. This means they have a greater influence on the pair’s exchange rate.
News calendar for the US and the European Union:
On May 29, the economic events calendar contains no important entries. The impact of the information background on traders’ sentiment for the remaining part of the day will be absent.
Forecast for EUR/USD and advice for traders:
New sales of the pair can be initiated on a breakout below the upper line of the corridor on the hourly chart with a target of 1.0652. I recommend buying after the price closes above the descending trend corridor on the hourly chart, with targets at 1.0785 and 1.0843.
The material has been provided by InstaForex Company – www.instaforex.com
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