EUR/USD. May 30. The euro currency cannot find support
May 30, 2023 11:22 am
On Tuesday, the EUR/USD pair continued its downward movement within a descending trend corridor, which still characterizes traders’ sentiment as “bearish.” The decline is towards the corrective level of 23.6% (1.0652). A rebound of the pair’s exchange rate from this level will favor the euro currency and could lead to some growth toward the Fibonacci level of 38.2% (1.0726). Closing quotes below the level of 1.0652 will increase the chances of further decline toward the next level at 1.0609.
The information background did not bring any positive news for traders on Monday. The only news of the day was the announcement of an agreement between Republicans and Democrats on the debt limit, which needs to be raised by June 1 to avoid default. Yesterday was a holiday in the United States, and trader activity was zero. Today’s rise in the dollar may be related to the news about the national debt. At least there were no other significant announcements on Monday or Tuesday, so the choices were limited.
The resolution of the debt issue removes some restrictions on the dollar. Although the currency has been growing in the past month, it can accelerate. Many analysts have repeatedly stated that a potential default in the American economy harms the dollar’s exchange rate. Currently, this factor no longer affects traders’ sentiment. Undoubtedly, the entire US Congress still needs to sign the agreement, but it is a much smaller problem than a week ago. Since the pair is not even attempting to exit the descending corridor, I see no grounds for buying the euro currency. The information background for the American currency remains decent and improves over time. The euro currency has no support yet. Several important reports will be released in the European Union and the United States this week, and they may help the euro currency rise slightly.
On the 4-hour chart, the pair continues downward toward the corrective level of 38.2% (1.0610). A new bullish divergence in the MACD indicator allows for some small growth expectations, but it can be invalidated at any moment, just like the previous one. A rebound of the pair’s exchange rate from the level of 1.0610 will work in favor of the EU currency and some growth. Closing below 1.0610 increases the probability of further decline toward the next Fibonacci level at 23.6% (1.0201).
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 large traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now amounts to 250,000, while short contracts amount to only 76,000. A strong bullish sentiment is maintained, but the situation will change soon. The euro has already started to decline. The high value of open long contracts suggests that buyers may start to close them soon (or may have already started, as indicated by the latest COT report). There is currently an excessive imbalance toward the bulls. The current figures indicate a decline in the euro soon. I would also like to draw attention to the fact that a larger number of contracts are concentrated in the hands of the “commercial” group. This means that they have a greater influence on the pair’s exchange rate.
News calendar for the United States and the European Union:
US – CB Consumer Confidence Index (14:00 UTC).
On May 30, the economic events calendar contained no important entries. Only the CB Consumer Confidence Index in the United States. The impact of the background information on traders’ sentiment for the rest of the day will be absent or minimal.
Forecast for EUR/USD and trader recommendations:
New pair sales can be opened on a breakout from the upper line of the corridor on the hourly chart with a target of 1.0652. Or you can continue with previously opened sales. I recommend buying only after closing 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 information background did not bring any positive news for traders on Monday. The only news of the day was the announcement of an agreement between Republicans and Democrats on the debt limit, which needs to be raised by June 1 to avoid default. Yesterday was a holiday in the United States, and trader activity was zero. Today’s rise in the dollar may be related to the news about the national debt. At least there were no other significant announcements on Monday or Tuesday, so the choices were limited.
The resolution of the debt issue removes some restrictions on the dollar. Although the currency has been growing in the past month, it can accelerate. Many analysts have repeatedly stated that a potential default in the American economy harms the dollar’s exchange rate. Currently, this factor no longer affects traders’ sentiment. Undoubtedly, the entire US Congress still needs to sign the agreement, but it is a much smaller problem than a week ago. Since the pair is not even attempting to exit the descending corridor, I see no grounds for buying the euro currency. The information background for the American currency remains decent and improves over time. The euro currency has no support yet. Several important reports will be released in the European Union and the United States this week, and they may help the euro currency rise slightly.
On the 4-hour chart, the pair continues downward toward the corrective level of 38.2% (1.0610). A new bullish divergence in the MACD indicator allows for some small growth expectations, but it can be invalidated at any moment, just like the previous one. A rebound of the pair’s exchange rate from the level of 1.0610 will work in favor of the EU currency and some growth. Closing below 1.0610 increases the probability of further decline toward the next Fibonacci level at 23.6% (1.0201).
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 large traders remains “bullish” and continues to strengthen overall. The total number of long contracts held by speculators now amounts to 250,000, while short contracts amount to only 76,000. A strong bullish sentiment is maintained, but the situation will change soon. The euro has already started to decline. The high value of open long contracts suggests that buyers may start to close them soon (or may have already started, as indicated by the latest COT report). There is currently an excessive imbalance toward the bulls. The current figures indicate a decline in the euro soon. I would also like to draw attention to the fact that a larger number of contracts are concentrated in the hands of the “commercial” group. This means that they have a greater influence on the pair’s exchange rate.
News calendar for the United States and the European Union:
US – CB Consumer Confidence Index (14:00 UTC).
On May 30, the economic events calendar contained no important entries. Only the CB Consumer Confidence Index in the United States. The impact of the background information on traders’ sentiment for the rest of the day will be absent or minimal.
Forecast for EUR/USD and trader recommendations:
New pair sales can be opened on a breakout from the upper line of the corridor on the hourly chart with a target of 1.0652. Or you can continue with previously opened sales. I recommend buying only after closing 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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