Analysis of the trading week of May 30 - June 3 for the EUR/USD pair. COT report. The euro is trying to grow with all its

Long-term perspective.

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The EUR/USD currency pair has decreased by 30-40 points during the current week. In general, as we have already said in the articles during the trading week itself, traders are now thinking: what to do next with the European currency? Recall (and this is especially clearly seen on the 24-hour TF) that the downward trend persists and has been going on for almost 2 years. Thus, an increase of 400 points is simply not able to break it. Thus, the euro currency has taken one step in the direction of an upward trend, but its fall may resume at any moment. Formally, the euro currency has already adjusted. This is again seen in the illustration above. This growth of the euro even pulls very weakly for a correction, it is already too small. But formally, the correction has happened, so now the euro can resume the downward trend to its 20-year lows and below. Unfortunately for the European currency, the fundamental, macroeconomic and geopolitical picture has not changed much in recent weeks. The euro could count on strengthening, but only because the instrument cannot move constantly only in one direction. The fundamental background is still expressed by the weakness of the ECB's position, which cannot decide in any way whether it will raise the key rate this year or not, as well as the strength of the Fed's position, which continues to follow the path of aggressive monetary policy tightening. The macroeconomic background this week was also in favor of the dollar: inflation in the European Union continues to accelerate, but no one understands how to extinguish it now. Recall that the ECB continues to pour money into its economy under the APP program. That is, what kind of tightening can we talk about now, even if the quantitative easing program has not yet been completed? And at the end of the week, a report on Non-farm companies in the United States was published, which showed good dynamics and exceeded forecasts. Well, there is nothing to say about geopolitics now. There is no sign that the military conflict in Ukraine will end at least until the end of 2022. The whole world is now busy solving the problem of grain export from Ukraine, as without it many countries may face famine.

COT analysis.

The latest COT reports on the euro currency raised a lot of questions. Recall that in the last few months, they have shown a frank "bullish" mood of professional players, but at the same time, the European currency has been falling all the time. Now the situation has started to change, not at the expense of the market players themselves, but because the euro has started to grow. That is, the mood of traders remains "bullish" (according to COT reports), and the euro has started to grow because it needs to be adjusted from time to time. But at the same time, the "bullish" mood has been maintained for quite a long time, and the euro has barely managed to add 400 points in the last few weeks. During the reporting week, the number of buy contracts decreased by 0.5 thousand, and the number of shorts from the "Non-commercial" group decreased by 13.8 thousand. Thus, the net position increased by 14.3 thousand contracts per week. The number of buy contracts exceeds the number of sell contracts for non-commercial traders by 50 thousand. From our point of view, this is because the demand for the US dollar remains much higher than the demand for the euro currency. Now a certain "respite" has begun for the euro, but this does not mean that the global downward trend will not resume tomorrow, and the COT reports data will not continue to contradict the real state of things on the market. That is why we believe that it is still impossible to rely on such report data in forecasting.

Analysis of fundamental events.

During the current week, the only important event in the European Union was inflation. It cannot be said that the market paid attention to this report at all. But at the same time, the very essence of the report is now "empty". Well, inflation is growing in the EU, so what? It is growing everywhere now, but the ECB is not doing anything to make it start to decline and, it seems, is still acting according to the "Lagarde plan", which is still waiting for inflation to begin to decline "by itself". An increase in inflation in the EU does not at all mean a tightening of the rhetoric of ECB members. In the US, as usual, the reports of ADP and Nonfarm Payrolls did not match. If ADP turned out to be significantly worse than forecasts, then Nonfarm Payrolls exceeded all forecasts of experts. True, unemployment has also increased, from 3.5% to 3.6%, but we have already said that this is rather a positive phenomenon than a negative one. The shortage of labor in the labor market leads to an increase in wages, which, in turn, spurs inflation to further growth.

Trading plan for the week of June 6-10:

1) On the 24-hour timeframe, the pair stopped just a step away from the minimum for the last 20 years - 1.0340. Almost all factors still speak in favor of the long-term growth of the US dollar. So far, the pair has managed to adjust only to the Kijun-sen line, so it does not make sense to seriously count on a strong upward movement yet. Overcoming the Ichimoku cloud will allow the European currency to count on stronger growth already.

2) As for the sales of the euro/dollar pair, they are still more relevant now. If the price bounces and fixes back below the critical line, this will be a new signal for a new fall with a target of 1.0172 (127.2% Fibonacci).

Explanations of the illustrations:

Price levels of support and resistance (resistance /support), Fibonacci levels - target levels when opening purchases or sales. Take Profit levels can be placed near them.

Ichimoku indicators (standard settings), Bollinger Bands (standard settings), MACD (5, 34, 5).

Indicator 1 on the COT charts - the net position size of each category of traders.

Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.


Trading analysis offered by RobotFX and Flex EA.
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