Analysis of EUR/USD 5M
No notable movements on Monday. There were few news reports, but at least there was something for the market to digest. However, the market did not find anything interesting, considering only the retail sales report in the United States to be more or less important. But let's go in order. The EU industrial production for February was released, which fully coincided with forecasts. In addition, there were several speeches by European Central Bank representatives. Francois Villeroy de Galhau said that the ECB " is likely to cut interest rates in June," and Gediminas Simkus said that "there is a more than 50% probability that there will be more than three rate cuts this year,". Both of these statements can exert pressure on the euro, as the ECB will begin easing monetary policy earlier than the Federal Reserve and will lower rates more aggressively than the Fed.
Most likely, based on these factors, we did not even see a minor bullish correction on Monday. The price reached the area of 1.0658-1.0669 and bounced off it. Therefore, the euro may fall on Tuesday. We support the downward movement, as we do not see any factors that would support the single currency.
Only one trading signal was formed yesterday. Throughout the entire European trading session, the pair traded along the area of 1.0658-1.0669, but during the US session, it finally bounced off it. After this sell signal, the price was able to move in the intended direction by no more than 20-25 pips. You can try to leave this trade open with a Stop Loss order above the level of 1.0669.
COT report:
The latest COT report is dated April 9th. The net position of non-commercial traders has been bullish for quite some time. Basically, the number of long positions in the market is higher than the number of short positions. However, at the same time, the net position of non-commercial traders (red line) has been decreasing in recent months, while that of commercial traders (blue line) has been increasing. This shows that market sentiment is turning bearish, as speculators continue to sell the euro. Furthermore, we don't see any fundamental factors that can support the euro's strength, while technical analysis also suggests a downtrend. Three descending trend lines on the weekly chart indicate that there's a good chance of continuing the decline.
At present, the red and blue lines are moving towards each other (indicating a trend reversal after a rise). Therefore, we believe that the euro will fall further. During the last reporting week, the number of long positions for the non-commercial group decreased by 12,800, while the number of short positions decreased by 28,700. Accordingly, the net position increased by 15,900. Overall, both the euro and the net position continue to decline. The number of buy contracts is higher than the number of sell contracts among non-commercial traders by only 32,700 (previously 31,000).
Analysis of EUR/USD 1H
On the 1-hour chart, EUR/USD resumed its downward trend. Since expectations for Fed rate cuts in 2024 have significantly been reduced, the US dollar can and should continue to rise for a couple more months at least. Especially since the ECB is expected to ease its monetary policy very soon. Practically all the factors point to the US dollar's growth.
On April 16, we highlight the following levels for trading: 1.0530, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0836, 1.0886, 1.0935, 1.1006, 1.1092, as well as the Senkou Span B line (1.0805) and the Kijun-sen (1.0755). The Ichimoku indicator lines can move during the day, so this should be taken into account when identifying trading signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 15 pips. This will protect you against potential losses if the signal turns out to be false.
In the European Union, the economic sentiment indices from the ZEW Institute for the euro area and Germany may provide impetus to traders. However, in general, these are not crucial data. In the United States, reports on building permits, housing starts, and industrial production will be released. These are also relatively minor reports that are unlikely to trigger a strong market reaction. On Tuesday, it would be better to focus on technical analysis, especially in the area of 1.0658-1.0669.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;
Yellow lines are trend lines, trend channels, and any other technical patterns;
Indicator 1 on the COT charts is the net position size for each category of traders;
