EUR/USD 1H
The EUR/USD pair started all the same downward movement in the hourly timeframe towards the evening of Thursday. It is still difficult to say whether this will be a more or less tangible correction or the beginning of a new downward trend. One thing is for sure, buyers have not found the strength to purchase the European currency above the resistance level of 1.1417. In principle, this is logical, since there was no important news yesterday that could strengthen the dollar on all fronts. Most likely, we are talking about the banal closing of part of the profit by buyers, which caused quotes of the euro-dollar pair to fall. Therefore, price taking below the critical line will make it possible for the pair to continue moving down, which, from our point of view, taking into account all economic factors, is more logical. So far, we expect a fall to the first rising trend line.
EUR/USD 15M
The lower channel of linear regression finally turned down on the 15-minute timeframe on Thursday, which now signals a possible change in the trend. The index remains up, indicating how precarious the position of sellers is now.
The COT report
The European currency continued to rise in price for most of this week. Thus, professional traders over the past few days either continued to reduce contracts for selling the euro, or, conversely, began to build up contracts for the purchase of euros. Today's COT report will show if we are right in our assumptions. At the same time, if the total number of sales contracts again turns out to be higher, or if it turns out that professional traders (speculators) did not trade the euro for an increase, this will be even more surprising than the last report and again make us assume a strong drop in the European currency .
The overall fundamental background for the EUR/USD pair remains neutral. Over the past day, nothing remarkable has happened either in the United States or in the European Union. A day earlier, market participants ignored the results of the Federal Reserve meeting, Jerome Powell's statement and updated forecasts on key macroeconomic indicators. Yesterday, a single report was published on applications for unemployment benefits in the United States, which is no longer an important report. Thus, a slurred movement was observed for most of the day. Buyers were obviously already full of purchases, but did not take profits, hoping for a new growth. Sellers had no reason to start trading lower. It all ended prosaically. Traders just started to exit the market and close the longs, which led to starting a correction. On June 12, the European Union plans to publish a report on industrial production for April, which is expected to decrease by 29.5% (!!!) in annual terms and by 20% in monthly terms. It is unlikely that this indicator, even if it is noticed by traders, will support the euro. But tomorrow, we will receive information on the consumer confidence index from the University of Michigan, which is also not extravagant now. Perhaps today we will also receive information on the results of the Eurogroup meeting, which most likely addressed issues of additional financing for the EU economy (the most affected sectors due to the coronavirus crisis).
Based on the foregoing, we have two trading ideas for June 12:
1) It is possible for the EUR/USD pair to resume growth if buyers are able to gain a foothold above the resistance level of 1.1417, from which a rebound has occurred earlier. To do this, you may need a positive factor from the European Union or negative from overseas. Without fulfilling at least one of these conditions, we believe that the option of moving down is now more likely. Thus, after overcoming the Kijun-sen line, we recommend selling the pair with goals of the Senkou Span B line (1.1158), the trend line (1.1090) and the support level of 1.0974. Potential Take Profit range from 150 to 340 points.
2) If buyers still find the strength to hold the pair in their hands, then the upward movement may still resume, but to identify this scenario, you need to overcome the level of 1.1417. Then we will recommend buying the euro again with the goal of the resistance level of 1.1542. Potential Take Profit in this case is 120 points.
