In my morning forecast, I focused on the 1.1336 level and planned to make market entry decisions from there. Let's look at the 5-minute chart and see what happened. A decline and the formation of a false breakout confirmed the correct entry point for buying the euro, but a major rally didn't follow, and trading remained around the 1.1336 level. The technical picture was revised for the second half of the day.

To Open Long Positions on EUR/USD:

The euro fell in response to weak retail sales data from Germany, but good lending figures in the Eurozone limited the downside. In the second half of the day, an important report on the U.S. Core Personal Consumption Expenditures (PCE) Price Index will be released, which could shape the Fed's future stance on interest rates. We are also awaiting data on changes in U.S. income and spending levels, and the University of Michigan Consumer Sentiment Index. The day will conclude with a speech by FOMC member Raphael Bostic. In the case of a bearish market reaction—which seems more likely—focus will shift to defending the 1.1296 support. A false breakout there will provide an opportunity to buy EUR/USD, aiming for a recovery toward 1.1342. A breakout and retest of this range will confirm the correct entry point, with an exit around 1.1386. The furthest target will be 1.1416, where I plan to take profit. If EUR/USD declines and there is no activity around 1.1296 by the end of the week, pressure on the pair will intensify, leading to a deeper decline. In that case, bears could push the pair down to 1.1256. I would only look to buy after a false breakout there. Otherwise, I plan to open long positions immediately on a rebound from 1.1214, aiming for an intraday correction of 30–35 points.

To Open Short Positions on EUR/USD:

Euro sellers have asserted themselves and currently control the market. However, weak statistics may limit the pair's downward potential, so in case of a bullish reaction to the data, it's best to wait for a false breakout around the new resistance at 1.1342, where the moving averages are located. Only then would it make sense to enter short positions aiming for a decline toward 1.1296. A breakout and consolidation below this range would be a suitable setup for selling, with a target at 1.1256. The furthest target will be around 1.1214, where I will fix profits. If EUR/USD moves upward during the second half of the day and bears show no activity around 1.1342, buyers may achieve a larger rally and a renewal of 1.1386. I would only sell after a failed breakout there. Otherwise, I plan to open short positions immediately on a rebound from 1.1416, aiming for a downward correction of 30–35 points.

According to the COT (Commitments of Traders) report for May 20, there was an increase in short positions and a decrease in long positions. Given that the EU authorities are actively trying to reach a trade agreement with the U.S.—which even led to the postponement of higher tariffs until July—the chances of strengthening the euro are fairly good. Combined with the Fed's dovish stance, the chances for dollar growth are reduced. The COT report indicated that long non-commercial positions fell by 3,507 to 206,042, while short non-commercial positions rose by 6,814 to 131,589, narrowing the gap between longs and shorts by 4,489.

Indicator Signals:

Moving Averages: Trading is below the 30- and 50-day moving averages, indicating further downside for the pair.

Note: The periods and prices for the moving averages discussed here refer to the H1 chart and differ from the standard daily moving averages on the D1 chart.

Bollinger Bands: In the event of a decline, the lower boundary of the indicator around 1.1334 will act as support.

Indicator Descriptions:

• Moving Average: Smooths volatility and noise to define the current trend. Period – 50 (yellow line on the chart).
• Moving Average: Smooths volatility and noise to define the current trend. Period – 30 (green line on the chart).
• MACD (Moving Average Convergence/Divergence): Fast EMA – 12; Slow EMA – 26; SMA – 9.
• Bollinger Bands: Period – 20.
• Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes under specific requirements.
• Long non-commercial positions: The total number of open long positions held by non-commercial traders.
• Short non-commercial positions: The total number of open short positions held by non-commercial traders.
• Net non-commercial position: The difference between short and long positions held by non-commercial traders.