EUR/USD 5-Minute Analysis
On Wednesday, the EUR/USD currency pair traded higher once again. As soon as the pair begins even a slight correction, the market immediately finds new reasons to sell off the U.S. dollar. We believe this situation accurately represents the general market sentiment: the market primarily focuses on selling the dollar, and nothing seems to divert it from this course — except Donald Trump. However, the U.S. president is not rushing to make peace with his trade partners, so the market continues to enthusiastically and energetically sell off the dollar.
Yesterday, two of the day's most important reports turned out to be disappointing for the dollar. We warned that a strong reaction to the macroeconomic background was unlikely, but the market happily seized the new reason to sell the dollar. The ADP report on private-sector employment came in significantly weaker than expected, and the U.S. ISM services PMI registered at just 49.9 points against the forecast of 52. As a result, in the second half of the day, the market was certain about what to do. The uptrend remains intact and continues.
Yesterday, a great buy signal was formed in the 5-minute time frame. At the start of the European session, the price bounced off the 1.1362 level and then traded upward for most of the day. Volatility wasn't high, but after the release of the poor reports during the U.S. session, the dollar's fall accelerated. By evening, the price reached the 1.1426 level, where profits could be locked in, totaling about 50 pips.
COT Report
The latest COT report is dated May 27. The chart above shows that the net position of non-commercial traders was bullish for a long time; bears barely gained the upper hand at the end of 2024 but quickly lost it. Since Trump took office as U.S. president, the dollar has rapidly declined in value. We cannot be 100% certain that the dollar's decline will continue, but current global developments point precisely in that direction.
We still do not see any fundamental factors supporting the euro, but one decisive factor remains for the dollar's decline — Trump's trade wars. The global downtrend persists, but what value does a trend have now? The dollar might recover once Trump ends his trade wars — but will he end them? And when?
The red and blue lines have crossed again, so the market trend is again "bullish." Over the last reporting week, the number of long positions in the "Non-commercial" group decreased by 1,700, while shorts decreased by 6,700. Thus, the net position fell by 5,000 over the week. However, COT reports come with a one-week delay. At the moment, the market is actively buying EUR/USD again.
EUR/USD 1-Hour Analysis
On the hourly time frame, the EUR/USD pair maintains its local uptrend, which is part of a four-month rally. The dollar's prospects still depend on developments related to the Global Trade War. If trade agreements are signed and tariffs are lowered, the dollar could start recovering. However, currently, there are no peace deals, and Trump continues to make strange decisions and statements that continue to shock the market. The market expects the worst, and Trump regularly confirms that expectation.
For June 5, we highlight the following trading levels: 1.0823, 1.0886, 1.0949, 1.1006, 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1607, as well as the Senkou Span B (1.1317) and Kijun-sen (1.1361) lines. Ichimoku indicator lines can shift during the day, which should be considered when determining trading signals. Don't forget to set a Stop Loss to breakeven if the price moves 15 pips in the right direction — this will protect against potential losses if the signal turns out to be false.
On Thursday, the EU is scheduled to announce the results of the European Central Bank meeting and hold a press conference with Christine Lagarde. The ECB is expected to lower the key rate. Lagarde could guide the market on how many more rounds of monetary easing to expect. However, the euro continues to rise, so even dovish news from the ECB is unlikely to have any significant impact.
Illustration Explanations:
- Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
- Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
- Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
- Yellow lines – trend lines, trend channels, and other technical patterns.
- COT Indicator 1 on the charts – the size of the net position for each category of traders.
