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Hello, dear traders! On Monday, EUR/USD reversed downward and consolidated below the 127.2% retracement level of 1.0705. The downward move may extend to the 161.8% retracement level of 1.0574. In the past several days, the pair closed either above or below the mark. In other words, the price is now mainly moving sideways, while bears are somewhat reluctant to act. On Monday, amid the lack of fundamentals, traders focused on the geopolitical background. The EU fears the shortage of grain as Ukraine's seaports continue to remain blocked by Russia.
Amid rising oil and gas prices, anti-Russian sanctions, and cutting off almost all ties with Russia, the last thing the EU now needs is a food crisis. Russia is now called on to allow the secure export of grain through Ukrainian ports in the Black sea. The problem is that the Black Sea is mined, and it is not entirely clear who will demine it. In the meantime, inflation in the eurozone may accelerate due to rising food prices, including grain and sunflower oil.
On the H4 chart, EUR/USD bounced off the 100.0% retracement level of 1.0638 to the upper limit of the descending trend corridor. Market sentiment is still bearish. In case of consolidation above the corridor, the pair may rise to the 76.4% retracement level of 1.1041. Alternatively, if the pair settles below the 100.0% retracement level, the downtrend will extend to the 127.3% retracement level of 1.0173.
Commitments of Traders (COT):
Last week, 519 long positions and 13,861 short ones were closed, indicating bullish bias. The number of long positions now totals 236,000, while the number of short ones is 184,000. Although non-commercial traders have been bullish in recent months, the euro is still in a bearish trend. The euro's growth potential is rising day by day as non-commercial traders become even more bullish. The euro might end up in a prolonged uptrend if bullish sentiment remains strong.
Macroeconomic calendar:
On June 7, the macroeconomic calendar contains no important releases both in the US and the eurozone. Thus, it will not have any effect on the market today.
Forecast for EUR/USD:
Short positions could be opened after the price has closed below 1.0638 on the H4 chart, with targets at 1.0574 and 1.0430. Buying could be considered after consolidation above the corridor on the H4 chart, with the target at 1.1041.
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