29.05.202217:20 Forex-elemzések és áttekintések: EUR/USD. Hot days ahead. EU Summit, European inflation, Nonfarm and the fate of anti-Chinese tariffs

Storming the 8th figure or returning to the base of the 6th price level: it is such a difficult choice that traders of the EUR/USD pair will have to make. The next trading week in this regard will be decisive. If market participants choose the upward direction, this will be a signal for a possible trend reversal. And although this scenario looks unlikely in my opinion, it cannot be ruled out. After all, if the upcoming week is again left for EUR/USD bulls, then a fairly significant picture will appear on the W1 timeframe, which will reflect a consistent three-week price increase. But for this, the bulls of the euro-dollar pair need to overcome at least the resistance level of 1.0760 (the upper line of the Bollinger Bands on the daily chart), and also settle above the 1.0800 mark. Only then will it be possible to talk about the first signs of a real turning point in the situation, with an exit in the medium term to the area of the 10th figure.

EUR/USD bears face a different task: they need to at least keep the price below 1.0760. The maximum program is to return the pair to the area of the sixth figure, convincing "hesitant" traders of the futility of the upward route. If the large-scale corrective growth stalls this week, the bears of the pair will be able to further pull the price not only to the base of the 6th figure, but also under the level of 1.0600. Everything will depend on the information flow, which will either return the "former demand" for the US currency, or weaken it even more.

If we talk about macroeconomic releases, then it is necessary to highlight two points. Firstly, these are releases of data on inflation growth in Germany and in the eurozone, and secondly– Non-Farms.

The German consumer price index should show further growth, although in April it reached its 49-year high (7.4%). According to general forecasts, it will reach 7.5% in May. The same applies to the basic CPI. Pan-European inflation should repeat the trajectory of the German one, once again setting a historical record. Let me remind you that in the previous month, the consumer price index rose to 7.4% in April. This is the highest value of the indicator for the entire history of observations (i.e. since 1997). In May, it should rise to the level of 7.7%. If this indicator comes out at least at the level of forecasts (not to mention the green zone), the euro will receive some support, although this support will be limited (short-term). The fact is that the head of the ECB has already announced the expected scenario for further actions (an increase in the rate to zero by September), and it is unlikely that the European Central Bank will tighten it in any way. Therefore, a possible increase in the price of EUR/USD after the release of inflation reports should be treated with great caution.

The most important event of the week for traders of the pair will be Nonfarm, which will be published on Friday, June 3. It is worth recalling here that the key components of the previous – April – release did not disappoint, but also did not impress market participants. Despite the "red color" of the main indicator (the unemployment rate remained at 3.6%, contrary to the forecast decline to 3.5%), all other components came out in the green zone. The number of people employed in the non-agricultural sector in April increased by 428,000 (as well as in March), while experts expected to see this indicator slightly lower, at around 390,000. The level of average hourly wages on a monthly basis was supposed to drop to 0.2%, while traders saw an increase to 0.3%. In annual terms, the index, in accordance with the forecast, minimally decreased to 5.5% (after the March value of 5.6%), still remaining at a fairly high level.

According to the general forecast, the May Nonfarm will also show a relatively good result. The growth rate of the employed should grow to 350,000, although the growth rate of the average hourly wage on an annualized basis may slow down to 5.2% (in this case, there will be a downward trend). The unemployment rate, in turn, should fall to a two-year low of 3.5%. Let me remind you that the last time this indicator was at such lows was in February 2020, just before the beginning of the global coronavirus crisis.

The "task" of Nonfarm is to achieve at least forecast levels. In this case, everything will depend on what aspects the market focuses its attention on – either a decrease in unemployment and an increase in the number of people employed, or a slowdown in the growth rate of average wages (wages will stop "catching up" with inflation) will be in the center of attention. If the release is in the red zone, then the dollar will definitely be under significant pressure.

As for the external fundamental background, there are several issues on the agenda here. So, over the past week, the US stock market has shown positive dynamics on expectations of easing trade restrictions for China. The reason for optimism was the statement of US President Joe Biden, who said that duties on imports of Chinese goods to the United States "are under consideration." According to him, he intends to discuss this issue with the country's Finance Minister Janet Yellen. Since then, the situation has been hanging in the air: the White House keeps the intrigue, saying neither "yes" nor "no". If during the coming week Biden or his heralds make it clear that Washington is not yet ready for such liberalization, the craving for risk will noticeably decrease, and the dollar will be "on the horse" again. If Yellen still convinces the US president to take this step, EUR/USD bulls will certainly use this information guide.

Also, among the main fundamental events of the coming week, the EU summit should be highlighted, the results of which may shake the position of the euro if the sanctions confrontation with Russia continues to intensify. In addition, in the coming days, the foreign exchange market may react to the "Ukrainian case". Just today it became known that the Turkish president plans to talk with Vladimir Putin and Vladimir Zelensky on Monday. The press secretary of the Russian president Dmitry Peskov has already confirmed that the Russian president plans to have a conversation with the Turkish leader. If these dialogues move the negotiations off the ground, the EUR/USD pair will get a reason for its growth. Otherwise, the safe dollar will again be in high demand.

Thus, the situation for the EUR/USD pair is uncertain. The pendulum can swing both towards the bulls, and towards the bears. Therefore, it is not worth rushing with longs until the pair overcomes the resistance level of 1.0760 and settles above the 1.0800 target. Short positions will be relevant if bears are able to push through the support level of 1.0700 (the average line of the Bollinger Bands on the four-hour chart). In other cases (i.e. if the pair fluctuates in the range of 1.0705-1.0750), it is better to take a wait-and-see position, given the high degree of uncertainty.