12.05.202002:30 Forex Analysis & Reviews: Hot forecast and trading signals for the EUR/USD pair on May 12. US inflation report is unlikely to affect the pair's movement

EUR/USD. 1H

Quotes of the euro/dollar pair resumed a downward movement to a long-term upward trend line on the hourly timeframe, from which the price has already rebounded several times. In addition, there is also a strong support area of 1.0762 - 1.0775 in the area of the trend line, from which the pair has also rebounded several times. Moreover, there are also two border lines of the side channel with a width of 250 points, which we did not even put on the chart, so as not to clutter it. The lower border of this channel is also in the 1.0750 - 1.0740 range, that is, very close to the support area and the trend line. Thus, until traders manage to overcome these three supports, it is not necessary to talk about forming a new downward trend and further movement down. Since there was an ideal development and rebound from the Senkou Span B line last Friday, the quotes failed to continue moving to the first resistance level of 1.0954 and the April 19 high of 1.0990. Thus, the priority option now is to reduce back to the trend line. In addition, a new downward trend line has been built, the last peak of which is near the Senkou Span B. line. This line acts as resistance for the pair.

As we have repeatedly said in fundamental reviews, the entire macroeconomic background is now ignored by market participants. In any case, the calendar of macroeconomic events of the United States and the European Union is almost empty on Monday and Tuesday. Formally, the US inflation report for April will be published today. However, in the current conditions, it does not matter, since market participants are primarily interested in indicators of unemployment, the labor market, and GDP decline. Inflation at the present time is of secondary importance. Judging by forecasts, the consumer price index in the US will slow down to 0.4% - 0.5% in annual terms, and in monthly terms - will decrease by as much as 0.8%. At the same time, core inflation in annual terms will be reduced to only 1.6% - 1.7% from March 2.1%. Thus, the main indicator of inflation will go down solely due to falling oil prices. Thus, we believe that traders will ignore this report today, or the reaction will be minimal.

Based on the foregoing, we have two trading ideas for May 12:

1) We expect quotes to fall to the trend line and the area of 1.0763 - 1.0775 on Tuesday, May 12. Those traders who are already in sell-offs after a rebound from the Senkou Span B line can support open sell positions with the target of 1.0775. It is recommended to open new sales for the pair only in case of overcoming the trend line, the support area. The potential to take profit is about 35 points.

2) The second option - bullish - implies either a rebound from a long-term upward trend line, or overcoming a downward trend line, as well as a support area of 1.0881 - 1.0894. In the first case, we recommend opening purchases of the euro with the aim of a downward trend. In the second case, we recommend trading on the rise with the goal of the resistance level of 1.0954. The potential to take profit in the execution of the first scenario is 60 points, the second - 55 points.