In my morning forecast, I focused on the 1.1416 level and planned to base market entry decisions around it. Let's look at the 5-minute chart and analyze what happened. A breakout and retest of 1.1416 led to a buy entry on the euro, resulting in a 20-point rise in the pair. The technical outlook was revised for the second half of the day.

To Open Long Positions on EUR/USD:

Mixed data on manufacturing activity in the Eurozone did not prevent the euro from rising during the first half of the day. During the U.S. session, similar data for the ISM Manufacturing PMI will be released for the U.S., along with speeches by Federal Reserve Chair Jerome Powell and FOMC member Lorie K. Logan. Policymakers' statements could influence the EUR/USD pair more than the data. In case of a decline, the focus will shift to defending the 1.1404 support, formed earlier today. A false breakout there will be a signal to buy EUR/USD, aiming for a new monthly high around 1.1453. A breakout and retest of this range will confirm the correct entry, targeting 1.1490. The ultimate target will be 1.1530, where I plan to take profits.

If EUR/USD falls and there is no activity around 1.1404, pressure on the pair will return, potentially pushing it down to 1.1357. Only after a false breakout there will I look to buy the euro. I also plan to open long positions immediately on a rebound from 1.1314, targeting a 30-35 point intraday correction.

To Open Short Positions on EUR/USD:

If the euro continues to rise—which is more likely—only strong hawkish comments from Fed officials could harm the bullish trend. Therefore, it's better to wait for a false breakout around the new resistance at 1.1453, which would be a signal to open short positions targeting a drop to 1.1404. A breakout and consolidation below this range would be a suitable scenario for selling, aiming for 1.1357, where moving averages favor the bulls. The ultimate target will be 1.1314, where I will fix profits. If EUR/USD continues upward in the second half of the day and there are no active bears around 1.1453, buyers could drive the pair even higher toward 1.1490. I will sell there only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.1530, targeting a 30-35 point downward correction.

COT Report (Commitments of Traders):

The COT report from May 20 showed an increase in short positions and a reduction in long positions. Considering that EU authorities are actively working toward a trade agreement with the U.S., which even led to the postponement of higher tariffs until July, there is a good chance for the euro to strengthen soon. Adding to that is the Fed's dovish stance, reducing the likelihood of dollar growth. The report indicated that long non-commercial positions dropped by 3,507 to 206,042, while short non-commercial positions rose by 6,814 to 131,589. As a result, the gap between long and short positions narrowed by 4,489.

Indicator Signals:

Moving Averages:

Trading is above the 30- and 50-day moving averages, indicating further growth for the pair.

Note: The periods and prices of moving averages are based on the author's analysis on the H1 hourly chart and differ from the classic daily moving averages on the D1 chart.

Bollinger Bands:

In case of a decline, the lower boundary of the indicator around 1.1404 will act as support.

Indicator Description:

• Moving Average (MA): Defines the current trend by smoothing out volatility and noise. Period 50 marked in yellow, period 30 marked in green 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.
• Long non-commercial positions: Total long open positions of non-commercial traders.
• Short non-commercial positions: Total short open positions of non-commercial traders.
• Net non-commercial position: The difference between short and long positions of non-commercial traders.