Yesterday, traders received several interesting signals to enter the market. Let us take a look at the 5-minute chart to clear up the market situation. Mixed fundamental data from the eurozone published in the first part of the day did not allow traders to take a particular approach. As a result, market volatility was rather sluggish. Earlier, I asked you to pay attention to the level of 1.0886 to decide when to enter the market. At the beginning of the European session, the pair made an attempt to hit this resistance level, but to no avail. The fact is that Germany's inflation report did not reveal anything new. As a result, traders did not see a false break of this level to open short positions. The pair neither reached the nearest support level of 1.0839. However, in the second part of the day when the US disclosed its inflation figures, the situation changed. A break and consolidation above 1.0886 led to a buy signal. However, the bullish momentum faded away very fast. As a result, many traders suffered losses. A return to 1.0886 and an unsuccessful attempt to consolidate above this level gave a perfect sell signal. The pair slumped by more than 50 pips, thus allowing traders to recoup losses and even make a profit.

Conditions for opening long positions on EUR/USD:

Yesterday's US inflation report caused a lot of discussions. According to the US Labor Department, in March, the consumer price index surged to 8.5% compared to the same month in 2021. In February, the indicator advanced to 7.9%. Compared to the previous month, the CPI increased by 1.2%, showing the most considerable jump since 2005. The indicator's growth was mainly driven by the cost of gasoline and food. Economists had expected a rise of 8.4% on a yearly basis and an increase of 1.2% compared to the previous month. After an unsuccessful attempt to regain control over the market, buyers of the euro left the market. In addition, expectations of a more aggressive Fed's policy prevent traders from buying risk assets. Today, countries will hardly publish any report that will support the euro. It will be wise to focus on Italy's industrial production data and Spain's CPI report. Both indicators have a minor influence on the market. If bulls fail to protect 1.0849, the hope for an upward correction in the euro/dollar pair will disappear. In case of a further decline in the pair, it is a most likely scenario, only a false break of 1.0810 will give the first buy signal. To slacken the bearish trend, the pair should rise and bulls should be active above 1.0849. A break and a downward test of this level will give an additional signal to go long, thus allowing the pair to recover to 1.0886. If the price exceeds this level, it may advance to the highs of 1.0931 and 1.0970. If the pair continues falling and buyers fail to protect 1.0810, it will be better to avoid buying the asset. It will be possible to go long from 1.0728 or lower - from 1.0636, expecting a rise of 30-35 pips within one day.

Conditions for opening short positions on EUR/USD:

Yesterday, the pair hit a new weekly low, thus proving that the market is under bearish control. As I have already mentioned, in the first part of the day, there will be no reports that will support the euro. First of all, sellers should protect the resistance level of 1.0849. A false break of this level may put the euro under pressure and cause a sell signal, expecting a decline to the support level of 1.0810. To retain the bearish sentiment, the pair should hit new local lows. That is why a break and an upward test of 1.0810 will give a sell signal, thus allowing the pair to slide to the lows of 1.0772 and 1.0728, where it is recommended to lock in profits. If the euro rises in the first part of the day amid strong fundamental data and sluggish bearish activity at 1.0849, nothing important will happen. The euro may jump only amid positive news about the Russia-Ukraine negotiations. However, in the near future, we will hardly receive any positive information on the issue. That is why it will be better to open short positions after a false break of 1.0886. It is also possible to sell the euro from 1.0931 or higher – from 1.0970, expecting a drop of 25-30 pips.

COT report

According to the COT report from April 5, the number of both long and short positions increased. Notably, the number of buyers exceeded the number of sellers. Such data could be explained by the expectations of new measures from the ECB. The regulator has been emphasizing the necessity of a more aggressive approach for the last few weeks. However, the absence of positive news about the Russia-Ukraine talks and rising geopolitical tension are still having a negative influence on the euro. That is why bulls cannot form a strong upward correction. In the near future, the US and the eurozone are going to disclose important inflation data. The reports will contain more accurate figures on the consumer price growth after the beginning of the special military operation in Ukraine. This information will provide politicians with hints about further actions on monetary policy. This, in turn, may help us to predict a future movement of the euro/dollar pair. According to the COT report, the number of long non-commercial positions increased to 210,914 from 200,043, while the number of short non-commercial positions climbed to 183,544 from 178,669. Since the rise in the number of short positions was less significant than a jump in the number of long positions, the general non-commercial net position advanced to 27,370 compared to 21,374. The weekly close price slid to 1.0776 from 1.0991.

Signals of indicators:

Moving Averages

Trading is performed below the 30- and 50-day moving averages, which points to a further drop in the euro.

Note: The period and prices of moving averages are considered by the author on the one-hour chart that differs from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

If the euro advances, the upper limit of the indicator located at 1.0886 will act as resistance. In case of a decline, the lower limit of the range will serve as support.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing volatility and noise). The period is 30. It is marked in green on the graph.
• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). A fast EMA period is 12. A slow EMA period is 26. The SMA period is 9.
• Bollinger Bands. The period is 20.
• Non-profit speculative traders are individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions is a total number of long positions opened by non-commercial traders.
• Short non-commercial positions is a total number of short positions opened by non-commercial traders.
• The total non-commercial net position is a difference in the number of short and long positions opened by non-commercial traders.