EUR/USD 5M Analysis

The EUR/USD currency pair continued its downward movement on Wednesday, although volatility remained quite weak again. Throughout the day, there were no significant reports in either the US or the Eurozone, and even geopolitical news did not come from either Donald Trump or Iran. Therefore, the market is currently forced to trade based on its own expectations regarding the conflict in the Middle East. As the atmosphere in the Middle East has worsened significantly in recent days, the market continued to sell the EUR/USD pair out of inertia.

It is also worth noting the rise in US inflation to 3.8%; however, we want to emphasize that inflation growth is not an American problem alone. In Europe and the UK, inflation is also rising, but unlike the Federal Reserve, the European Central Bank and the Bank of England are ready to tighten monetary policy, which should support the euro and the pound... if the market were to pay attention to the macroeconomic and fundamental backdrop.

On the hourly timeframe, the technical picture has transformed. The price is now below the Ichimoku indicator lines, and a clearly defined flat structure is absent. Therefore, we can assume that the trend has changed downward. If Donald Trump does not shower compliments on Iran this week and does not announce the proximity of an agreement signing, the pair may continue to fall.

On the 5-minute timeframe, one sell signal was formed yesterday. During the European trading session, the price broke below the Senkou Span B line, allowing traders to open short positions. With volatility remaining low again, the trade could yield around 10 pips in profit. However, the trade could also be carried over to Thursday.

EUR/USD 4H Analysis

On the 4-hour timeframe, according to the ICT trading system, the situation is quite clear as well. The upward trend has been canceled after the CHOCH line was breached. Therefore, the trend is now downward, and we will be looking for patterns and signals for selling. Currently, there is only one such pattern—a "bearish" FVG in the area of 1.1718-1.1732. A reaction to this pattern will allow for opening short positions. The trend on the hourly timeframe has also changed, increasing the likelihood of a continued decline in the euro's value.

EUR/USD 1H Analysis

On the hourly timeframe, the EUR/USD pair has turned downward. The situation in the Middle East remains tense, though it is not getting worse; however, the negotiations have once again hit a dead end, allowing the dollar to show modest growth. In the near term, the euro may drop to the 1.1657-1.1666 area.

For May 14, we highlight the following trading levels: 1.1362, 1.1426, 1.1542, 1.1615-1.1625, 1.1657-1.1666, 1.1750-1.1760, 1.1830-1.1837, and 1.1907-1.1922, as well as the Senkou Span B line (1.1726) and Kijun-sen line (1.1743). The Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. Don't forget to set a Stop Loss order to break even if the price moves 15 pips in the correct direction. This will protect against potential losses if the signal turns out to be false.

On Thursday, ECB President Christine Lagarde will give another speech in the Eurozone, and in the US, secondary reports on retail sales and jobless claims will be published. We do not expect significant announcements from Lagarde; however, she may indicate the ECB's readiness to raise the key interest rate.

Trading Recommendations:

Today, traders may remain in short positions after the price consolidates below the Senkou Span B line, targeting the 1.1657-1.1666 area. Long positions can be opened on a bounce from the 1.1657-1.1666 area, targeting 1.1726 and 1.1750-1.1760.

Explanations for the Illustrations:

• Support and Resistance Levels – Thick red lines at which market movement may end. These are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines – Lines from the Ichimoku indicator transferred from the 4-hour timeframe to the hourly timeframe. These are considered strong lines.
• Extreme Levels – Thin red lines from which the price has previously bounced. These are sources of trading signals.
• Yellow Lines – Trend lines, trending channels, and any other technical patterns.
• CHOCH – Change of the trend structure.
• Liquidity – Liquidity, Stop Loss, and pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. The price rapidly passes through such areas, indicating a complete absence of one party in the market. Subsequently, the price tends to return and react to these areas in alignment with the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react from it; instead, it impulsively breaks through and then tests it from the other side.
• OB – Order Block. The candle on which the market maker opened a position aimed at capturing liquidity to form their position in the opposite direction.