Hot forecast for EUR/USD on May 24, 2021

Throughout Friday, the single European currency steadily declined. Even though it was not that fast, the movement was still steady. At the beginning of the European session, the single European currency had every reason to grow strongly. It's all about the preliminary data on business activity indices, which came out much better than forecasts. In particular, the index of business activity in the service sector, which was supposed to grow from 50.5 points to 52.6 points, rose to 55.1 points. Even the index of business activity in the manufacturing sector, which, although it fell from 62.9 points to 62.8 points, was also great, as it was predicted to decline to 62.2 points. In general, the composite PMI increased from 53.8 points to 56.9 points, which is significantly better than the expected 54.5 points. However, even if there was some growth of the single European currency at the time of publication of these data, it was frankly symbolic, and quite quickly, the direction of movement changed dramatically

Composite PMI (Europe):

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Of course, we can write off all the similar data in the United States, which turned out to be even better. For example, the index of business activity in the service sector, instead of falling from 64.7 points to 64.0 points, rose to 70.1 points, which is an absolute record. The index has never soared so high. The manufacturing PMI rose from 60.5 points to 61.5 points, instead of falling to 59.8 points. It is not difficult to guess that the market expectations regarding the composite PMI did not come true. After all, they expected a decline from 63.5 points to 63.0 points, but received an increase to 68.1 points. And this is also an absolute record. But there is one problem, and that is the fact that the decline in the single European currency began long before the publication of preliminary data on business activity indices in the United States. This means that investors are much more inclined towards the strengthening of the dollar, and other things being equal, we are more likely to observe a gradual weakening of the single European currency. For its growth, rather serious reasons are needed, which have not yet been observed. Moreover, the macroeconomic calendar is completely empty today, so the single European currency will likely continue to lose its positions.

Composite PMI (United States):

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The EUR/USD currency pair failed to overcome the local maximum of May 19 - 1.2245 last Friday, which ultimately led to a reduction in the volume of long positions and, as a result, a pullback in the direction of 1.2160.

Market dynamics are still on a wave of acceleration, which is confirmed by both the speculative behavior of market participants and the structure of the candlesticks.

If we proceed from the current location of the quote, we will see the amplitude fluctuation of 1.2160 / 1.2240, which has already been encountered in the history of the trading chart.

In this situation, it is worth paying special attention to the 1.2160 border, since keeping the price below it will lead to an increase in the volume of short positions, and this will open the way in the direction of the price value 1.2100.

From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments have a variable signal relative to the minute and hourly intervals, due to the price movement along the 1.2160 / 1.2240 amplitude. Meanwhile, the daily interval signals a buy, due to an upward cycle.

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The material has been provided by InstaForex Company - www.instaforex.com

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