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14.05.2025 11:20 AM
EUR/USD Analysis on May 14, 2025

On Tuesday, the EUR/USD pair rebounded from the support zone of 1.1074–1.1081 and reversed in favor of the euro, climbing by 110 points. Thus, the bears' joy was short-lived. The pair's consolidation above the 127.2% Fibonacci corrective level at 1.1181 opens the door for further growth toward the 100.0% level at 1.1265. However, the trend remains technically bearish—albeit weak. A close back below 1.1181 would indicate a potential resumption of the decline toward the 1.1074–1.1081 zone.

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The wave configuration on the hourly chart has shifted. The most recent upward wave did not exceed the previous high, while the last downward wave broke the prior low. This indicates a shift to a bearish trend. However, recent waves have been weak, reflecting low market activity and a lack of conviction among bears. Positive headlines from the U.S.-China trade negotiations supported the bears, but many more hurdles remain ahead.

Monday's backdrop lifted bearish sentiment, but Tuesday's U.S. inflation report reversed the momentum. Despite predictions of an inevitable rise in prices, headline CPI in April dropped from 2.4% y/y to 2.3%. No one expected this—some had forecast a rise to 2.5%. The weaker-than-expected inflation quickly sparked speculation about a potential Fed policy shift toward easing. This factor caught the dollar off guard—it had just begun strengthening when it fell again.

Even within a bearish trend, the dollar's positions are hardly strong or confident. The "thaw" in the trade war has begun, but actual signed agreements with most countries remain distant. Moreover, Trump aims for deals that put the U.S. in a stronger position than before. He wants tariffs on imports to remain in place or for other countries to eliminate their tariffs on American goods. Ideally, he also wants them to limit trade with China. Therefore, a full recovery of the dollar to early-year levels is not in sight.

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On the 4-hour chart, the pair had previously consolidated below the 100.0% Fibonacci level at 1.1213, suggesting a potential continuation of the decline toward the 76.4% level at 1.0969. A rebound from 1.1213 would support further dollar gains, while a close above it would favor the euro and the resumption of a bullish trend toward the 127.2% level at 1.1495. There are currently no signs of divergence from any indicator.

Commitments of Traders (COT) Report:

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Over the past reporting week, professional traders closed 2,196 long positions and 2,118 short positions. Sentiment in the "Non-commercial" category remains bullish—thanks to Donald Trump. Long positions now total 194,000, while shorts have dropped to 118,000, a dramatic reversal from earlier this year.

For 20 weeks, large players had been shedding euro positions, but for 13 consecutive weeks now, they've been closing shorts and adding longs. The divergence in monetary policy between the ECB and the Fed still favors the U.S. dollar, but Trump's political strategy looms larger, as it could ultimately trigger a recession.

News Calendar for the U.S. and Eurozone (May 14):

  • Eurozone: Germany's Consumer Price Index (06:00 UTC)

The calendar includes only one minor event today, so news-driven market impact is expected to be very limited on Wednesday.

EUR/USD Forecast and Trading Tips:

Sell scenario: A close below 1.1181 on the hourly chart allows for short positions with a target at the 1.1074–1.1081 support zone.

Buy scenario: Longs can be considered on a bounce from the 1.1074–1.1081 zone with a target at 1.1181. That target has been met, and holding above it favors continuation toward 1.1265.

Fibonacci grids:

  • Hourly chart: from 1.1265 to 1.1574
  • 4-hour chart: from 1.1214 to 1.0179
Samir Klishi,
Analytical expert of InstaForex
© 2007-2025
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