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27.05.2025 11:47 AM
Forecast for EUR/USD on May 27, 2025

On Monday, the EUR/USD pair returned to the support zone of 1.1374–1.1380. A rebound from this zone would once again work in favor of the euro and a resumption of growth toward the 76.4% retracement level at 1.1454. The bulls haven't retreated or given up—they've only taken a short pause after their latest advance. A consolidation below the 1.1374–1.1380 zone would favor the U.S. dollar and allow for some recovery toward the 50.0% Fibonacci level at 1.1320.

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The wave pattern on the hourly chart has changed. The last upward wave broke the previous high, and the most recent downward wave did not break the previous low. Thus, the current trend is bullish. News about successful U.S.-China trade negotiations and the Fed's hawkish stance briefly supported the bears, but only for a short time. Donald Trump's policies are once again putting significant pressure on the U.S. dollar.Monday's news background was quite interesting. In particular, traders learned that the tariff hike for the European Union has been postponed until at least July 9, and Christine Lagarde stated that global trust in the U.S. dollar is steadily eroding due to the White House's new policies. She added that the euro could potentially replace the dollar in international transactions. According to Lagarde, international investors are reducing their dollar holdings, and instead of turning to other currencies (such as the euro), they're choosing Bitcoin or gold. At the moment, investors don't yet see the euro as a full-fledged alternative. However, the euro could become a global currency if a unified capital market is created, legal frameworks are strengthened, and the EU increases its military capabilities. Investors are drawn to currencies and assets from countries with strong geopolitical positions that honor their commitments and can guarantee protection from economic shocks.

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On the 4-hour chart, the pair has reversed in favor of the euro and continues its rise toward the 127.2% Fibonacci retracement level at 1.1495. The previous bearish divergence only triggered a minor pullback. Currently, no new divergences are emerging on any indicator. A rebound from 1.1495 could signal a reversal in favor of the U.S. dollar and a move down toward the 100.0% level at 1.1213, while a breakout above 1.1495 would increase the likelihood of continued growth toward the next retracement level at 1.1851 (161.8%).

Commitments of Traders (COT) Report:

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Over the past reporting week, professional traders closed 3,507 long positions and opened 6,814 short positions. Sentiment among the "Non-commercial" group remains bullish—thanks to Donald Trump. The total number of long positions held by speculators now stands at 206,000, while short positions total 132,000—and the gap is steadily widening. Thus, demand for the euro persists, while interest in the dollar continues to decline. The situation remains unchanged.

For 16 consecutive weeks, large players have been reducing short positions and increasing longs. Despite the divergence in monetary policy between the ECB and the Fed—favoring a wider interest rate differential that should support the dollar—Trump's policies are currently a stronger market factor. They risk causing a recession in the U.S. and triggering a range of long-term structural issues.

News Calendar for the U.S. and the EU:

  • EU – GfK German Consumer Confidence Index (06:00 UTC)
  • U.S. – Change in Durable Goods Orders (12:30 UTC)

The economic calendar for May 27 contains two key entries. The news background may influence market sentiment on Tuesday, with stronger impact likely in the second half of the day. Bears urgently need support from news and reports.

EUR/USD Forecast and Trading Recommendations:

Selling the pair is advisable if it closes below the 1.1374–1.1380 zone, targeting 1.1320 and 1.1282. Buying was previously recommended above the 1.1260–1.1282 zone, with targets of 1.1338 and 1.1374—all of which have been reached. A rebound from the 1.1374–1.1380 zone would offer a new opportunity to open long positions, with a target of 1.1454.

Fibonacci grids are drawn from 1.1574–1.1066 on the hourly chart and 1.1214–1.0179 on the 4-hour chart.

Samir Klishi,
Analytical expert of InstaForex
© 2007-2025
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