On Friday, the EUR/USD pair rebounded from the 50.0% Fibonacci retracement level at 1.1630, advanced toward the 38.2% Fibonacci level at 1.1682, rebounded from it, and reversed in favor of the U.S. dollar. As a result, the new week may begin with a decline toward the 1.1630 level. A rebound from this level would favor the euro and the resumption of growth toward the 1.1682 and 1.1746 levels. Consolidation below the 1.1630 level would allow traders to expect a continuation of the decline toward the 61.8% Fibonacci retracement level at 1.1578.

The wave structure on the hourly chart currently remains straightforward. The latest completed downward wave did not break below the previous low, while the new upward wave surpassed the previous high. Thus, the trend has shifted to bullish. Bulls will only be able to continue their advance if Iran and the United States sign an interim agreement, stop violating the ceasefire terms, and the Strait of Hormuz is reopened in the near future.

The news background on Friday was not entirely absent, but the market once again made it clear that it is not interested in routine economic statistics. The most important release, Germany's inflation report, surprised markets with a reading of 2.6% year-on-year versus the expected 2.9%. Thus, despite the sharp increase in energy prices caused by the conflict in the Middle East, inflation in Germany is slowing, as is the case in the United Kingdom.

Of course, one month does not establish a trend. Price pressures may persist through the end of the year, and the reopening of the Strait of Hormuz and the end of the conflict will not return prices to January levels within a matter of weeks. Nevertheless, the decline in German inflation is undoubtedly a negative factor for the euro, as the European Central Bank may begin to question the necessity of tightening monetary policy at its June meeting.

The upcoming Eurozone inflation report, due later this week, should provide greater clarity. If inflation continues to accelerate across Europe, the ECB may proceed with a rate hike in June. Such an outcome would support both the euro and bullish market sentiment.

On the 4-hour chart, the pair continues to trade between the 23.6% Fibonacci retracement level at 1.1569 and the 38.2% retracement level at 1.1667. The market is not rushing to open new positions or draw conclusions. At present, I recommend focusing primarily on the hourly chart, as price movements have remained relatively weak in recent weeks. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 10,196 long positions and 6,109 short positions. Over seven weeks in February and March, the bulls' overwhelming advantage disappeared due to the war in Iran, while over the past nine weeks the situation has stabilized amid the suspension of hostilities in the Middle East. The total number of long positions held by speculators currently stands at 223,000, compared with 193,000 short positions. The gap is once again widening in favor of the euro.

Overall, from a long-term perspective, major market participants continue to view the euro favorably. Naturally, various global events—which have been in no short supply in recent years—continue to influence investor sentiment. In particular, market attention remains focused on the Middle East, where the conflict has merely been paused rather than resolved. Therefore, in the near term, the euro and the dollar are likely to be driven not by Federal Reserve or ECB monetary policy, nor by economic data, but by developments in Iran.

News Calendar for the United States and the Eurozone:

• Germany – Retail Sales (06:00 UTC).
• Eurozone – Unemployment Rate (09:00 UTC).
• United States – ISM Manufacturing PMI (14:00 UTC).

The economic calendar for June 1 contains three events, with the ISM index standing out as the most important. The economic backdrop may influence market sentiment during the second half of Monday's trading session.

EUR/USD Forecast and Trading Tips:

Short positions could be initiated following a rebound from the 1.1682 level on the hourly chart, with targets at 1.1630 and 1.1578. These positions may remain open today. Long positions could be considered following a close above and subsequent rebound from the 1.1630 level, with targets at 1.1682 and 1.1745. The first target has already been reached. New long positions may be considered either on a rebound from the 1.1630 level or after a close above 1.1682.

Fibonacci retracement levels are drawn from 1.1409 to 1.1850 on the hourly chart and from 1.2081 to 1.1411 on the 4-hour chart.