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05.05.202604:17 Forex Analysis & Reviews: Trading Recommendations and Analysis of EUR/USD on May 5. Bulls Can't, Bears Won't

Relevance up to 20:00 2026-05-05 UTC--4

Analysis of EUR/USD 5M

Exchange Rates 05.05.2026 analysis

The EUR/USD currency pair intended to have a calm trading day on Monday, but geopolitical factors intervened once again. Recall that on Friday, news of yet another failure in negotiations between Iran and the US strengthened the dollar. On Monday, reports emerged that Iran attacked an American warship attempting to pass through the Strait of Hormuz with two missiles. The extent of the damage to the American vessel is unknown, but it is likely that there is some. Thus, the dollar showed growth again. As we mentioned, the U.S. currency could strengthen due to geopolitical factors.

However, for the dollar to experience sustained growth, the conflict in the Middle East must reignite. The dollar still has no other advantages aside from geopolitics.

From a technical perspective, we also observe a flat EUR/USD market. The price has failed to hold above the Senkou Span B line and the 1.1750-1.1760 area. Consequently, a decline towards the area of 1.1657-1.1666, which serves as the lower boundary of the sideways channel, can now be expected. Without the geopolitical factor, bulls may return to the market very quickly. It should also be noted that this week features important data on the US labor market.

In the 5-minute timeframe on Monday, three sell signals were generated. The first was generated late at night, so few could act on it. The second came when the critical line was breached during the European trading session. The third signal was during a bounce off the Kijun-sen line during the US trading session. Traders could act on the latter two signals, with the second one potentially being closed in profit by the evening or carried over to Tuesday.

COT Report

Exchange Rates 05.05.2026 analysis

The latest COT report is dated April 28. The weekly timeframe illustration clearly shows that the net position of non-commercial traders remains "bullish," but is rapidly declining due to geopolitical events. Traders have been shedding the European currency in favor of the US dollar in recent months. Trump's policies have not changed, but for some time, the dollar has served as a "reserve currency." However, this process may already be behind us.

We still do not see any fundamental factors that would strengthen the euro, while there remain sufficient factors for the dollar's decline. The war in the Middle East made the dollar temporarily super attractive, but when this factor reaches its "expiration date," everything will revert to the way it was. And that expiration may have already occurred. In the long term, the euro could fall to the level of 1.06 (trend line), but the upward trend will still remain relevant. Currently, the pair has not strayed too far from the descending trend line, which has been breached several times.

The positioning of the red and blue lines of the indicator indicates parity between bulls and bears. Over the last reporting week, the number of long positions in the "Non-commercial" group decreased by 300, while the number of shorts increased by 5,300. Consequently, the net position fell by 5,600 contracts over the week.

EUR/USD Analysis 1H

Exchange Rates 05.05.2026 analysis

On the hourly timeframe, the EUR/USD pair continues to form a downward trend, but in reality, we are observing a flat market. The situation in the Middle East remains tense, but it is not deteriorating, so there are currently few strong reasons to further strengthen the US dollar. Technically, the dollar is in a more advantageous position than the euro, but this advantage was not realized last week.

For May 5, 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, 1.1907-1.1922, as well as the Senkou Span B line (1.1758) and the Kijun-sen line (1.1720). The Ichimoku indicator lines may shift throughout the day, which should be taken into account when determining trading signals. Remember to set a stop loss to breakeven if the price moves in the correct direction by 15 pips. This will help protect against potential losses if the signal turns out to be false.

On Tuesday, European Central Bank President Christine Lagarde will give another speech in the Eurozone, and we still do not expect any significant statements from her. In the US, an important ISM Services sector activity index will be released, along with a less important JOLTs report on job openings. Don't forget about geopolitics.

Trading Recommendations:

Today, traders may open short positions if the price consolidates below the 1.1657-1.1666 area, targeting 1.1615-1.1625. Long positions can be opened on a price rebound from the area of 1.1657-1.1666 with targets at the Kijun-sen line and the Senkou Span B line.

Explanation of Illustrations:

  • Support and resistance price levels (resistance/support) – thick red lines around which movement may end. They are not sources of trading signals.
  • Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator transferred to the hourly timeframe from the four-hour. They are strong lines.
  • Extremity levels – thin red lines from which the price had previously rebounded. They are sources of trading signals.
  • Yellow lines – trend lines, trend channels, and any other technical patterns.
  • Indicator 1 on COT charts – the size of the net position of each category of traders.

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