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On Friday, the EUR/USD pair consolidated above the resistance zone of 1.1070–1.1081, allowing for the possibility of continued growth toward the next Fibonacci level of 200.0% at 1.1165. A consolidation below the 1.1070–1.1081 zone would favor the U.S. dollar and support a further decline toward the 127.2% corrective level at 1.0984. I currently view the probability of growth and decline as evenly balanced, as neither bulls nor bears have had a decisive advantage in recent weeks.
The wave situation has become slightly more complex but remains understandable overall. The last downward wave broke the low of the previous wave, while the last upward wave failed to break the August 26 peak. Therefore, the "bullish" trend has now reversed, and a "bearish" trend has begun to form. This trend may be short-lived, but for it to reverse, the price must close above the last peak from September 6 at 1.1152. Until then, I remain focused on selling the pair.
The news background on Friday was weak, and trader activity was very low. Traders were cautious ahead of two central bank meetings, which followed the ECB meeting. In my view, the euro's rise on Thursday and Friday was unexpected, as the ECB meeting led to monetary policy easing and the announcement of further rate cuts. Therefore, at the beginning of the new week, I expect the pair to decline despite its consolidation above the 1.1070–1.1081 zone. However, starting Wednesday, the situation may change as the news background becomes more influential. It is widely expected that the FOMC will lower the interest rate, marking the beginning of monetary policy easing. The market has had enough time to prepare for this, but is it ready for a 0.50% rate cut? I would say that a decline in the dollar in the second half of the week is very likely, but not guaranteed. Traders are facing a crucial, significant, and challenging week.
On the 4-hour chart, the pair rebounded from the 76.4% corrective level at 1.1013 and reversed in favor of the euro. The CCI indicator is showing signs of a "bearish" divergence, suggesting a potential reversal in favor of the dollar and a return to the 1.1013 level. After the ECB meeting, I am even less convinced of the euro's growth. A rebound from the 1.1139 level will also indicate the resumption of a decline.
Commitment of Traders (COT) Report:
During the last reporting week, speculators closed 23,148 long positions and 4,563 short positions. The sentiment of the "Non-commercial" group turned "bearish" several months ago, but bulls have once again begun to dominate. The total number of long positions held by speculators is now 193,000, while short positions total just 111,000.
I still believe that the situation will continue to shift in favor of the bears. I do not see long-term reasons to buy the euro. I would also like to note that the FOMC rate cut in September is already priced in with a very high probability. The potential for a decline in the euro remains significant. However, it is important to remember the graphical analysis, which currently does not allow us to confidently predict a strong drop in the euro, as well as the news background, which frequently disrupts the dollar's movements.
News Calendar for the U.S. and Eurozone:
On September 16, the economic events calendar contains no notable entries. The impact of the news background on trader sentiment today will be absent.
EUR/USD Forecast and Trading Tips:
New sales of the pair are possible on the hourly chart if it closes below the 1.1070–1.1081 zone, with a target of 1.0984. I still would not recommend buying the pair, as the euro's rise amid the ECB's monetary policy easing seems unjustified. However, as the week progresses, support factors for the bulls may emerge.
Fibonacci levels are drawn from 1.0917 to 1.0668 on the hourly chart and from 1.1139 to 1.0603 on the 4-hour chart.
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