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The EUR/USD pair continued its downward movement after consolidating below the range of 1.1070 - 1.1081 on Thursday. The fall of quotes may continue toward the next Fibonacci level of 127.2% at 1.0984. The trend is slowly turning in favor of the bears, but they still have to endure today. A rebound from the 1.0984 level would work in favor of the euro and could lead to some upward movement toward 1.1070. Consolidating below the 1.0984 level would allow for further declines.
The wave situation has become a bit more complicated, but overall it remains clear. The last completed upward wave (September 23-25) broke through the peaks of the previous waves, while the last downward wave broke through the lows of the previous two waves. Thus, the pair is now starting to form a new "bearish" trend. Consolidating below the support range of 1.1070 - 1.1081 allows for further declines, although a pullback may occur today.
The market conditions on Thursday once again allowed the bears to continue their active actions. Their activity declined slightly after a strong start to the week, but they continue to exert pressure. The bulls are retreating from the market amid increasing "dovish" expectations regarding the ECB's interest rate policy. I remind you that on Monday, Christine Lagarde indicated the possibility of faster monetary easing, as inflation has dropped significantly and the EU economy is showing rather disappointing results. However, today, the bears may retreat from the market. If the labor market and unemployment data turn out to be weaker than expected, the "bearish" trend may end before it even begins. I certainly expect strong data from the US, but we cannot be certain. The dollar has some resilience, but it is limited. The trend can be considered "bearish" until the peak from September 25 is breached.
On the 4-hour chart, the pair reversed in favor of the US dollar after a series of "bearish" divergences appeared in the RSI and CCI indicators. The RSI had also entered the overbought territory several weeks ago. However, given the strength and momentum of the bulls lately, it is hard to believe in a significant drop in the euro. Around the level of 1.1013, the bears may start facing challenges. However, consolidating below this level will allow them to spread their wings toward the 50.0% corrective level at 1.0872.
Commitments of Traders (COT) Report:
During the last reporting week, speculators opened 5,514 long positions and 3,462 short positions. The sentiment among the "Non-commercial" group shifted to "bearish" several months ago, but currently, the bulls are actively regaining dominance. The total number of long positions held by speculators now stands at 188,000, while short positions total only 116,000.
However, for the third consecutive week, major players are primarily offloading the European currency. In my opinion, this may be a precursor to a new "bearish" trend or at least a correction. The key factor in the dollar's decline—expectations of FOMC monetary policy easing—has materialized, and the dollar currently lacks reasons for further declines. Such reasons may emerge over time, but for now, the rise of the U.S. dollar seems more likely. Active selling of the euro has not yet commenced. If it begins, the likelihood of a "bearish" trend will rise.
News Calendar for the USA and the Eurozone:
On October 4, the economic calendar includes several important entries. The impact on trader sentiment tomorrow may be significant, as traders will need to familiarize themselves with the most important labor market report.
Forecast for EUR/USD and Trading Advice:
Selling the pair was possible upon closing below the level of 1.1139 on the 4-hour chart, with targets at 1.1081 and 1.1070. Both targets have been achieved. Positions can be maintained with targets at 1.1013 and 1.0984. Purchasing the pair is possible today if it rebounds on the 4-hour chart from the level of 1.1013. Targets are 1.1070 and 1.1081.
Fibonacci level grids are constructed based on 1.0917 - 1.0668 on the hourly chart and 1.1139 - 1.0603 on the 4-hour chart.
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