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On Wednesday, the EUR/USD pair continued its decline and broke below the critical retracement level of 1.0532 on Thursday morning. This development suggests that the downtrend may extend further toward the next target at 1.0420. While a close above 1.0532 could hint at some recovery for the euro, the market continues to offload the currency rapidly. As such, I do not recommend considering buying opportunities at this time.
The wave structure clearly indicates a bearish trend. The last completed upward wave failed to breach the previous wave's peak, while the subsequent downward wave easily broke through the previous low. This confirms the continuation of the bearish trend. Bullish traders have entirely lost market influence, and regaining it would require significant effort, which seems improbable in the near term. For the current trend to reverse, the pair would need to climb above 1.0800, an unlikely scenario in the short term.
Wednesday's fundamental developments were significant but failed to support the euro. The US Consumer Price Index (CPI) initially raised hopes for bullish traders, but it failed to generate any meaningful growth. US inflation rose to 2.6%, signaling persistent price pressures, while core inflation remained unchanged. Considering the dollar's rally on Monday and Tuesday, an upward correction seemed likely but did not materialize.
Bearish traders interpreted the rise in inflation as reducing the likelihood of monetary policy easing by the Federal Reserve in December, prompting further euro selling in favor of the dollar. This interpretation appears logical. Moreover, the bearish trend itself continues to attract sell orders, maintaining the pair in a strong "order flow" driven by bearish sentiment.
On the 4-hour chart, the pair broke below the 100.0% Fibonacci retracement level at 1.0603. The CCI indicator has signaled a potential bullish divergence for several days, hinting at a possible rebound. However, recent bullish divergences have proven unreliable. At this point, the downtrend remains intact, with the next support level at the 127.2% Fibonacci retracement of 1.0436.
During the last reporting week, speculators opened 587 long positions and closed 28,064 short positions. Despite this, the overall sentiment of the "Non-commercial" group remains bearish, with 160,000 long positions compared to 181,000 short positions.
For eight consecutive weeks, major players have reduced their euro positions, reinforcing the bearish sentiment. This trend suggests the formation of a new bearish phase or at least a significant global correction. The primary driver of the dollar's previous decline—expectations of monetary policy easing—has already been priced in. Consequently, the dollar remains poised for further growth. Technical analysis also supports the initiation of a long-term bearish trend, suggesting a prolonged decline in the EUR/USD pair. The latest COT data does not indicate any shift toward a bullish trend.
Eurozone:
United States:
Key events include Powell's speech and Eurozone GDP data, both of which could significantly influence market sentiment.
Selling opportunities were valid after the pair rebounded from the 1.0781–1.0797 zone on the hourly chart, targeting 1.0662. This target has been reached. Closing below this level allowed for continued short positions, aiming for 1.0603 and 1.0532. With these targets achieved, the next objectives are 1.0436 and 1.0420. I do not recommend considering long positions at this time.
Fibonacci Levels:
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