05.09.202414:00 Forex Analysis & Reviews: Forecast for EUR/USD pair on September 5, 2024

Relevancia 05:00 UTC--4

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On Wednesday, the EUR/USD pair reversed in favor of the euro and consolidated above the resistance zone of 1.1070–1.1081. Thus, the euro's upward movement can now resume toward the 200.0% corrective level at 1.1165. If the pair consolidates below the 1.1070–1.1081 zone again, it will favor the U.S. dollar and lead to a resumption of the decline toward the 127.2% corrective level at 1.0984.

The wave structure has become slightly more complex, but overall, it raises no concerns. The last completed upward wave surpassed the peak of the previous wave, while the new downward wave has not yet approached the low from August 15. Thus, the "bullish" trend remains intact for now. For the "bullish" trend to reverse, the bears will need to push the pair below the low of the last downward wave, which is around the 1.0950 level.

Wednesday's news brought no good news for the dollar. The day before, the ISM Manufacturing PMI was weaker than expected, and another manufacturing index (S&P) showed a decline from 49.6 to 47.9. Yesterday, the JOLTS report on job openings was also disappointing, with only 7.763 million openings in July, compared to the expected 8.1 million. As a result, bearish traders, who are also dollar bulls, have retreated from the market. This retreat may continue today if the important ADP employment report from the U.S. also falls below forecasts. I also recommend paying attention to the ISM Services PMI. These two reports could further prompt bears to retreat from the market. Overall, this data will help traders gauge how quickly the Federal Reserve may cut rates, starting from September 18. The worse the data, the higher the likelihood of quick monetary easing. For now, the data has been mediocre.

On the 4-hour chart, the pair consolidated below the 100.0% Fibonacci level at 1.1139, suggesting a potential decline toward the 76.4% corrective level at 1.1013. A rebound from the 1.1013 level could signal a reversal in favor of the euro and some growth toward 1.1139. No imminent divergences are observed in any indicators today.

Commitments of Traders (COT) Report:

In the last reporting week, speculators opened 24,031 long positions and closed 12,790 short positions. The sentiment of the "Non-commercial" group turned "bearish" several months ago, but bulls are now actively dominating. The total number of long positions held by speculators is now 218,000, while short positions stand at 125,000.

I still believe the situation will ultimately favor the bears. I see no long-term reasons to buy the euro. Additionally, the market has already fully priced in a September FOMC rate cut. The potential for further euro weakness remains substantial. However, one should not ignore chart analysis, which at the moment does not clearly indicate a sharp decline in the euro, or the broader news developments, which regularly create challenges for the dollar.

News Calendar for the U.S. and Eurozone:

Eurozone – Retail Sales (09:00 UTC).
U.S. – ADP Non-Farm Employment Change (12:15 UTC).
U.S. – Initial Jobless Claims (12:30 UTC).
U.S. – Services PMI (13:45 UTC).
U.S. – ISM Services PMI (14:00 UTC).

The economic calendar for September 5 contains several important entries. The news developments could have a significant impact on trader sentiment, especially in the second half of the day.

Forecast for EUR/USD and Trading Tips:

Sales of the pair can be considered if it consolidates below the 1.1070–1.1081 zone on the hourly chart, targeting 1.0984. Buying opportunities were available after consolidation above the 1.1070–1.1081 zone on the hourly chart, targeting 1.1165. The news background today and tomorrow may frequently influence market sentiment.

Fibonacci retracement levels are drawn between 1.0917–1.0668 on the hourly chart and between 1.1139–1.0603 on the 4-hour chart.

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