The EUR/USD pair rebounded from the corrective level of 161.8% (1.0561) on Tuesday and continued to rise towards the level of 1.0637. The current ascending trend corridor characterizes trader sentiment as "bullish." If the pair's price consolidates below this corridor, it would favor the US dollar and a potential resumption of the decline towards the level at 1.0489. A bounce from the level at 1.0637 could also lead to a slight decline in the pair.
The wave situation has become clearer. After the new ascending wave broke the peak of the previous one, it can be confidently stated that a "bullish" trend is forming at the moment. The ascending trend corridor confirms this assumption. Therefore, both technical and wave analyses now support the idea of the euro's rise. I doubt it will be a long-lasting trend, but it doesn't matter at the moment. If reversal signals start to appear, then we can consider the potential formation of a "bearish" trend. Signs of a reversal could include closing below the corridor or breaking the low from October 9th at 1.0520.
The information background for both the euro and the dollar remains relatively weak. Weak in the sense that there is very little news and reports available. However, this evening, the minutes of the September FOMC meeting will be released. Considering the sharp decline in hawkish sentiment among members of the Federal Reserve's FOMC (Federal Open Market Committee) about tightening monetary policy, I believe that this document may contain important information. Information on how many members of the Federal Reserve supported an interest rate hike at the last two meetings in 2023. This is crucial because if it turns out that the "hawks" remain in the minority, it could be a significant reason for further dollar depreciation and a rise in the EUR/USD pair.
On the 4-hour chart, the pair rebounded from the corrective level of 127.2% (1.0466) and rose to the upper line of the descending trend corridor, where it found support for the third time. The previous two attempts did not lead to the formation of a "bullish" trend, but now two "bearish" divergences have appeared, which could quickly lead to a resumption of the euro's decline. At this time, I still do not expect a significant rise in the European currency, but on the hourly chart, we have a corridor and a wave pattern that indicate a "bullish" trend.
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 267 long contracts and 19,723 short contracts. The sentiment of major traders remains "bullish," but it has noticeably weakened in recent weeks and months. The total number of long contracts held by speculators is now 211,000, while short contracts amount to 133,000. The difference is now less than double, although a few months ago, the gap was threefold. I believe that the situation will continue to change in favor of the bears. Bulls have dominated the market for too long, and now they need strong news to begin a new "bullish" trend. Such news is currently lacking. Professional traders may continue to close their long positions in the near future. I think the current figures suggest a further decline in the euro in the coming months.
Economic Calendar for the United States and the European Union:
European Union - German Consumer Price Index (CPI) (06:00 UTC).
United States - Producer Price Index (PPI) (12:30 UTC).
United States - FOMC Minutes Release (18:00 UTC).
On October 11th, the economic calendar includes several entries, with the FOMC minutes being the highlight. The impact of the news on traders' sentiment today could be of moderate strength.
Forecast for EUR/USD and Trader Recommendations:
Selling the pair is possible today if it closes below the level of 1.0561 on the hourly chart, with targets at 1.0489 and 1.0450. Or, if there is a rebound from 1.0637 with a target at 1.0580. I recommended buying when it closed above the level of 1.0561 on the hourly chart, with a target of 1.0637. These positions can be held open, but I advise caution with buying.
