To open long positions on EUR/USD:
The Eurozone inflation data matched economists' forecasts, and the market showed no reaction as traders prepared for more important events later in the day. The FOMC decision on the key interest rate and its economic forecast will be crucial in determining the U.S. dollar's direction. Fed Chairman Jerome Powell's press conference will also provide more clarity as he answers journalists' questions. If the Fed takes a dovish stance, the dollar will decline, but a more restrained stance could help the dollar strengthen, leading to a drop in EUR/USD, which I plan to take advantage of. A false breakout around 1.1113 will create the necessary conditions for long positions, resuming the bullish trend toward the 1.1146 resistance, which almost coincides with last week's high. A breakout and upward consolidation of this range could push the pair higher, with a chance to test 1.1176. The final target would be the 1.1199 high, where I will take profit. If EUR/USD declines and there is no buying activity around 1.1113 in the second half of the day, pressure on the pair will increase, leading to a larger sell-off. In that case, I'll consider entering after a false breakout forms around the next support level at 1.1097, where the moving averages are slightly above. I plan to open long positions immediately on a rebound from 1.1074, targeting an intraday upward correction of 30-35 points.
To open short positions on EUR/USD:
Sellers may gain an opportunity only if the Fed cuts rates by a quarter-point while stating that future easing will depend on incoming data. In this case, a false breakout around 1.1146 will provide a suitable condition for opening short positions, aiming to update support at 1.1113, which has yet to be broken today. A breakout and consolidation below this range, along with a retest from below to above, will give another selling opportunity toward 1.1097. The final target would be the 1.1074 level, which would temporarily disrupt the bulls' plans for further euro growth. I will take profit there. If EUR/USD rises and bears are absent at 1.1146, buyers will continue to build the bullish trend, with the possibility of updating resistance at 1.1176. I will also sell there but only after a failed consolidation. I plan to open short positions immediately on a rebound from 1.1199, targeting a downward correction of 30-35 points.
The COT (Commitment of Traders) report from September 3 showed a reduction in both long and short positions. Despite the decrease in euro sellers, this hasn't affected the pair's bearish technical outlook. The euro is likely to continue losing ground against the dollar this week, especially with the upcoming European Central Bank meeting, where we'll learn about another interest rate cut in the Eurozone and further monetary policy developments. However, this does not negate the medium-term bullish trend for the euro, and the lower the pair goes, the more attractive it becomes for buying. The COT report indicates that long non-commercial positions decreased by 2,412 to 215,969, while short non-commercial positions dropped by 9,592 to 115,951. As a result, the gap between long and short positions grew by 4,918.
Indicator signals:
Moving averages
Trading is occurring around the 30- and 50-day moving averages, indicating market uncertainty ahead of important data.
Note: The period and prices of moving averages are considered by the author on the hourly H1 chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of a decline, the lower boundary of the indicator around 1.1110 will serve as support.
Indicator descriptions:
- Moving average: Determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.
- Moving average: Determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence): Fast EMA period 12. Slow EMA period 26. SMA period 9.
- Bollinger Bands: Period 20.
- Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
- Long non-commercial positions: Represent the total long open position of non-commercial traders.
- Short non-commercial positions: Represent the total short open position of non-commercial traders.
- Total non-commercial net position: The difference between short and long positions of non-commercial traders.
