On Tuesday, the EUR/USD pair continued its ascent and secured a position above the 200.0% corrective level at 1.1165. Consequently, the upward trend could extend towards the next level at 1.1240. Should the pair consolidate below the 1.1165 level, it would favor the US dollar, potentially leading to a decline toward the support zone at 1.1070–1.1081. The bullish trend remains intact.
The wave situation has become slightly more complex, but it presents no immediate concerns. The most recent downward wave (from September 18 to 19) did not breach the low of the preceding wave, while the new upward wave exceeded the peaks of the previous two waves. Thus, the bearish trend has reversed, and the pair is either transitioning into a complex sideways pattern or beginning to establish a new bullish trend. Consolidating below the support zone of 1.1070–1.1081 would negate the emerging bullish trend.
There was no significant news on Tuesday to influence the markets, and the bulls launched new offensives. There was no chance that three minor German indices would impede their momentum. Two of the three indices registered values below market expectations, yet the euro continued its ascent just as before this data was released. Today, the absence of significant news is likely to persist, and the bullish momentum may continue as it has broken out of the 1.1070–1.1180 range. A slight downward correction might still occur, potentially closing below the 1.1165 level, but the graphical analysis now suggests a more likely continuation of the pair's rise. The nearest target is 1.1240, and the bulls do not need support from the news backdrop. Next week, important U.S. unemployment and labor market data will be released, and without strong figures, the dollar is likely to weaken further.
On the 4-hour chart, the pair reversed in favor of the U.S. dollar after forming several bearish divergences on the RSI and CCI indicators, but a decline has not materialized. The RSI also entered the overbought zone several weeks ago, and another bearish divergence is now forming on the CCI indicator. Given the bulls' strength and momentum, a significant euro decline seems unlikely. Consolidation below the 1.1139 level would indicate a potential move toward 1.1013, but on the hourly chart, the bears faltered at the first support level.
Commitments of Traders (COT) Report:
In the last reporting week, speculators closed 10,540 long positions and opened 1,247 short positions. The sentiment of the "Non-commercial" group turned bearish several months ago, but currently, the bulls are actively dominating again. The total number of long positions held by speculators now stands at 182,000, with short positions totaling 112,000.
However, for the second consecutive week, major players have been divesting from the euro. This could indicate the onset of a new bearish trend or at least a correction. The key factor for the dollar's decline — expected FOMC monetary easing — has already been priced in, leaving fewer reasons for the dollar to fall. While new factors may emerge over time, growth in the US dollar currently seems more probable. Active selling of the euro has not yet started. If it begins, the likelihood of a bearish trend will increase.
News Calendar for the US and Eurozone:
US – New Home Sales (14:00 UTC).
On September 25th, the economic calendar includes only one minor entry. The impact of the information backdrop on trader sentiment throughout the day may be very weak or non-existent.
Forecast for EUR/USD and Trader Recommendations:
Sales of the pair are possible if it closes below the 1.1165 level on the hourly chart, targeting 1.1081 and 1.1070. Purchases were advisable after a bounce from the support zone of 1.1070–1.1081 on the hourly chart, aiming for 1.1139. With the 1.1139 and 1.1165 levels surpassed, maintaining buy positions with targets at 1.1240 and 1.1286 is recommended.
Fibonacci levels are plotted from 1.0917 to 1.0668 on the hourly chart and from 1.1139 to 1.0603 on the 4-hour chart.
