On Tuesday, the EUR/USD pair traded sideways, ignoring the 1.1637–1.1645 level. Thus, sideways movement may persist today, as there will be no significant news background during the day. A rebound from the 50.0% retracement level at 1.1590 could work in favor of the euro and a resumption of growth toward the 76.4% Fibonacci level at 1.1695. Consolidation below 1.1590 would increase the likelihood of a continuation of the decline toward the next 38.2% Fibonacci level at 1.1544.
The wave pattern on the hourly chart remains simple and clear. The last completed downward wave did not break the previous lows, while the last upward wave nearly broke through all recent peaks. Thus, the trend may once again be turning "bullish," though the possibility of sideways movement also remains. Recent labor market data and the changed outlook for Fed policy support the bulls.
On Tuesday, there was only one economic report. U.S. durable goods orders fell by another 2.8% m/m, following a 9.4% decline the previous month. This indicates that Americans have sharply reduced demand for expensive goods over the past two months, as many imported products or those with imported components have risen in price due to Donald Trump's tariffs. It is unclear what the trend will be going forward, but it is obvious that rising prices do not stimulate demand. Thus, while the U.S. economy benefits from additional budget revenues, many other indicators show negative dynamics. Next week, we will see fresh U.S. data on unemployment, business activity, and the labor market, and I expect some unpleasant surprises there as well. For now, the dollar is holding back from another drop, but its prospects for next week do not look good.
On the 4-hour chart, the pair turned back in favor of the U.S. currency and consolidated below 1.1680. Recently, this level has been crossed too often by price to be of much significance, so I advise ignoring it. The hourly chart provides a clearer and more informative picture, with more levels. No emerging divergences are seen in any indicator today. The sideways movement is also clearly visible on the 4-hour chart.
Commitments of Traders (COT) Report:
During the last reporting week, professional traders opened 6,420 long positions and 3,106 short positions. The sentiment of the "Non-commercial" group remains "bullish" thanks to Donald Trump and is strengthening over time. The total number of long positions held by speculators is now 253,000, compared to 134,000 short positions — nearly a twofold gap. Also note the number of green cells in the table above, showing a strong increase in euro positions. In most cases, interest in the euro continues to grow, while interest in the dollar declines.
For 28 consecutive weeks, large players have been reducing short positions and increasing longs. Donald Trump's policies remain the most significant factor for traders, as they may create numerous long-term and structural problems for the U.S. economy. Despite the signing of several important trade agreements, some key economic indicators continue to decline.
News calendar for the U.S. and the Eurozone:
On August 27, the economic calendar contains no noteworthy entries. The news background will have no influence on market sentiment on Wednesday — though who knows whom Trump might decide to fire next?
Forecast for EUR/USD and trader recommendations:
Sales of the pair were possible upon a close below 1.1695 on the hourly chart, with the target at the 1.1637–1.1645 zone. This target has been reached. I do not recommend considering new sales yet due to the sideways market. Purchases may be opened on a rebound from 1.1590 on the hourly chart with a target at 1.1695.
Fibonacci grids are built from 1.1789–1.1392 on the hourly chart and from 1.1214–1.0179 on the 4-hour chart.
