EUR/USD 5M analysis
The EUR/USD currency pair traded in a convulsive manner throughout Tuesday. Volatility was near zero despite a large amount of macroeconomic data. In the morning, Germany and the European Union published September business activity indices for the services and manufacturing sectors. However, as we warned yesterday, the market reaction would follow only if the reports showed resonant values. They did, but in opposite directions. While indices for the services sector increased, indices for the manufacturing sector fell. Thus, traders could not decide what to do and in which direction to trade.
Overall, the upward trend remains intact, and the European currency continues to recover after an unfair drop at the end of last week. At present, the pair is in the area of the Ichimoku indicator lines, so consolidation above them will confirm our expectations for continued euro growth. Let us recall that the global fundamental background continues to support only the euro, while the dollar can still rely solely on technical corrections.
On the 5-minute timeframe, not a single trading signal was formed on Tuesday. The price moved strictly sideways with minimal volatility. Therefore, it is even good that the price did not work off any levels or lines during the day.
The latest COT report is dated September 16. The illustration above clearly shows that the net position of non-commercial traders was "bullish" for a long time. Bears barely managed to move into their own zone of superiority at the end of 2024 but quickly lost it. Since Trump took office as U.S. president for the second time, only the dollar has been falling. We cannot say with 100% certainty that the fall of the U.S. currency will continue, but current global developments suggest exactly this scenario.
We still see no fundamental factors for strengthening the European currency, but plenty remain for the fall of the U.S. dollar. The global downward trend still persists, but what does it matter now where the price moved over the past 17 years? Once Trump ends his trade wars, the dollar may resume growth, but recent events have shown that the war will continue in one form or another. The possible loss of Fed independence is another powerful factor weighing on the U.S. currency.
The positioning of the red and blue lines of the indicator continues to point to the preservation of the "bullish" trend. Over the last reporting week, the number of long positions in the "Non-commercial" group decreased by 4.8 thousand, while the number of short positions increased by 3.1 thousand. Accordingly, the net position fell by 7.9 thousand contracts for the week.
EUR/USD 1H analysis
On the hourly timeframe, the EUR/USD pair maintains an upward trend. In recent days, the price corrected, but above the trend line the upward trend remains valid. There have been no significant reasons for the fall of the European currency, but the pound sterling rendered it a "disservice." And no one has canceled technical corrections. Taking into account the Fed's stance at the last meeting, we believe even more strongly in the further decline of the U.S. currency.
For September 24, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604–1.1615, 1.1666, 1.1750–1.1760, 1.1846–1.1857, 1.1922, 1.1971–1.1988, as well as the Senkou Span B line (1.1790) and the Kijun-sen line (1.1823). Ichimoku indicator lines may move during the day, which should be taken into account when identifying trading signals. Do not forget to set the Stop Loss order to breakeven if the price has moved 15 points in the right direction. This will protect against potential losses if the signal turns out to be false.
On Wednesday, the most interesting event of the day will be Germany's business climate index. Obviously, this report will not be able to provoke a strong market reaction, and there will simply be no other events during the day. Thus, we may once again face a rather dull day with flat movement and low volatility.
Trading recommendations: On Wednesday, the pair may continue to move north, since the upward trend remains intact, and the dollar still has no grounds for growth. The first target is the 1.1846–1.1857 level. However, volatility may again be very low, and intraday trend movement may be absent.
Explanations for illustrations:
- Support and resistance price levels – thick red lines where movement may end. Not sources of trading signals.
- Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour chart. Strong lines.
- Extreme levels – thin red lines from which the price previously bounced. Sources of trading signals.
- Yellow lines – trend lines, trend channels, and any other technical patterns.
- Indicator 1 on COT charts – the size of the net position of each trader category.
