On Tuesday, the EUR/USD pair continued to trade slightly above the resistance zone of 1.1789–1.1802. Thus, the upward movement may continue toward the next 127.2% retracement level at 1.1896. A consolidation of the pair's rate below the 1.1789–1.1802 zone would work in favor of the U.S. dollar and a decline toward the 76.4% Fibonacci level at 1.1695.
The wave structure on the hourly chart remains simple and clear. The last completed upward wave broke the peak of the previous one, while the last downward wave did not break the prior low. Therefore, the trend remains "bullish" for now. Recent labor market data and shifting Fed monetary policy prospects continue to support only the bulls, while the bears remain sidelined. For the trend to switch to "bearish," the pair must fall to the support zone of 1.1637–1.1645.
On Tuesday, the most important event of the day was Jerome Powell's speech. Important, but not the only one. In the morning and afternoon, business activity indices were released in both the Eurozone and the U.S., but judging by market behavior, traders showed no interest in them. Powell's remarks could not be ignored by the markets, yet they provoked no reaction either. Most likely, traders did not see anything new compared to his post-Fed meeting statement last week. The Fed Chair said inflation risks are rising while the labor market continues to slow. Both problems cannot be solved at once, since they require entirely different monetary policy approaches. According to Powell, "there is no risk-free path," and the situation faced by the Fed is "quite complicated." For traders, this means only one thing – the Fed will try to balance between supporting the labor market and containing inflation. As such, each new monetary easing step will be taken very cautiously. Once the labor market shows signs of recovery, rate cuts will likely stop.
On the 4-hour chart, the pair consolidated above the horizontal channel, allowing traders to count on further growth. A rebound from the 161.8% Fibonacci level at 1.1854 worked in favor of the U.S. dollar and a decline toward 1.1680. Consolidation above 1.1854 would allow traders to expect continued growth toward 1.2066. No emerging divergences are currently observed on any indicator.
Commitments of Traders (COT) report:
During the last reporting week, professional players closed 4,788 long positions and opened 3,130 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, while short positions amount to 135,000 – nearly a twofold difference. In addition, note the number of green cells in the table above. They reflect strong increases in euro positions. In most cases, interest in the euro continues to grow, while interest in the dollar declines.
For thirty-two weeks in a row, large players have been shedding short positions and increasing longs. Donald Trump's policy remains the most significant factor for traders, as it can create many long-term and structural problems for America. Despite several important trade deals being signed, many key economic indicators continue to decline.
News calendar for the U.S. and Eurozone:
- Eurozone – German business climate index (08:00 UTC).
- U.S. – New home sales (14:00 UTC).
On September 24, the economic calendar contains only two entries, both of minor importance. The impact of the news background on market sentiment on Wednesday will be very weak or absent.
EUR/USD forecast and trader tips: Sales of the pair are possible today if it closes again below the 1.1789–1.1802 support zone on the hourly chart, targeting 1.1695. Purchases will become possible today on a rebound from the 1.1789–1.1802 zone, targeting 1.1896.
The Fibonacci grids are built at 1.1789–1.1392 on the hourly chart and at 1.1214–1.0179 on the 4-hour chart.
