On Tuesday, the EUR/USD pair attempted to continue its upward movement, but with little success. The pair consolidated below the 1.1645–1.1656 zone, which allows for expectations of a further decline toward the next Fibonacci level of 61.8% – 1.1594. However, today traders' actions will depend more on the news background than on chart analysis. A reverse close above the 1.1645–1.1656 zone would work in favor of the European currency and signal a possible resumption of growth toward the 38.2% corrective level at 1.1718.
The wave structure on the hourly chart remains simple and clear. The last upward wave broke the high of the previous wave, while the last downward wave did not break the previous low. Thus, the trend currently remains bullish. Recent labor market data, the changed outlook for the Fed's monetary policy, Trump's renewed aggression toward China, and the government shutdown are all supporting bullish traders. However, the bulls continue to attack very sluggishly, as if they simply don't want to for some unknown reason.
There was no significant news on Tuesday, but the first two days of the week can now be forgotten. This evening will bring the event traders have been waiting for all month. Let me remind you that the most important events for traders are the U.S. labor market, unemployment, and inflation data (as well as several other indicators), along with central bank meetings. None of these key reports have been released in October except for inflation. No central bank meetings have been held yet. Thus, as of October 29, the FOMC meeting is not only the most important event of the month, but practically the only significant one.
There's no intrigue here — 99% of traders are confident that monetary policy will be eased by 0.25%. This outcome is already largely priced into the market. However, Jerome Powell's speech, which will again be examined under a microscope, remains the main intrigue. It is quite possible that the FOMC chair will provide important information this evening.
On the 4-hour chart, the pair reversed in favor of the U.S. dollar and consolidated below 1.1680, which allows expectations of some decline. However, earlier there was also a consolidation above the descending trend channel after the formation of a bullish divergence in the CCI indicator. Therefore, the upward movement could resume toward the next Fibonacci corrective level of 161.8% – 1.1854. Market movements are currently very weak, and I believe the hourly chart offers more informative insights.
Commitments of Traders (COT) Report
During the last reported week, professional traders closed 789 long positions and opened 2,625 short positions. However, no new COT reports have been published for a month. The sentiment of the Non-commercial group remains bullish, largely due to Donald Trump, and continues to strengthen over time. The total number of long positions held by speculators now stands at 252,000, compared to 138,000 short positions — almost a twofold difference. Also, note the large number of green cells in the table above — they indicate a strong buildup of long positions in the euro. In most cases, interest in the euro is rising, while interest in the dollar is falling.
For thirty-three consecutive weeks, major players have been reducing short positions and increasing long ones. Donald Trump's policies remain the most influential factor for traders, as they may cause long-term structural problems for the U.S. economy. Despite the signing of several important trade agreements, many key economic indicators continue to decline.
News Calendar for the U.S. and the Eurozone:
- U.S. – FOMC Monetary Policy Decision (18:00 UTC)
- U.S. – Federal Reserve Press Conference (18:30 UTC)
The October 29 economic calendar contains only two entries, but both are highly significant. The impact of the news background on market sentiment on Wednesday evening will be very strong.
EUR/USD Forecast and Trading Recommendations
Sales were possible after the price closed below the 1.1645–1.1656 level on the hourly chart, with a target at 1.1594. Buy positions can be considered if the price closes above the 1.1645–1.1656 zone, targeting 1.1718.
Fibonacci grids are constructed between 1.1392 – 1.1919 on the hourly chart and 1.1214 – 1.0179 on the 4-hour chart.
