Analysis of EUR/USD 5M
The EUR/USD currency pair posted record-low volatility on Tuesday. By the end of the day, the pair started moving somewhat, but it fluctuated within a 30-pip range throughout the day. Overall, there is not much more to add. A daily volatility of 30 pips came despite the release of significant reports from the Eurozone that showed noteworthy figures. The Consumer Price Index (CPI) rose to 2.2% year-on-year, while the market expected to see a reading of 2.1%. The unemployment rate climbed to 6.4%, exceeding forecasts of 6.3%. In light of this data, the euro neither rose nor fell. The market ignored the new series of reports.
In the second half of the day, the U.S. dollar began to strengthen. Why this happened remains unclear. Once again, traders are reminded that a sideways range persists on the daily timeframe, suggesting that one should not expect logical, systematic movements on lower timeframes. The market is characterized by randomness and chaos, and the volatility is such that it is unlikely to profit from any trade under these conditions.
On the 5-minute timeframe, the nature of the pair's movement throughout the previous day is even clearer. There was no sense in opening trades, as no valid signals were generated during the day.
COT Report
The latest COT report was released last week and is dated October 14, meaning it is somewhat outdated. The illustration clearly shows that the net position of non-commercial traders had long been "bullish," with bears struggling to gain a foothold in the zone of superiority towards the end of 2024, only to lose it quickly. Since Trump took office for a second time as U.S. president, only the dollar has been in decline.
We cannot state with 100% certainty that the decline of the American currency will continue, but current global developments suggest this scenario. We still do not see any fundamental factors that would strengthen the European currency, while there are plenty of factors that could lead to a decline in the dollar. The global downward trend remains intact, but it is less relevant to consider where the price has moved over the last 17 years at this point. The dollar may grow if the global fundamental picture changes, but there are currently no signs of that.
The positioning of the red and blue lines in the indicator continues to suggest that the "bullish" trend is preserved. Over the last reporting week, the number of long positions within the "Non-commercial" group decreased by 12,900, while the number of short positions increased by 2,800. Consequently, the net position decreased by 10,100 contracts over the week. However, this data is already outdated and holds little significance.
Analysis of EUR/USD 1H
On the hourly timeframe, the EUR/USD pair continues to form an upward trend, but it is moving upward very slowly and reluctantly. The price remains within a sideways channel of 1.1400-1.1830 on the daily timeframe, so a rise in the euro toward 1.1800 can be anticipated, at least within the context of a local trend. The rise of the euro cannot be called strong, but movements within a flat are always weak and chaotic.
For December 3, we identify the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the Senkou Span B line (1.1574) and the Kijun-sen line (1.1601). The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals. Remember to set stop-loss orders to breakeven once the price moves in the right direction by 15 pips. This will safeguard against potential losses if the signal turns out to be false.
On Wednesday, there are no significant reports or events scheduled in the Eurozone, aside from a speech by Christine Lagarde. However, we should not expect any significant statements from the European Central Bank head at this time. The market is largely unresponsive to news, especially from the Eurozone. In the U.S., reports on industrial production, the labor market (ADP), and the ISM services activity index will be published. We are uncertain whether the market will react to these quite important releases.
Trading Recommendations:
On Wednesday, traders may again look to trade from the 1.1604-1.1615 region. If the price consolidates above this area, new long positions can be considered, with a target of 1.1657-1.1666. Conversely, if the price consolidates below this area, short positions can be considered, with targets at the Senkou Span B line and the 1.1542 level.
Illustration Explanations:
- Support and Resistance Levels: Thick red lines where price movement may end. These are not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines projected onto the hourly timeframe from the 4-hour timeframe. These are strong lines.
- Extreme Levels: Thin red lines where the price previously rebounded. These are 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 for each category of traders.
