On Tuesday, the EUR/USD pair reversed in favor of the euro once again and consolidated above the 100.0% Fibonacci retracement level at 1.1409. As a result, the upward move may continue toward the 76.4% Fibonacci retracement level at 1.1514. However, it should be noted that a large number of false signals have formed around the 1.1409 level, and EUR/USD has been trading largely sideways in recent weeks.
The wave structure on the hourly chart remains bearish despite the bulls' attempts to regain control over the past two weeks. The latest completed downward wave broke below the previous low, while the latest upward wave has not yet exceeded the previous peak and is still developing. The geopolitical situation has deteriorated again, as Iran and the United States have resumed blockades of the Strait of Hormuz and active military operations. It will be possible to conclude that the bearish trend has ended only after a breakout above the 1.1620 peak or after the formation of two consecutive bullish waves.
Tuesday's news flow was particularly eventful. Since there were several important developments, it is worth examining them one by one. First, the U.S. inflation report came in weaker than expected. This report enabled the bulls to launch another advance, although it was not sufficient to break the pair out of its sideways range. At the same time, Donald Trump stated that the United States should control the Strait of Hormuz, arguing that Iran is unable to guarantee its security. It is worth recalling that Trump has repeatedly opposed any transit fees imposed by Iran for passage through the strait. However, according to his position, what is unacceptable for Iran is acceptable for the United States. Initially, Trump announced that the United States would provide security for commercial vessels passing through the strait and charge a fee equal to 20% of the cargo's value. He later suggested that even greater revenues could be generated by encouraging Middle Eastern countries to conclude trade and investment agreements with the United States in exchange for secure exports of their energy resources through the strait. Nothing personal—just business.
On the 4-hour chart, the pair remains in a sideways range. Consolidation above the 1.1411 level suggests the potential for further gains. However, price direction has changed too frequently in recent sessions, while overall trading activity remains subdued. No developing divergences are currently observed on any indicator. The descending trend channel remains valid.
Commitments of Traders (COT) Report:
During the latest reporting week, professional traders closed 12,228 Long positions and opened 5,098 Short positions. Over the seven weeks of February and March, the bulls' overwhelming advantage disappeared due to the war in Iran, while over the past fifteen weeks, market positioning has largely normalized amid the suspension of hostilities in the Middle East. Speculative traders currently hold 223,000 Long positions and 239,000 Short positions.
Overall, from a long-term perspective, large market participants continue to view the euro favorably. At the same time, the wide range of global developments that have characterized recent years continues to influence investor sentiment. In particular, market participants remain focused on the situation in the Middle East, where hostilities have been paused and negotiations have begun that could eventually lead to a lasting peace. However, the market is currently overlooking the improvement in geopolitical conditions, as well as many other factors that support the euro.
News Calendar for the United States and the Eurozone:
Eurozone
- Industrial Production (09:00 UTC)
United States
- Producer Price Index (12:30 UTC)
- Speech by Federal Reserve Chairman Kevin Warsh (14:00 UTC)
The economic calendar for July 15 contains three scheduled events, one of which may be considered important. As a result, macroeconomic developments could influence market sentiment during the second half of Wednesday.
EUR/USD Forecast and Trading Tips:
Long positions may be considered after a confirmed consolidation above the 1.1409 level on the hourly chart, with a target at 1.1514. Short positions may be considered after consolidation below the 1.1409 level on the hourly chart, with a target at 1.1290. However, market movements remain extremely weak at present, and the 1.1409 level has not been providing reliable trading signals.
Fibonacci retracement levels are plotted from 1.1409 to 1.1850 on the hourly chart and from 1.1411 to 1.1850 on the 4-hour chart.
