On Friday, the EUR/USD pair made another attempt to continue its decline, but by the end of the day the bulls had regained some prospects for a corrective retracement. A rebound in the quotes today from the 61.8% Fibonacci level at 1.1473 would favor the euro and some growth toward the 50.0% corrective level at 1.1519. Consolidation of the pair below 1.1473 would favor the U.S. dollar and a continuation of the decline toward the 76.4% corrective level at 1.1416.
The wave situation on the hourly chart has changed to bearish. The latest completed upward wave failed to break the previous peak, while the latest downward wave broke the previous low. Geopolitics remains consistently negative and has every chance of becoming more acute in the near future. The market is pricing in several stages of FOMC monetary policy tightening through the end of the year. These two factors have brought bearish traders back into the market.
The information background on Friday once again allowed the bears to take a pause. The economic background on that day was fairly weak, but traders paid little attention to it either. The FOMC meeting had already taken place, so there was little else to trade on. The U.S. industrial production report had no impact on trader sentiment. Its reading was slightly worse than traders had expected, but the market is currently focused on completely different events. The bears continue to control the market because of the Fed's tighter monetary policy. The bulls cannot find a bottom from which to rebound. Thus, the most the euro can expect at present is a corrective retracement. Of course, the bears are not all-powerful, but during the last two days of informational calm, I have not seen any willingness to launch a counterattack. Today, Monday, there is no significant information flow, so trader activity may be low. I do not expect the EUR/USD pair to move far from 1.1473 today.
On the 4-hour chart, the pair has consolidated below the 38.2% corrective level at 1.1526 and continues to decline toward the next Fibonacci level of 23.6% at 1.1449. A rebound in the quotes from 1.1449 would allow for a reversal in favor of the euro and some growth toward 1.1526. Consolidation of the pair below 1.1449 would increase the probability of a further decline toward the next correction level of 0.0% at 1.1325. No emerging divergences are currently observed on any of the indicators.
Commitments of Traders (COT) Report:
During the latest reporting week, professional traders closed 4,968 Long positions and opened 12,723 Short positions. Over the seven weeks in February and March, the bulls' overwhelming advantage disappeared because of the war in Iran, while over the last twenty-four weeks the situation has become more balanced amid market hopes for an end to the conflict. The total number of Long positions currently held by speculators stands at 198,000, while the number of Short positions is 241,000. The bears remain in the lead, but their advantage is narrowing.
Overall, over the long term, major players continue to show strong interest in the euro. Of course, events of various kinds around the world, which have been abundant in recent years, influence investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war seems to end and then start again. However, geopolitics no longer determines the dollar's fate on its own.
News Calendar for the United States and the European Union:
On September 21, the economic calendar contains no noteworthy events. The economic background will have no influence on market sentiment on Monday.
EUR/USD Forecast and Trading Tips:
Buying the pair is possible today following a rebound from 1.1473 on the hourly chart, with targets at 1.1519 and 1.1564. New short positions are possible after consolidation below 1.1473, with a target of 1.1416.
The Fibonacci grids are drawn from 1.1325 to 1.1712 on the hourly chart and from 1.1849 to 1.1325 on the 4-hour chart.
