Analysis EUR/USD 5M
The EUR/USD pair resumed downward movement on Monday as markets prepared for the upcoming Federal Reserve meeting. Recall that the current downtrend (which has lasted two months with almost no corrections) began just ahead of a Fed meeting — the September one. Then the market expected policy tightening and the start of a rate-hike campaign to fight high inflation. It does not matter that over the summer the market repeatedly priced in future Fed hikes after each of Kevin Warsh's speeches. Now the Fed does not intend to tighten at this meeting, yet the dollar is still rising. Why? Because the market expects tightening in December. Under that scheme, the dollar could theoretically rise even toward parity with the euro. We still believe the current fall in EUR/USD has little to do with logic or consistency. The market interprets incoming information the way it wants, not as things actually are. In addition, the geopolitics factor can pressure the euro. Again, it doesn't matter that the Middle East war was already priced in during the first half of 2026—it cannot support the dollar forever. The market continues to buy the dollar simply because it is getting more expensive—inertial, speculative movement.
Technically, the downtrend may be finished since the trend line was broken. For five weeks, the market bought the dollar at any excuse, and now it cannot overcome even the nearest resistance at 1.1274. We still see no willingness among market participants to buy the euro.
On the 5-minute TF, two sell signals formed on Monday. Price closed below the Senkou Span B line, then dropped to the nearby support area of 1.1154–1.1165. Thus, traders in short positions could have booked a few dozen pips of profit. The price is closing below the Senkou Span, suggesting the downtrend may resume.
COT report
The latest COT report is dated October 20. On the weekly TF, it is clearly visible that non-commercial traders' net position remains bearish and has declined significantly in 2026 due to geopolitical events. Over the past eight months, traders have been exiting the euro in favor of the U.S. dollar. Donald Trump's policies have not changed, but the dollar served as a reserve currency for a time.
However, we still do not see any fundamental factors that would further strengthen the U.S. dollar. The war in the Middle East made the dollar super-attractive for a while, and the Fed's monetary-policy stance surprised the dollar for the second time this year. In the long term, the euro could fall as low as $1.08 (the trend line), but the longer-term uptrend will remain relevant. Nevertheless, in recent weeks the market has priced in only positive factors for the dollar and ignored everything else.
The arrangement of the red and blue indicator lines points to the bears' advantage. During the last reporting week, long positions among the "Non-commercial" group rose by 3,500, while short positions increased by 500. Accordingly, the net position rose by 3,000 contracts over the week.
Analysis EUR/USD 1H
On the hourly timeframe, the EUR/USD pair finally has the opportunity to form an uptrend. If you also look at the daily and weekly TFs, it becomes clear that the chances of a strong and lasting trend remain high. However, for the euro to rise, it must be bought. Over the past week and a half, the market has shown no willingness to buy the euro. Therefore, based on market sentiment, we think a new decline is more likely, regardless of macroeconomics and fundamentals.
For October 27 we highlight the following levels for trading — 1.1092, 1.1154–1.1165, 1.1221, 1.1274, 1.1362–1.1368, 1.1461–1.1473, 1.1536–1.1542, 1.1585, 1.1657–1.1665, as well as the Senkou Span B line (1.1191) and the Kijun-sen (1.1217). Ichimoku lines may shift during the day, so account for this when determining trading signals. Remember to move your Stop Loss to breakeven after the price moves 15 pips in the right direction. This will protect against losses if the signal proves false.
On Tuesday, European Central Bank President Christine Lagarde will speak in the euro area, although important market-moving comments for the euro are unlikely. In the U.S., a relatively important report on durable-goods orders will be published today.
Summary of the above analysis:
Traders can consider short positions near 1.1092 if price holds below the 1.1154–1.1165 area. If price bounces from the 1.1154–1.1165 area, consider a target of 1.1217–1.1221 for long positions.
Explanations for the illustrations:
- Price support and resistance levels (resistance/support) — thick red lines around which movement may end. They are not sources of trading signals.
- Kijun-sen and Senkou Span B lines — Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
- Extreme levels — thin red lines from which the price previously bounced. They are sources of trading signals.
- Yellow lines — trendlines, trend channels, and any other technical patterns.
- Indicator 1 on the COT charts — the size of the net position of each trader category.
