On Monday, the EUR/USD pair made another reversal in favor of the US dollar, consolidating below the 61.8% Fibonacci retracement level at 1.1594. Thus, today the decline may continue toward the next retracement level of 76.4% — 1.1517. A consolidation above 1.1594 would favor the euro and open the way for further growth toward the resistance level of 1.1645–1.1656.
The wave structure on the hourly chart remains simple and clear. The last completed upward wave failed to surpass the previous peak, while the new downward wave broke the prior low — meaning the trend is still bearish.
Recent labor market data and the shifting outlook for the Fed's monetary policy support bullish traders, so I expect a trend reversal to a bullish one. To confirm the end of the bearish trend, the price must consolidate above the last peak — 1.1779.
On Monday, there were very few notable events, though one worth mentioning was the apparent end of the French political crisis. The resigned Prime Minister Sebastien Lecornu, who had served only 27 days, has once again been appointed Prime Minister. This ironic twist concluded an event that many traders had considered the true cause of the euro's recent decline. Yet, while the political crisis has ended, the euro continues to fall — meaning the reason likely lies elsewhere.
Bears continue their offensive without informational support — but what's the point in denying the obvious? They truly lack backing, yet nothing prevents them from pressing forward. Therefore, as long as the trend remains downward, another decline remains entirely possible regardless of the news background.
Today's key event will be Jerome Powell's speech, but the FOMC Chair is unlikely to offer support to either bulls or bears. He had such opportunities in recent weeks, yet Powell's rhetoric remains unchanged — the Federal Reserve will make decisions based solely on economic data, and nothing else.
On the 4-hour chart, the pair has consolidated below 1.1680, which allows traders to expect further decline toward the 127.2% retracement level at 1.1495. The CCI indicator is showing signs of an emerging bullish divergence, which could halt the current downward movement. A close above 1.1680 and above the descending trend channel would favor the euro and signal a potential resumption of the bullish trend, targeting the 161.8% retracement level at 1.1854.
Commitments of Traders (COT) Report
During the latest reporting week, professional traders closed 789 long positions and opened 2,625 short positions. Despite this, the sentiment of the Non-commercial group remains bullish, largely thanks 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 — nearly a two-to-one ratio. Also, note the large number of green cells in the upper table, indicating strong accumulation of long positions in the euro. In most cases, interest in the euro is growing, while interest in the dollar is declining.
For thirty-three consecutive weeks, major players have been reducing short positions and increasing long positions. Donald Trump's policies remain the most significant factor for traders, as they could create a host of long-term, structural problems for the US. Despite the signing of several major trade agreements, many key economic indicators continue to show declines.
Economic Calendar for the US and the Eurozone
Eurozone:
United States:
The October 14 economic calendar includes several entries, though only Powell's speech stands out as a significant event. The news background may influence market sentiment on Tuesday.
EUR/USD Forecast and Trading Recommendations
Sell positions are possible today after a rebound from the 1.1594 level on the hourly chart, with a target of 1.1517. Buy positions can be considered upon a close above 1.1594, targeting 1.1645–1.1656.
Fibonacci grids are constructed between 1.1392–1.1919 on the hourly chart and 1.1214–1.0179 on the 4-hour chart.
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