The EUR/USD pair continued its upward movement on Monday and, for the second time, broke through the important 1.1750–1.1760 area. The first breakout turned out to be false, but the uptrend on the hourly timeframe remains intact, which gives sufficient (technical) grounds to expect further growth of the European currency. From a fundamental and macroeconomic standpoint, the arguments in favor of further euro appreciation are even stronger. All recent U.S. data have, in one way or another, indicated worsening economic conditions. The only exception was the ISM Services PMI, which has traditionally shown more resilience than manufacturing in recent years. Fundamentally, the dollar's only chance for relief lies in the possibility that the U.S. Supreme Court overturns Donald Trump's tariffs. Of course, we do not believe that in this case, Trump would give up and not attempt to reintroduce tariffs through other legislation. However, such a decision would at least give the dollar a temporary reprieve.
As mentioned, on the hourly timeframe, there are no reasons to expect the uptrend to end. The movement remains weak, but stable. Volatility is still low, but this is the nature of the market.
On the 5-minute timeframe, Monday produced one excellent buy signal in the form of a bounce from the critical line. After that, the price reached the 1.1750–1.1760 area and broke above it. Therefore, exiting the buy trade was not even necessary. Let us also recall that the upcoming Fed meeting will most likely turn out to be dovish rather than hawkish.
The latest COT report (as of September 9) shows the net position of non-commercial traders has been "bullish" for a long time, with bears only barely taking the upper hand at the end of 2024, and quickly losing it. Since Trump took office as US President, the dollar has been the only currency to fall. We can't say with 100% certainty that the dollar will keep declining, but current events globally do point in that direction.
We still see no fundamental reasons for euro strength, but plenty are supporting the dollar's drop. The global long-term downtrend remains, but what does the last 17 years' price action matter now? Once Trump ends his trade wars, the dollar may rally, but recent events show that won't happen anytime soon. Potential loss of Fed independence is another major pressure point for the US currency.
The red and blue lines of the indicator keep pointing to a persistent "bullish" trend. In the last reporting week, the number of longs in the Non-commercial group rose by 2,400 contracts, while shorts fell by 3,700. Thus, the net position increased by 6,100 contracts, which isn't a significant change.
On the hourly chart, the EUR/USD pair continues a modest uptrend. A rebound from the trendline, coupled with the U.S. inflation report, triggered another wave of growth. The pair still spends most of its time in the 1.1615–1.1750 range, but the upward bias remains. The dollar continues to face numerous bearish factors and is only losing ground slowly because of the generally low volatility.
For September 16, the following levels are identified for trading: 1.1092, 1.1147, 1.1185, 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604–1.1615, 1.1666, 1.1750–1.1760, 1.1846–1.1857, along with the Senkou Span B line (1.1660) and the Kijun-sen line (1.1721). Ichimoku indicator lines may shift during the day, which should be taken into account when identifying trading signals. Do not forget to set a Stop Loss at breakeven once the price moves 15 pips in the right direction, which will protect against potential losses if the signal turns out to be false.
On Tuesday, the euro area will release reports on industrial production and economic sentiment. Neither can be described as particularly important. In the U.S., retail sales and industrial production reports are scheduled, which are of slightly greater interest.
On Tuesday, the pair may continue moving north, as the 1.1750–1.1760 area was successfully broken. Therefore, long positions remain relevant following yesterday's rebound from the Kijun-sen line, with a target at 1.1846–1.1857. Short positions will only be justified if the price consolidates back below the 1.1750–1.1760 area, with the target at the Kijun-sen line.
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