On Monday, the EUR/USD pair returned to the corrective level of 323.6% – 1.0532, where it has been trading for several weeks. A rebound from this level allows us to anticipate a slight decline toward 1.0420, but the price movement remains horizontal. Only the news background can trigger significant activity from bears or bulls, leading to a strong directional move. Until then, the pair's movements are likely to remain as they have been over the past few days or weeks.
The wave scenario is simple and clear. The last completed downward wave did not break the previous low, and the last upward wave barely exceeded the previous peak. Thus, a bullish trend has formally started, but it looks very unconvincing and might already be over. To break the current bullish trend, the pair needs to fall below the 1.0461 level.
On Monday, the economic calendar was full, but neither the euro nor the US dollar managed to show notable performance by the end of the day.
The US data painted a similar picture:
Thus, the reports contradicted one another and failed to provide clear direction for either bulls or bears.
Christine Lagarde's speech in the morning stated that "the worst days are behind us" (referring to inflation) and reiterated that the ECB will continue to lower interest rates. As rate cuts are a bearish factor for the euro, strong growth in the euro would have been illogical.
On the 4-hour chart, the pair completed a second rebound from the 100.0% Fibonacci correction level at 1.0603 and continued to decline toward the 127.2% Fibonacci level at 1.0436. A bearish divergence on the CCI indicator further pushes the price downward.
Commitments of Traders (COT) Report
In the most recent reporting week, speculative traders closed 10,318 long positions and opened 7,766 short positions.
For 13 consecutive weeks, large players have been reducing their euro holdings. In my opinion, this signals the formation of a bearish trend. The key factor supporting the dollar's decline—expectations of FOMC policy easing—has already been priced in, leaving the market with no significant reason to continue selling the dollar.
On December 17, the calendar includes several noteworthy events, though none are major. The news background is expected to exert moderate influence on market sentiment.
The wave scenario is simple and clear. The last completed downward wave did not break the previous low, and the last upward wave barely exceeded the previous peak. Thus, a bullish trend has formally started, but it looks very unconvincing and might already be over. To break the current bullish trend, the pair needs to fall below the 1.0461 level.
On Monday, the economic calendar was full, but neither the euro nor the US dollar managed to show notable performance by the end of the day.
- In the Eurozone, the services PMI rose to 51.5 (from 49.5 last month), but the manufacturing PMI fell further to 45.2.
- In Germany, the services PMI improved to 51.0 (from 49.3), while the manufacturing PMI fell to 42.5 (from 43.0).
The US data painted a similar picture:
- The services PMI improved from 56.1 to 58.5, while the manufacturing PMI declined from 49.7 to 48.3.
Thus, the reports contradicted one another and failed to provide clear direction for either bulls or bears.
Christine Lagarde's speech in the morning stated that "the worst days are behind us" (referring to inflation) and reiterated that the ECB will continue to lower interest rates. As rate cuts are a bearish factor for the euro, strong growth in the euro would have been illogical.
On the 4-hour chart, the pair completed a second rebound from the 100.0% Fibonacci correction level at 1.0603 and continued to decline toward the 127.2% Fibonacci level at 1.0436. A bearish divergence on the CCI indicator further pushes the price downward.
- A rebound from 1.0436 could trigger a slight upward correction.
- Closing below 1.0436 will increase the likelihood of a continuation of the downtrend toward the next Fibonacci level 161.8% – 1.0225.
Commitments of Traders (COT) Report
In the most recent reporting week, speculative traders closed 10,318 long positions and opened 7,766 short positions.
- Sentiment among the Non-commercial category remains bearish and is strengthening, indicating further potential declines in the pair.
- The total number of long positions is now 157K, while short positions have reached 233K.
For 13 consecutive weeks, large players have been reducing their euro holdings. In my opinion, this signals the formation of a bearish trend. The key factor supporting the dollar's decline—expectations of FOMC policy easing—has already been priced in, leaving the market with no significant reason to continue selling the dollar.
Economic Calendar for the US and Eurozone
- Eurozone – German Business Climate Index (09:00 UTC)
- Eurozone – German ZEW Economic Sentiment Index (10:00 UTC)
- US – Retail Sales (13:30 UTC)
- US – Industrial Production (14:15 UTC)
On December 17, the calendar includes several noteworthy events, though none are major. The news background is expected to exert moderate influence on market sentiment.
Forecast for EUR/USD and Trading Tips
- Sell positions could have been opened after a rebound from 1.0603 on the 4-hour chart, targeting 1.0420 and 1.0320. These trades can still be held.
- Yesterday, short positions were possible after a rebound from 1.0532 on the hourly chart, and the same scenario applies today.
- Buy positions will become viable after closing above 1.0532 on the hourly chart, but I would avoid risky long trades at the moment.
Fibonacci Levels
- Hourly chart: Fibonacci levels are drawn from 1.1003 to 1.1214.
- 4-hour chart: Fibonacci levels are drawn from 1.0603 to 1.1214.
