Analysis of EUR/USD 5M

The EUR/USD currency pair began to recover on Monday, although there were no macroeconomic or fundamental reasons for the euro's rise. Let us recall that at the end of last week, the British pound fell significantly, dragging the euro down with it. This is why we saw an unplanned correction in the euro despite a solid macroeconomic and fundamental background. The price even broke through the upward trendline, but the breakout turned out to be false and occurred at a time when traders were unlikely thinking about opening positions.

On Monday, there were no interesting or important events either in the U.S. or in the EU. Therefore, volatility left much to be desired. However, the recovery of the European currency amid an empty economic calendar indirectly suggests that the upward trend remains intact. Once again, we assert that the euro fell somewhat undeservedly and at an inopportune moment. Hence, a swift recovery is a logical outcome.

In the 5-minute time frame on Monday, exactly one trading signal was formed. In the middle of the European session, the pair overcame the zone of 1.1750–1.1760, allowing traders to open long positions. Closer to the evening, these positions could have been safely closed with a decent profit, but alternatively, a Stop Loss could be placed at breakeven, and one could wait for a test of the critical line and the level of 1.1846–1.1857.

COT Report

The latest COT report is dated September 16. The chart above clearly shows that the net position of non-commercial traders was "bullish" for a long time. Bears only managed to gain the upper hand at the end of 2024, but quickly lost their advantage. Since Trump took office as U.S. president for the second time, the dollar has only been falling. We cannot say with 100% certainty that the decline in the U.S. currency will continue, but the current developments around the world hint at this scenario.

We still see no fundamental factors for strengthening the euro, but there are plenty of factors for the weakening of the dollar. The global downtrend still persists, but what does it matter now which way the price has moved over the past 17 years? Once Trump ends his trade wars, the dollar may start to rise, but recent events suggest the war will continue in one form or another. A potential loss of the Fed's independence is another powerful factor putting pressure on the U.S. currency.

The positioning of the red and blue lines of the indicator continues to signal a "bullish" trend. Over the past reporting week, the number of long positions in the "non-commercial" category decreased by 4.8 thousand, while the number of short positions increased by 3.1 thousand. Consequently, the net position decreased by 7.9 thousand contracts for the week.

Analysis of EUR/USD 1H

In the hourly time frame, the EUR/USD pair maintains an upward trend. Over the last few days, the price has been undergoing a correction, but as long as it stays above the trendline, the upward trend remains intact. There have been no significant reasons for the euro to fall, but the British pound added to the downward pressure, and technical corrections are a natural part of the market. Considering the Fed's tone at its last meeting, we have even more confidence in the continued decline of the U.S. currency.

For September 23, we identify the following trading levels: 1.1234, 1.1274, 1.1362, 1.1426, 1.1534, 1.1604–1.1615, 1.1666, 1.1750–1.1760, 1.1846–1.1857, 1.1922, 1.1971–1.1988, as well as the Senkou Span B (1.1755) and Kijun-sen (1.1823) lines. The Ichimoku indicator lines can shift during the day, which should be taken into account when identifying trading signals. Don't forget to set a Stop Loss at breakeven if the price moves 15 points in the right direction. This will protect against potential losses if the signal turns out to be false.

On Tuesday, business activity indices in the services and manufacturing sectors will be published in both the Eurozone and the U.S. Keep in mind that the U.S. publishes its own internal activity indices, so the Eurozone indices are generally considered more important. Additionally, another speech by Jerome Powell will take place today, which is always significant and interesting.

Trading Recommendations:

On Tuesday, the pair may continue moving north, as the upward trend persists and there are still no reasons for dollar growth. The first target is the Kijun-sen critical line.

Explanation of illustrations:

• Price support and resistance levels – thick red lines near which price movement may stop. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred from the 4-hour to the 1-hour time frame. These are strong lines.
• Extremum levels – thin red lines from which the price previously rebounded. They serve as sources of trading signals.
• Yellow lines – trendlines, trend channels, and any other technical patterns.
• Indicator 1 on COT charts – the size of the net position of each group of traders.