On Thursday, the EUR/USD pair rebounded from the 76.4% Fibonacci corrective level at 1.1338, turned in favor of the U.S. dollar, and fell below the support zone of 1.1240–1.1265. A rebound from this zone from below today would signal a continuation of the decline toward 1.1182 and 1.1074. Conversely, a consolidation above 1.1265 would support the euro and resume growth toward the 76.4% Fibonacci level at 1.1338.

The wave structure on the hourly chart has changed. The last completed upward wave failed to break the previous high, while the last downward wave broke the previous low. This suggests a potential trend shift to a "bearish" one. Recent waves have been weak and shallow, indicating low trader activity. There hasn't been much news from the White House; traders are awaiting results from trade agreement negotiations. Nevertheless, the dollar has started to recover.

There was practically no economic news on Thursday, but traders were still digesting the Fed meeting and Jerome Powell's speech. The Fed's decision to hold rates was long anticipated, so attention was focused on Powell's tone. As usual, Powell reassured markets, saying there's no cause for concern. He mentioned that inflation might increase slightly and temporarily. The U.S. economy slowed in Q1, but a recovery is expected in Q2. Despite Trump's imposition of high tariffs on many countries, trade agreements are expected to eventually improve the situation. Powell made it clear the Fed isn't going to react to every geopolitical shift and prefers to wait for clarity on U.S. trade policy before adjusting monetary policy.

Traders had expected a more "dovish" tone from Powell, but bears began to act only a day after his speech. Better late than never.

On the 4-hour chart, the pair dropped to the 100.0% Fibonacci corrective level at 1.1213. A rebound from this level will favor the euro and a rise toward the 127.2% level at 1.1495. A break below 1.1213 combined with a move below the trendline would increase the chances of further decline toward the 76.4% level at 1.0969. No divergence signals are currently observed on any indicator.

Commitments of Traders (COT) Report

Over the last reporting week, professional traders opened 183 Long positions and closed 10,586 Short positions. The "Non-commercial" trader group has returned to a clearly "bullish" sentiment—thanks to Donald Trump. The total number of Long positions held by speculators now stands at 196,000, while Shorts total 120,000. Just months ago, the situation was the opposite.

For 20 weeks, major players were shedding euros, but they've now spent 12 consecutive weeks unwinding Short positions and adding Long positions. The difference in monetary policy direction between the ECB and the Fed still favors the dollar, but Trump's policies remain a key factor for traders, as they could have a "dovish" influence on the FOMC or even trigger a U.S. recession.

News Calendar for the U.S. and EU – May 9:

No important events are scheduled for today. The news background will likely have no influence on market sentiment this Friday.

EUR/USD Forecast and Trader Tips:

Sales were possible from the rebound at 1.1374 on the hourly chart, targeting 1.1265—which has been reached. Today, consider selling on a rebound from the 1.1240–1.1265 resistance zone with targets at 1.1182 and 1.1074. Buying can be considered on a bounce from 1.1213 on the 4-hour chart, targeting 1.1338.

Fibonacci grids are drawn from 1.1265–1.1574 on the hourly chart and from 1.1214–1.0179 on the 4-hour chart.