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05.11.2025 11:53 AM
The wave structure on the hourly chart remains simple and clear. The last completed upward wave failed to break the peak of the previous wave, while the latest downward wave broke the previous low. Thus, the trend has once again turned bearish. Bullish traders once again failed to take advantage of opportunities to advance, while bears continued their attacks driven largely by sheer enthusiasm, without informational support.
On Tuesday, the bears continued their assault, again without any positive news in favor of the U.S. dollar. On Monday, the U.S. released the ISM Manufacturing PMI, which came in worse than expected. Yet traders did not react to it at all. This pattern has been observed almost daily: the dollar rises even though the news background points in the opposite direction. Yesterday it also became known that Democrats and Republicans may soon reach an agreement to extend government funding, which could indeed support the dollar. But this raises a question: why has the dollar been rising throughout the entire shutdown period? When government funding stopped in early October, the dollar didn't experience any shock because of it. The dollar rose when the shutdown began, it rose throughout October, and now it continues to rise because the shutdown — which has already set a new record for length — might soon end?
On the 4-hour chart, the pair rebounded from the resistance zone 1.1649–1.1680, reversed in favor of the U.S. dollar, and consolidated below the 38.2% Fibonacci level at 1.1538. Thus, the downward movement may continue toward the next retracement level, 50.0% at 1.1448. A rebound from 1.1448 would support the euro and lead to some upward movement. A consolidation below 1.1448 would increase the likelihood of a further decline toward the 61.8% Fibonacci level at 1.1358. The CCI indicator is showing signs of an emerging bullish divergence.
Commitments of Traders (COT) Report:
During the most recent reporting week, professional traders closed 789 long positions and opened 2,625 short positions. No new COT reports have been released for over a month. The sentiment of the Non-commercial category remains bullish, largely thanks to Donald Trump, and continues to strengthen over time. The total number of long positions held by speculators is now 252,000, compared to 138,000 short positions — almost a two-to-one difference. Note the large number of green cells in the table above: they reflect strong accumulation of long positions in the euro. In most cases, interest in the euro continues to grow while interest in the dollar declines.
For 33 consecutive weeks, large players have been reducing short positions and increasing longs. Donald Trump's policies remain the most significant factor for traders, as they could create numerous long-term structural problems for the U.S. economy. Despite the signing of several important trade agreements, many key economic indicators continue to show weakness.
Economic Calendar for the U.S. and the Eurozone:
On November 5, the calendar includes four events, two of which (the U.S. releases) attract significant attention. Market sentiment on Wednesday may be strongly affected in the second half of the day.
EUR/USD Forecast and Trader Recommendations: At this time, I do not recommend considering sell positions, as the bears have already exceeded their targets by a wide margin. Buy positions may be considered if the pair consolidates above 1.1517, with a target of 1.1594.
The Fibonacci grids are drawn between 1.1392–1.1919 on the hourly chart and 1.1066–1.1829 on the 4-hour chart.
