The EUR/USD pair rose on Friday to the 61.8% Fibonacci retracement level at 1.1824, then rebounded from it, reversed in favor of the U.S. dollar, and declined to the 50.0% retracement level at 1.1745. A rebound from this level today would favor the euro and a renewed rise toward 1.1824. A consolidation below 1.1745 would increase the likelihood of further decline toward the next Fibonacci level of 38.2% at 1.1666.
The wave structure on the hourly chart currently raises no concerns. The last completed upward wave broke through six previous peaks, while the last completed downward wave failed to break the most recent low. A two-week truce between Iran and the United States supported the bulls, allowing them to form a strong upward wave. Thus, the trend is currently bullish. In the near term, geopolitical tensions may escalate again, giving strength and confidence to the bears. However, breaking the bullish trend would require two downward waves or a breakout below the April 6 low.
There were few major global events on Friday, but late in the day, Donald Trump announced that an agreement had been reached with Tehran, resulting in the reopening of the Strait of Hormuz. Unfortunately, by Saturday, Iran closed the strait again, as the U.S. had not lifted its blockade of Iranian ports. Tensions began to rise again after Iranian armed forces shelled several vessels attempting to pass through the strait. Tehran stated that Washington had violated the terms of the reopening, and the blockade would resume until U.S. ships stop blocking Iranian vessels and other commercial ships entering Iranian ports. A new round of negotiations between Tehran and Washington is scheduled for today, but the situation remains quite tense. Yesterday, Donald Trump stated that the war with Iran would resume if a peace agreement is not signed soon. Tehran continues to refuse exporting enriched uranium outside the country, so the second round of negotiations may also fail. After two weeks of truce, the situation in the Middle East has not significantly improved. Oil started the week with a slight decline, but renewed hostilities or failed negotiations could trigger another price increase.
On the 4-hour chart, the pair rebounded from the 38.2% retracement level at 1.1849, reversed in favor of the U.S. dollar, and consolidated below the 50.0% Fibonacci level at 1.1778. Thus, the decline may continue toward the next retracement level of 61.8% at 1.1706. A move above 1.1778 would allow bulls to launch a new attack targeting 1.1849. No emerging divergences are currently observed on any indicators.
Commitments of Traders (COT) report:
During the latest reporting week, professional traders opened 13,693 long positions and closed 19,866 short positions. Over the past seven weeks, the bulls' overall advantage has disappeared. The total number of long positions held by speculators now stands at 214,000, while short positions amount to 188,000. Two months ago, bulls had more than a twofold advantage among non-commercial traders.
Overall, in the long term, large players continue to show strong interest in the euro. However, global events—of which there has been no shortage in recent years—continue to influence investor sentiment. In particular, market attention remains focused on the Middle East, where the war has only been paused, not ended. Therefore, in the near term, the euro and dollar exchange rates will depend less on Federal Reserve or ECB monetary policy or economic data, and more on developments related to the conflict with Iran. The dollar can still benefit from this situation.
Economic calendar for the U.S. and the Eurozone:
On April 20, the economic calendar contains no significant events. Therefore, the news background is unlikely to influence market sentiment on Monday.
EUR/USD forecast and trading advice:
Selling opportunities were available upon a rebound from the 1.1824 level on the hourly chart with a target of 1.1745. This target has been reached. New selling opportunities may arise upon a close below 1.1745, targeting 1.1666. Buying positions are recommended upon a rebound from 1.1745 with a target of 1.1824.
Fibonacci retracement levels are drawn from 1.2082 to 1.1410 on the hourly chart and from 1.1474 to 1.2082 on the 4-hour chart.