FX.co ★ EUR/USD – August 10: The Dollar Remains Stable

The EUR/USD pair made a reversal in favor of the euro on Friday and consolidated above the 76.4% retracement level at 1.1551. Thus, the upward move may continue this week toward the next retracement level of 100.0% at 1.1620. Consolidation of the pair below 1.1551 would favor the US currency and some decline toward the 61.8% Fibonacci level at 1.1507.

The wave situation on the hourly chart remains "bullish." The latest completed downward wave broke the previous low, but the latest upward wave also broke the previous high. Geopolitical developments have raised hopes for the opening of the Strait of Hormuz, while Iran, the US, and Oman are holding talks on control of the strategically important strait. Thus, geopolitics is currently not working in favor of the dollar, while the market's "hawkish" expectations regarding FOMC monetary policy are easing.

The news background once again forced the bears to retreat on Friday, while the US dollar received another blow. The labor market not only showed some signs of weakness, but fell below the zero mark, into negative territory. In other words, no jobs were created in July at all; their number decreased by 23,000 compared with the previous month. This point should be understood correctly. Jobs can be created, but their total number cannot increase indefinitely every month. There is always a natural decline in the number of jobs, which is not accounted for anywhere or in any way. Therefore, for the unemployment rate not to increase, the number of new jobs created each month must exceed 100,000. Now, however, we are seeing a paradoxical situation. The unemployment rate is falling even though jobs are hardly being created anymore. In any case, the Nonfarm Payrolls report could not please even the most ardent supporters of the US currency. At the same time, however, the dollar did not weaken significantly. It merely continued to decline. Friday could have ended much worse for the dollar.

On the 4-hour chart, the pair consolidated above the downward trend channel, suggesting not simply a "bullish" attack, but a full-fledged "bullish" advance and trend. Consolidation of the price above the 76.4% Fibonacci level at 1.1514 would allow for a continuation of the upward move toward the 61.8% retracement level at 1.1578. No new emerging divergences are observed in any of the indicators.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 3,128 Long positions and 17,484 Short positions. During the seven weeks in February and March, the overwhelming advantage of the bulls evaporated because of the war in Iran, while over the past nineteen weeks the situation has become more balanced amid the purported truce and market hopes for an end to the war. The total number of Long positions held by speculators currently stands at 202,000, while the number of Short positions stands at 260,000. The bears are once again taking the lead.

Overall, over the long term, large market participants continue to show a strong preference for the euro. Undoubtedly, events of various kinds around the world, which have been plentiful in recent years, influence investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war ends and then resumes again. The market initially ignored the fact of the truce and then ignored the resumption of the war. Thus, geopolitics no longer determines the fate of the dollar on its own.

Economic Calendar for the US and the European Union:

On August 10, the economic events calendar contains no noteworthy entries. The economic background will have no influence on market sentiment on Monday.

EUR/USD Forecast and Trading Tips:

Buying the pair was possible after consolidation above 1.1551 on the hourly chart, with a target of 1.1620. These trades can currently be kept open. Selling the pair is possible after an hourly close below 1.1551, with targets at 1.1507 and 1.1472.

The Fibonacci levels are drawn from 1.1620 to 1.1325 on the hourly chart and from 1.1411 to 1.1850 on the 4-hour chart.