FX.co ★ EUR/USD – September 8: Bulls Attempt to Resume the Upward Trend

The EUR/USD pair reversed in favor of the euro on Monday and consolidated above the 100.0% retracement level at 1.1620. Thus, the upward move may continue today toward the 127.2% Fibonacci level at 1.1700. Consolidation of the pair's rate below 1.1620 would favor the U.S. dollar and a decline toward the 76.4% retracement level at 1.1551. Trader activity at the beginning of the new week is minimal.

The wave situation on the hourly chart remains "bullish," despite the two-week decline. The latest completed upward wave broke above the previous peak, while the latest downward wave failed to break below the previous low. Geopolitical conditions remain consistently negative: no negotiations are being held between Iran and the United States, and the blockade of the Strait of Hormuz remains in place. The FOMC's stance is currently more important for the dollar, but it remains contradictory.

The information backdrop on Monday supported the bulls, who are seeking to preserve the trend. The most important Eurozone GDP report for the second quarter showed a higher figure than traders had expected—0.6% versus 0.4% quarter-on-quarter. Thus, bullish traders received some support. However, either the support was too weak or the bulls had no desire to trade on Monday. The euro's gain for the day was insignificant. The situation in the foreign exchange market is unlikely to change today, and traders are unlikely to find reasons for active trading. Two reports will be released in the Eurozone and the United States throughout the day, neither of which is likely to attract anyone's attention. There are no geopolitical developments either. The ECB meeting is on Thursday, the Fed meeting is next week, and the inflation report is due on Friday. These are the nearest major events, which the market is already focused on. It appears that the market is not going to trade until the ECB meeting.

On the 4-hour chart, the pair rebounded from the 50.0% retracement level at 1.1588 and reversed in favor of the euro. Thus, in the near term, the euro may return to the 1.1649 level. A rebound from this level would allow for the bears to resume their advance after the pair exits the upward channel. Consolidation above 1.1649 would allow for some growth toward the next Fibonacci level of 76.4% at 1.1726. No impending divergences are currently observed on any of the indicators.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 4,558 Long positions and closed 6,869 Short positions. During the seven weeks in February and March, the bulls' overwhelming advantage evaporated because of the war in Iran, while over the past twenty-three weeks the situation has become more balanced amid the supposed ceasefire and the market's hopes for an end to the war. The total number of Long positions currently held by speculators stands at 203,000, while the number of Short positions stands at 228,000. The bears remain in the lead, but their advantage is shrinking rapidly.

Overall, over the long term, large market players continue to show greater interest in the euro. Clearly, events of various kinds around the world, which have been plentiful in recent years, affect 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 starts again. However, geopolitics no longer determines the dollar's fate on its own.

News calendar for the United States and the Eurozone:

• Germany – Change in the trade balance (06:00 UTC).
• United States – ADP employment change (12:15 UTC).

The September 8 economic calendar contains two entries, neither of which is of particular interest. The impact of the economic backdrop on market sentiment on Tuesday will be weak or absent.

EUR/USD Forecast and Trading Tips:

Long positions in the pair were possible after the hourly chart closed above 1.1620, with a target of 1.1700. Short positions are possible if the hourly chart consolidates below 1.1620, with a target of 1.1551.

The Fibonacci levels are drawn at 1.1620–1.1325 on the hourly chart and at 1.1849–1.1325 on the 4-hour chart.