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On Monday, the EUR/USD pair consolidated again below the 1.1645–1.1656 level, which allowed for expectations of a small decline. The bears managed to deliver a slight drop, but by Tuesday morning the euro had returned to the 1.1645–1.1656 level. Thus, today another rebound from this zone will again favor the U.S. dollar and a moderate decline toward the support level of 1.1594–1.1607. A consolidation of the pair above 1.1645–1.1656 will increase the likelihood of further growth toward the 38.2% Fibonacci level at 1.1718.
The wave structure on the hourly chart remains simple and straightforward. The last completed downward wave did not break the previous wave's low, while the last upward wave (still forming) has broken the previous peak. Thus, the trend has officially turned "bullish." It is hard to call it strong, but in recent months the bulls have shown only one thing — their weakness. The Fed's monetary easing should give them additional strength, as the ECB does not intend to cut interest rates anytime soon.
On Monday, traders continued to rest, and their activity was close to zero. However, today begins an interesting period that may significantly increase market movement strength. On Tuesday, the first labor-market reports will be released, opening a sequence of economic publications that could become decisive for the dollar. It is obvious that ADP and JOLTS reports (especially for September and October) are not the key ones for the market. However, as mentioned earlier, they will simply open the "hit parade." The Fed meeting will take place tomorrow. Next week, the long-awaited Nonfarm Payrolls and unemployment rate for November (December 16) will be released, as well as November inflation (December 18). Based on these events, traders will be able to form a strategy for working with the dollar in the coming months. Also next week, the ECB meeting will take place. Even though the ECB board meeting is not causing much excitement among traders now, it is still an important event. The dollar may suffer significantly over the next two weeks.
On the 4-hour chart, the pair returned to the resistance level of 1.1649–1.1680. A rebound from this zone will again work in favor of the U.S. dollar and a decline toward the 38.2% Fibonacci level at 1.1538. A consolidation above the 1.1649–1.1680 resistance zone will increase the likelihood of continued growth toward the next corrective level of 0.0% at 1.1829. No forming divergences are observed today on any indicators. The "bullish" trend has every chance to recover.
Commitments of Traders (COT) Report:
During the last reporting week, professional traders opened 5,893 long positions and 10,312 short positions. COT reports began to be published again after the government shutdown, but the available data is still outdated — from October. The sentiment of the "Non-commercial" group remains bullish due to Donald Trump and continues to strengthen over time. The total number of long positions held by speculators is now 250,000, while short positions amount to 143,000.
For thirty-three consecutive weeks, major players have been reducing short positions and increasing long ones. Donald Trump's policies remain the most influential factor for traders, as they can cause many long-term, structural problems for the U.S. economy. Despite the signing of several important trade agreements, analysts fear a recession in the American economy, as well as the loss of the Fed's independence under Trump's pressure and in light of Jerome Powell's resignation scheduled for May next year.
News calendar for the U.S. and the European Union:
On December 9, the economic calendar contains three entries, two of which are directly related to the U.S. labor market. The influence of the news background on market sentiment on Tuesday may be present, but only in the second half of the day.
EUR/USD Forecast and Trader Recommendations:
Short positions on the pair are possible today if the price closes below the 1.1645–1.1656 level on the hourly chart, with a target of 1.1594–1.1607. Buy trades may be opened with a target of 1.1718 if the price closes above the 1.1645–1.1656 level.
Fibonacci grids are built from 1.1392–1.1919 on the hourly chart and from 1.1066–1.1829 on the 4-hour chart.
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