Analysis of EUR/USD (5M)

The EUR/USD currency pair continued its movement on Tuesday, which might only provoke a nervous tic in most traders. For the fifth consecutive day, the quotes of the European currency slid down at a pace not even a pregnant turtle would envy. Over the full five trading days, the pair fell 44 pips, while the average volatility during this period was 49 pips. Thus, we continue to note the obvious fact – market movements are virtually non-existent.

Yesterday, even relatively important reports like ADP and JOLTs did not help. We warned that the data on job openings has long been outdated and that the ADP report is now published not once a month but weekly, which sharply reduces its already low significance. As a result, yesterday, traders paid no attention to either ADP or JOLTs. To be precise, the market's reaction to these three reports (JOLTs was published two months late) amounted to a 20-pip move. Due to the fact that the number of job openings exceeded forecasts, the US dollar appreciated by 20 pips, which it successfully lost over the next half hour.

Regarding trading signals, it again made no sense to consider them yesterday. The price during the European session perfectly bounced off the level of 1.1657, but what was the sense in opening a short position when 20 pips lower was the Kijun-sen line? The price settled below the Kijun-sen line, but what was the point of opening a short position when the support area of 1.1604-1.1615 lay 20 pips lower?

COT Report

The latest COT report was released last week and is dated October 28. Thus, it is, to put it mildly, outdated. The illustration above clearly shows that the net position of non-commercial traders has been "bullish" for a long time; bears struggled to enter their zone of superiority at the end of 2024, but quickly lost it. Since Trump took office as President of the United States for a second time, only the dollar has been falling. We cannot say with 100% certainty that the decline of the American currency will continue, but current developments around the world suggest it is likely.

We still do not see any fundamental factors supporting the strengthening of the European currency, while there are enough factors for the decline of the American one. The global downward trend persists, but what significance does it have now where the price moved in the past 17 years? The dollar could appreciate if the global fundamental picture changes, but so far, there are no signs of that.

The positioning of the red and blue lines of the indicator continues to indicate a maintained "bullish" trend. During the last reporting week, the number of long positions for the "Non-commercial" group increased by 5,900, while the number of shorts increased by 10,300. Accordingly, the net position decreased by 4,400 contracts over the week. However, this data is already outdated and holds no importance.

Analysis of EUR/USD (1H)

On the hourly timeframe, the EUR/USD pair may have completed another upward trend, but we would not draw such conclusions, given the nature of the pair's movement in recent months, until it settles below the Senkou Span B line. The price remains within the sideways channel of 1.1400-1.1830 on the daily timeframe; therefore, a further strengthening of the euro to 1.1800 can still be expected in the near future. The growth of the European currency is extremely weak, but movements within the flat are always weak and chaotic.

For December 10, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the Senkou Span B line (1.1597) and Kijun-sen (1.1649). The Ichimoku indicator lines may move throughout the day, which should be taken into account when determining trading signals. Do not forget to set a stop-loss order at break-even if the price has moved in the right direction by 15 pips. This will protect against possible losses if the signal turns out to be false.

On Wednesday, European Central Bank President Christine Lagarde is scheduled to speak in the European Union, and in the US, a key event of the current week will take place – the FOMC meeting. The decision on the key rate seems to have already been made, but in addition to the rate, the "dot-plot" schedule will be published, and Jerome Powell will give a speech. A sharp increase in volatility can be expected in the evening.

Trading Recommendations:

On Wednesday, traders may again trade from the area of 1.1604-1.1615. However, above this area lies the Kijun-sen line, and below – the Senkou Span B. We would advise waiting for signals to form when the target is not 20 pips away. Additionally, the FOMC meeting in the evening may provoke moves in either direction, which should be kept in mind.

Illustration Explanations:

• Price Levels (Support/Resistance): Thick red lines where movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Indicates strong levels when applied to the hourly timeframe from the 4-hour timeframe.
• Extreme Levels: Thin red lines where the price has previously bounced. They serve as sources of trading signals.
• Yellow Lines: Trendlines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: Represents the net position of each trader category.