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On Monday, the EUR/USD pair continued its upward move, as I expected, and on Tuesday morning reached the target – the resistance zone at 1.1789–1.1802. A rebound from this zone would favor the U.S. dollar and a decline toward the 76.4% corrective level at 1.1695. Consolidation above this zone would increase the probability of continued growth toward the next Fibonacci level of 127.2% – 1.1896.
The wave structure on the hourly chart remains simple and clear. The last completed upward wave broke the peak of the previous one, while the last downward wave did not break the prior low. Thus, the trend can now be considered bullish, although not the strongest or most confident. The latest labor market data and changing Fed policy outlook support only the bulls.
On Monday, there were no significant events. Even Christine Lagarde's speech could hardly be considered one, given last week's ECB meeting. But the clock is ticking, and by tomorrow evening the results of the FOMC meeting will be known. While traders are not doubting a 0.25% rate cut, in my view, a lot of important information will come out. Already now there is a clear split among Fed policymakers. Some are ready to vote for a 0.50% cut, some take a less dovish but still dovish position, and some want to keep the rate unchanged. Most likely, "moderate doves" will prevail on Wednesday evening. However, the more policymakers vote and speak in favor of aggressive easing, the deeper the U.S. dollar may fall. A dovish tone alone already brings nothing good for the dollar. Donald Trump continues to demand the maximum possible rate cut, but his "influence" within the Fed is not yet enough to dictate the outcome. Thus, I believe the scenario most traders expect will be realized, but the details of the meeting, not the decision itself, will be crucial, as the market is already prepared for it.
On the 4-hour chart, the pair consolidated above the horizontal corridor, allowing traders to count on further growth toward the 161.8% corrective level at 1.1854. No developing divergences are observed today on any indicators. A rebound from 1.1854 would favor the U.S. dollar and some decline, while consolidation above this level would increase the pair's chances of continuing upward toward the next level at 1.2066.
Commitments of Traders (COT) report:
During the last reporting week, professional players opened 2,389 long positions and closed 3,696 short positions. Sentiment among the "Non-commercial" group remains bullish, supported by Donald Trump, and is strengthening over time. The total number of long positions held by speculators is now 258,000, compared to 132,000 shorts. The gap is practically twofold. In addition, note the number of green cells in the table above, indicating strong accumulation of euro positions. In most cases, interest in the euro is rising while interest in the dollar is falling.
For thirty-one consecutive weeks, large players have been reducing shorts and increasing longs. Trump's policies remain the most significant factor for traders, as they could cause numerous problems with long-term and structural consequences for the U.S. Despite the signing of several key trade agreements, many important economic indicators continue to decline.
News calendar for the U.S. and the Eurozone:
On September 16, the economic calendar contains four approximately equal entries. The impact of the news background on market sentiment on Tuesday may be moderate.
EUR/USD forecast and trader tips:
Selling the pair can be considered today on a rebound from the 1.1789–1.1802 zone on the hourly chart with a target at 1.1695. Buying was possible at the end of last week after closing above 1.1695 with a target at 1.1789–1.1802. That target has been reached. New buys should be considered after closing above this zone with a target at 1.1896.
The Fibonacci grids are built from 1.1789–1.1392 on the hourly chart and from 1.1214–1.0179 on the 4-hour chart.
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