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On Wednesday, the EUR/USD pair declined to the 38.2% retracement level at 1.1718, rebounded from it, reversed in favor of the European currency, and began a growth phase toward the resistance level at 1.1795–1.1802. A consolidation below the 1.1718 level would favor the US dollar and a resumption of the decline toward the support level at 1.1645–1.1656.
The wave structure on the hourly chart remains simple and clear. The most recent completed downward wave did not break the low of the previous wave, while the latest upward wave broke the previous high. Thus, the trend officially remains "bullish." It would be an exaggeration to call it strong, but in recent weeks the bulls have regained confidence and resumed their attacks with renewed strength. The Federal Reserve's monetary policy easing supports further growth of the euro, and the ECB is unlikely to create any problems for the single currency in the near future.
On Wednesday, the news background for both the euro and the dollar was rather sparse, but today traders are facing a heavy flow of economic data. The starting point is the ECB meeting. Although the market does not expect a rate cut or hike, attention will focus on Christine Lagarde's speech, in which, according to some economists, hints of monetary policy tightening in 2026 may appear. In my view, this is quite a bold assumption, as inflation in the European Union is currently close to the 2% target, leaving no need to either raise or cut rates. Nevertheless, today marks the ECB's final meeting of the year, so President Lagarde may "look ahead" to next year. The more "hawkish" her outlook, the stronger the case for another bullish attack. And a new attack within a bullish trend is a welcome development. Also due today is an important US inflation report, which will be the final release in a block of statistics that markets have been awaiting with such anticipation. Depending on the outcome of this report, either the bulls or the bears may receive support. One thing is certain—today promises to be an interesting day.
On the 4-hour chart, the pair reversed in favor of the US dollar after a bullish divergence formed on the CCI indicator. As a result, the decline may continue for some time toward the support level at 1.1649–1.1680. A rebound from this zone would favor the European currency and a resumption of growth toward the 0.0% retracement level at 1.1829.
Commitments of Traders (COT) Report:
During the latest reporting week, professional market participants opened 8,041 long positions and closed 17,377 short positions. COT reports have resumed publication after the shutdown, but the data being released are still outdated, covering October and November. Sentiment among the "Non-commercial" group remains bullish thanks to Donald Trump and continues to strengthen over time. The total number of long positions held by speculators now stands at 243,000, while short positions total 145,000.
For thirty-three consecutive weeks, large players have been reducing short positions and increasing longs. Donald Trump's policies remain the most significant factor for traders, as they could trigger numerous problems with long-term and structural implications for the US economy. Despite the signing of several important trade agreements, analysts fear a recession in the US economy, as well as a potential loss of the Federal Reserve's independence under pressure from Trump and amid Jerome Powell's expected resignation in May next year.
News Calendar for the US and the Eurozone:
The economic calendar for December 18 contains four events, three of which can be considered important. The impact of the news backdrop on market sentiment on Thursday may once again be strong.
EUR/USD Forecast and Trading Advice:
Short positions were possible on a rebound from the 1.1795–1.1802 level on the hourly chart with a target at 1.1718. The target has been reached. A consolidation below the 1.1718 level would allow new short positions to be opened with a target at 1.1656. Long positions could be opened on a rebound from the 1.1718 level with a target at 1.1795–1.1802. Today, these trades can be kept open, while closely monitoring the news flow.
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