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On Tuesday, EUR/USD made another reversal in favor of the European currency and consolidated above the 100.0% retracement level at 1.1620. Thus, the upward movement may continue today toward the 127.2% Fibonacci level at 1.1700. Consolidation below 1.1620 would favor the US dollar and some decline toward the 76.4% retracement level at 1.1551. Trader activity has so far been minimal this week.
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 did not break below the previous low. Geopolitical conditions remain consistently negative: negotiations between Iran and the United States are not taking place, 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 fundamental backdrop was extremely weak and unconvincing on Tuesday, but traders are not discouraged and have already shifted their focus to Thursday. Bullish traders are beginning to gain confidence and gradually apply upward pressure. The ECB meeting will take place tomorrow, and the market is already aware of the expected decision to tighten monetary policy. Thus, if we see the European currency rise today and tomorrow after several days of sideways movement, this would be quite natural. I believe traders should not overlook the fact that the ECB is tightening monetary policy, while at the same time the Fed continues to remain silent and wait. It is precisely the difference between the ECB's and the Fed's stances in 2026 that should support the European currency as strongly as geopolitics supported the dollar in the first half of the year. Market sentiment may change on Friday following the release of the US inflation report, but it is still too early to assess or discuss this. For now, attention should be focused on the ECB and Christine Lagarde, who may comment tomorrow on the outlook for inflation and monetary policy in the European Union.
On the 4-hour chart, the pair rebounded from the 50.0% retracement level at 1.1588 and reversed in favor of the European currency. Thus, in the near term, the euro may return to the 1.1649 level. A rebound from this level would allow traders to expect a further advance by the bears after the pair exits the upward channel. Consolidation above 1.1649 would allow traders to expect some growth toward the next Fibonacci level of 76.4% at 1.1726. No emerging divergences are currently observed on any indicator.
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 apparent ceasefire and the market's hopes for an end to the war. The total number of Long positions held by speculators currently stands at 203,000, while the number of Short positions stands at 228,000. The bears remain in the lead, but their advantage is rapidly narrowing.
Overall, over the long term, large market participants continue to show greater interest in the euro. Of course, 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 appears to end and then starts again. However, geopolitics no longer determines the dollar's fate on its own.
News Calendar for the US and European Union:
The economic calendar for September 9 contains one event that may interest traders. The economic backdrop may affect market sentiment on Wednesday during the second half of the day, but most likely it will not.
EUR/USD Forecast and Trading Tips:
Buying the pair was possible after a close above 1.1620 on the hourly chart, with a target of 1.1700. These positions can be maintained today. Selling opportunities may arise if the pair consolidates below 1.1620 on the hourly chart, with a target of 1.1551.
The Fibonacci levels are drawn from 1.1620–1.1325 on the hourly chart and from 1.1849–1.1325 on the 4-hour chart.
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