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On Tuesday, EUR/USD reversed in favor of the euro around the 23.6% Fibonacci retracement level at 1.0288 and began a new upward movement. Bulls managed to push the pair to the 50.0% Fibonacci level at 1.0373. A rejection from this level would support the U.S. dollar and pull the pair back toward 1.0288. However, if EUR/USD consolidates above 1.0373, the uptrend may extend toward 1.0411 and 1.0435.
On the hourly chart, the last completed downward wave broke below the previous low, while the last completed upward wave failed to break the previous high. This suggests either a bearish trend shift or a complex sideways movement. Wave sizes have been inconsistent, raising doubts about the presence of a clear trend.
Tuesday's fundamental background was relatively dull. Traders anticipated Jerome Powell's testimony before Congress, but they were more interested in new insights rather than the speech itself. Many expected senators to ask Powell about Donald Trump's influence on Fed policy, but that question never came up.
Powell himself reaffirmed the Fed's hawkish stance on monetary policy. No rush to cut interest rates as economic growth remains strong and inflation remains elevated. The Fed plans to keep rates at current levels for most of 2025. Despite the hawkish tone, bearish traders found nothing new in Powell's remarks. Since similar comments have been made multiple times, the market largely ignored them.
On the 4-hour chart, the pair rebounded from the 127.2% Fibonacci retracement level at 1.0436, leading to a reversal in favor of the U.S. dollar. EUR/USD now has a realistic chance of returning to the 161.8% Fibonacci level at 1.0225. For bulls to break above 1.0436 and sustain further growth, a strong fundamental catalyst would be required. The CCI indicator is forming a bearish divergence, signaling potential downside pressure.
Commitments of Traders (COT) Report
In the last reporting week, institutional traders opened 8,894 long positions and 904 short positions. The "Non-commercial" group remains bearish, suggesting a continued decline in EUR/USD. The total number of long positions held by speculators is now 162,000, while short positions amount to 221,000.
For 20 consecutive weeks, large market participants have been reducing their euro holdings, reinforcing the long-term bearish trend. Occasionally, bullish weeks appear, but they remain exceptions rather than the rule. The main driver for a weaker U.S. dollar—expectations of FOMC monetary easing—has already been priced in. At this stage, there are no new fundamental reasons to short the dollar. Technical analysis confirms a continuation of the long-term bearish trend for EUR/USD. Thus, further downside movement is expected.
News calendar for the USA and the European Union:
USA – Consumer Price Index (13-30 UTC).
USA – Speech by FOMC President Jerome Powell (15-00 UTC).
On February 12, the calendar of economic events contains two very important entries. The influence of the information background on the market mood on Wednesday may be quite strong, but in the afternoon.
EUR/USD Trading Strategy & Recommendations
Selling of the pair was possible with a rebound from the 1.0335 – 1.0346 zone with targets of 1.0288 and 1.0213. The first target has been achieved. Today, sales of the euro currency are possible upon rebound from the level of 1.0373 with targets of 1.0335 and 1.0288. Sales from other levels can also be considered. Purchases could be considered near the level of 1.0288, but the trend now looks more like a "bearish" one.
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