The EUR/USD pair continued its downward movement on Tuesday, but one very important point to note: it did not reach below the last low of the quotes. I will draw your attention to this moment. Shortly after, the pair reversed in favor of the euro and showed some growth towards the level of 1.1035, but by the current moment, it returned to 1.0984. A new consolidation below the corrective level of 76.4% will support a new attempt for the dollar to rise toward the Fibonacci level of 61.8% (1.0917). A rebound of the pair's exchange rate from the level of 1.0984 will support new growth towards 1.1035.
So, waves have recently been telling us only one thing - the "bearish" trend is still intact, and there are no signs of its completion. However, now such signs have appeared. Yesterday, the last downward wave failed to break the previous low, which signals a possible reversal. If the peak of the last upward wave is formed now, a new "bullish" trend may begin. However, this may be hindered by the information background, which will be very strong on Thursday and Friday. The US dollar may show growth on labor market news, so it is necessary to be cautious with conclusions.
Yesterday, July's ISM Business Activity Index in the US manufacturing sector was reported at 46.4, increasing by 0.4 points over the month. However, it is important to note that any value below 50 is negative for the industry, and the growth of the indicator was not as strong as traders expected. The next report will be on changes in the number of job openings in the US for June, which was reported at 9.582 million against traders' expectations of 9.61 million. Again, expectations were not fully met, so the decline of the US currency was justified in the second half of the day. Today, all attention is focused on the waves, as the information background is weak.
On the 4-hour chart, the pair returned to the ascending trend line. A new rebound from it will allow us to expect some growth in the pair, but closing above 100.0% (1.1030) still needs to be achieved. A closure below the trend line will support the continuation of the quote decline toward the Fibonacci level of 76.4% (1.0908). There are no imminent divergences observed in any of the indicators today.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 13,867 long contracts and 12,265 short contracts. The sentiment of major traders remains "bullish" but has slightly weakened over the past week. The total number of long contracts speculators hold is now 250,000, and short contracts are only 73,000. The "bullish" sentiment remains, but I believe the situation will change in the opposite direction soon. The high value of open long contracts indicates that buyers may start closing them soon - the current skew is too strong in favor of bulls. The current figures allow for a decline in the euro in the coming weeks. The ECB increasingly signals the imminent end of the tightening procedure.
News calendar for the USA and the European Union:
USA - ADP Non-Farm Employment Change (12:15 UTC).
On August 2nd, the economic events calendar includes only one entry. The impact of the information background on traders' sentiment today may be very weak.
Forecast for EUR/USD and trader advice:
On the hourly chart, I recommended selling on the rebound from the 1.1035 level, with targets at 1.0984 and 1.0917. The first target has been reached, but not the second one. New sales are possible if the pair closes below the 1.0984 level with a target at 1.0917. Buying the pair is now possible on the rebound from the 1.0984 level on the hourly chart, with targets at 1.1035 and 1.1092. The likelihood of the pair's rise is higher.