On Tuesday, the EUR/USD pair performed a new reversal in favor of the US currency, dropping almost to the corrective level of 61.8% (1.0917). Falling short of this level by about 10 points, there was a turnaround in favor of the European currency and a return to the 1.0984 level. A rebound from this level will favor the US dollar and a further drop toward the 1.0917 level. Staying above 1.0984 doesn't guarantee further growth.
The wave situation is getting more interesting. Recent wave movements suggest that the bearish trend isn't over yet. We observed a new downward wave that broke the last low, while the latest upward wave did not surpass the previous peak. However, the waves themselves are quite short and change frequently. Given the current movement, we will likely witness a new drop toward the 1.0917 level today.
There was no significant news on Monday. Traders could only pay attention to the inflation report from Germany for July, but its second assessment met their expectations, so there was virtually no reaction to this report. If anything notable happens this week, it will likely be on Thursday, when the US will release its inflation report for July. There will be only a few major events on Wednesday and Friday. Regarding the inflation report, I would wait to jump to conclusions. The market expects an increase of 3.3%, but the actual figure might be lower, which is unlikely to support the bears. If there is a drop today, we might witness a new rise in the pair tomorrow.
On the 4-hour chart, the pair consolidated below the ascending trend line and rebounded from the Fibonacci level of 38.2% (1.1032). As such, the decline might continue toward the Fibonacci level of 61.8% (1.0882). The movement may be unstable, as indicated by the waves on the hourly chart. The rise and fall might keep alternating, but I anticipate the pair's continued decline.
Commitments of Traders (COT) report:
During the last reporting week, speculators closed 10,573 long contracts and 5,405 short contracts. The sentiment among major traders remains bullish but has weakened slightly over the past week. The total number of long contracts held by speculators now stands at 240,000, while short contracts total only 68,000. The bullish sentiment persists, but the situation will likely reverse soon. The high number of open long contracts suggests that buyers might start closing them soon—there's currently too much bias toward the bulls. I believe the current figures suggest a possible continued decline of the euro in the upcoming weeks. The ECB is increasingly signaling the imminent end of its tightening QE procedure.
News Calendar for the US and the European Union:
On August 9th, the economic events calendar had yet to feature any significant entries. There will be no notable news influences on traders' sentiment throughout the day.
Forecast for EUR/USD and advice for traders:
For selling, look for a rebound from the 1.0984 level on the hourly chart, with targets at 1.0917 and 1.0864. Purchases will be possible upon closing above 1.0984, but I wouldn't expect a significant rise in this case.