The EUR/USD pair reversed in favor of the European currency on Monday and showed a slight increase towards the corrective level of 61.8% (1.0960). Trader activity was very low against the backdrop of a complete absence of news and reports. Today, the upward trend may continue, and a rebound from the level of 1.0960 will favor the US dollar, leading to a decline toward the corrective level of 50.0% (1.0862). If quotes consolidate above the level of 1.0960, it will increase the chances of the pair continuing to rise towards the next level at 1.1035.
The wave situation has become less attractive in recent days. The recent upward wave has overlapped all previous waves. It is evident that the trend has currently shifted to "bullish," but now almost any downward wave will not be able to change it back to "bearish." To determine the resumption of the "bearish" trend, the euro would need to fall by another 220-250 points. Thus, the pair may decline for another 3-4 days (according to the average trader activity), and the "bullish" trend will still be preserved. There is another scenario: a new upward wave will not surpass the peak from December 14. In this case, the trend will also change to "bearish."
On Monday, traders could rest after a busy previous week, and that's exactly what they were doing. The news background last week was very strong, allowing the pair to show strong movements. The beginning of the new week is uninformative, so the market is at a standstill. However, economic reports will start entering the market today. In the European Union, a report on inflation for November will soon be released. Its preliminary estimate showed a decrease to 2.4% y/y, and today this figure may be confirmed.
I believe that even if the actual value is 2.5% or 2.3%, it won't change the essence of the matter. Inflation in the European Union is decreasing quite rapidly, although a few months ago, it was hard to believe. At the same time, Christine Lagarde and some of her colleagues recently warned that in the winter months, the Consumer Price Index may accelerate, but no one expects a strong surge.
All this tells me that the question of tightening the monetary policy in the European Union is closed. It is also closed in the United States. Thus, neither the dollar nor the euro should show strong growth in the near future based on the monetary policy factor.
On the 4-hour chart, the pair reversed in favor of the US dollar and fell to the corrective level of 61.8% (1.0882). A rebound of the pair's rate from this level will allow traders to expect a continuation of the rise towards the Fibonacci level of 38.2% (1.1032). Consolidation below 1.0882 will increase the probability of a decline to the lower line of the ascending trend corridor, which still characterizes traders' sentiment as "bullish." I expect a significant decline in the euro only after consolidating below the corridor. There are no imminent divergences observed in any of the indicators today.
EUR/USD forecast and trader recommendations:
What can be advised to traders in the current situation? A strong rise in the European currency is unlikely today. The resumption of the "bullish" trend is also unlikely. The information background is weak today, and traders will find it difficult to find new reasons for buying. Thus, I believe that a resumption of the decline toward the level of 1.0862 is more likely. Perhaps a rebound from the level of 1.0960 will be required for this. Traders can stay in sales opened after consolidating below 1.0960. Purchases can be opened in case of a rebound from the level of 1.0862 with a target of 1.0960.