On Thursday, the EUR/USD pair experienced a rebound from the upper line of the ascending trend corridor, leading to a reversal in favor of the US dollar and a drop toward the lower line. Currently, the fate of the US currency is being decided. If the pair's rate consolidates below the corridor, it will significantly increase the probability of further dollar growth toward the levels of 1.0960 and 1.0862. A rebound from the lower line of the corridor will give the European currency a chance to rise to the level of 1.1172.
The wave situation remains clear. The last downward wave was too weak to consider the "bullish" trend as completed. The last upward wave broke the peak of the previous wave, so the "bullish" trend is still ongoing, and there are no signs of its completion. A break of the last low (from December 15th) is needed to have such a sign. Considering the current week's holiday status and the euro's constant rise, this week is not feasible.
The information background for the pair still needs to be present, which does not hinder traders from actively trading. Currently, the price is clearly within the trend corridor. Thus, trading is carried out in full accordance with technical analysis. Since there is no information background, it does not influence the pair's movement. Today, everything will depend on the lower line of the corridor.
The US dollar has lost too many positions lately, and I expect it to strengthen at the beginning of the next year. However, bullish sentiment prevails in the market for now, and there are no signals of a trend reversal.
On the 4-hour chart, the pair has risen to the Fibonacci level of 23.6% (1.1125) and rebounded. Thus, a reversal in favor of the US currency was executed, which did not resolve anything. A rebound from the Fibonacci level of 38.2% (1.1032) will allow the European currency to resume its growth within the "bullish" trend. A change to a "bearish" trend can only be considered after consolidating below the ascending trend corridor, at least on the hourly chart.
Commitments of Traders (COT) Report:
During the last reporting week, speculators closed 23,759 long contracts and opened 8,976 short contracts. The sentiment of major traders remains "bullish" and is weakening again. The total number of long contracts held by speculators now stands at 208,000, while short contracts total only 93,000. Despite the significant difference, the situation will shift toward the bears. Bulls have dominated the market for too long, and now they need a strong background of information to maintain the "bullish" trend. I don't see such a background at the moment. Professional traders may resume closing long positions soon; as we can see, they started this process last week. The current figures allow for a resumption of the euro's decline in the coming months.
Economic Calendar for the US and the European Union:
On December 29th, the economic events calendar does not contain any entries. The impact of the information background on traders' sentiment will be absent today.
EUR/USD Forecast and Trading Recommendations:
Selling the pair was possible yesterday on a rebound from 1.1125 on the 4-hour chart. Targets are 1.1081 and 1.1035. Today, selling will be possible if the pair consolidates below the trend corridor on the hourly chart with a target of 1.0960. Buying opportunities will be possible on a rebound from the lower line of the corridor on the hourly chart with a target of 1.1172.