The EUR/USD pair continued its upward movement towards the corrective level of 76.4% (1.0823) on Wednesday. Trader activity is low against the backdrop of an empty economic events calendar. A bounce from the 1.0823 level will favor the US dollar with a slight decline towards the Fibonacci level of 100.0% (1.0725). Consolidation of the pair's rate above the 1.0823 level will favor further growth towards the next corrective level at 61.8% (1.0853).
The wave situation remains ambiguous. The "bearish" trend is undeniable, but the waves are currently very peculiar. The latest upward wave broke the peak of the previous wave, but only by a few points. The last downward wave also broke the lows of the previous wave. Thus, the last two waves show signs of the completion of both the "bullish" and "bearish" trends. Since there is currently no clear "bullish" trend, I believe that bears should maintain the initiative. We do not see clearly defined impulse and corrective waves, but a continuation of the decline in the European currency can be expected. However, the current picture shows that bears have a rather weak advantage and a significant drop in the euro should not be expected.
The background information on Wednesday was almost nonexistent. In the European Union, a report on German industrial production was released. This indicator once again disappointed, with a 1.6% contraction in December. I remind you that the last time German industrial production increased was in April 2023, almost a year ago. Since then, production volumes have been decreasing every month. Thus, there is no expectation of growth in the German or European economies soon. ECB rates remain at peak levels, exerting a "cooling" effect on the economy. The European economy has been on the brink of recession for several consecutive months.
On the 4-hour chart, the pair made a reversal in favor of the European currency after forming a "bullish" divergence on the CCI indicator. The consolidation of quotes above the level of 38.2% (1.0765) allows us to count on a continuation of the upward movement toward the upper line of the descending trend corridor. However, the corridor itself continues to characterize trader sentiment as "bearish." The consolidation of the pair's rate below the 1.0765 level will favor the US currency and a resumption of the decline towards the Fibonacci level of 23.6% (1.0644).
Commitments of Traders (COT) Report:
In the last reporting week, speculators opened 5170 long contracts and 4723 short contracts. The sentiment of major traders remains "bullish" but continues to weaken. The total number of long contracts held by speculators is now 200 thousand, and short contracts - 111 thousand. Despite a significant difference, I still believe that the situation will continue to shift in favor of bears. Bulls have dominated the market for too long, and now they need a strong information background to maintain the "bullish" trend. I don't see such a background now. Professional traders may continue to close long positions soon. I believe that the current figures allow for a continuation of the decline in the euro in the coming months.
News Calendar for the US and the European Union:
US - Initial and Continuing Jobless Claims (13:30 UTC).
On February 8th, the economic events calendar contains only one not-very-important entry. The impact of the information background on trader sentiment today may be very weak.
EUR/USD Forecast and Trader Advice:
Sales of the pair were possible on a bounce from the 1.0883 level on the hourly chart, with targets at 1.0823 and 1.0805. Both targets were reached, and even the 1.0725 level, which could be considered the third target, was also hit. New sales are possible on a bounce from the 1.0823 level on the hourly chart, with a target of 1.0725. Purchases of the pair were possible on a bounce on the hourly chart from the 1.0725 level with a target of 1.0823.