The EUR/USD pair rebounded from the resistance zone of 1.0764–1.0806 on Tuesday, indicating a potential reversal in favor of the US dollar and a slight decline towards the lower line of the ascending trend channel and the corrective level of 100.0% (1.0696). Wednesday saw almost no trading activity, with no changes in the chart pattern. The "bullish" trend has not yet been completed or cancelled, and until the pair closes below the trend channel, bulls could initiate a new rally at any moment.
The wave situation remains unchanged. The last downward wave failed to reach the low of the previous wave, while the new upward wave has already exceeded the peak of the previous wave. Thus, a "bullish" trend has formed, but its prospects are doubtful. Over the past 2-3 weeks, the information background has supported bull traders, but will it continue to do so? This is a big question, as the European Union's economy is not in its best shape, and the ECB is ready to start easing monetary policy before the Fed, which already has a much lower interest rate.
There was no news on Wednesday. There is currently no market activity, and making forecasts in this situation is a thankless task. Today, the Bank of England meeting may have an impact on the EUR/USD pair. Perhaps traders will wake up in the second half of the day, and then we will see some movement and receive trading signals. However, the Bank of England meeting has little relevance to the euro. Weak trader activity may persist today. The pair's quotes are exactly in the middle of the ascending trend channel, allowing both bulls and bears to engage in the struggle. In any case, the "bullish" trend persists, and the proximity of the first ECB rate cut pushes bears towards more active actions. But first, they need to close the pair below the channel.
On the 4-hour chart, the pair rebounded from the upper line of the "wedge" and reversed in favor of the US dollar. The process of decline toward the corrective level of 23.6% (1.0644) has begun. If the quotes consolidate above the "wedge," the probability of further growth towards the next Fibonacci level of 50.0% at 1.0862 will increase, changing the "bearish" trend to "bullish." There are no imminent divergences today.
Commitments of Traders (COT) Report:
During the last reporting week, speculators closed 111 long contracts and 3323 short contracts. The sentiment of the "non-commercial" group has turned "bearish" and is rapidly strengthening overall. The total number of long contracts held by speculators is now 167 thousand, while short contracts amount to 173 thousand. The situation will continue to shift in favor of bears. In the second column, we see that the number of short positions has increased from 92 thousand to 173 thousand over the past 3 months. Over the same period, the number of long positions decreased from 211 thousand to 167 thousand. Bulls have dominated the market for too long, and now they need a strong information background to resume the "bullish" trend. Several poor reports from the US support the euro, but in the long run, this is not enough.
News Calendar for the US and the European Union:
US - Initial Jobless Claims (12:30 UTC).
On May 9th, the economic event calendar contains no important entries. The impact of the news background on trader sentiment for the remainder of the day will be absent.
Forecast for EUR/USD and Trader Advice:
Selling the pair was possible upon consolidation below the level of 1.0764 on the hourly chart, with a target at 1.0696. These trades can be maintained now. I recommend buying the euro until the pair consolidates above the level of 1.0806 on the hourly chart, with targets at 1.0840 and 1.0874. Or upon a rebound from the lower line of the ascending corridor.