On Friday, the EUR/USD pair returned to the support zone of 1.0781 – 1.0797. A rebound from this zone would signal a new reversal in favor of the euro and a resumption of growth towards the 161.8% retracement level at 1.0873. If the pair consolidates below this zone, it would increase the likelihood of further decline toward the 261.8% Fibonacci level at 1.0662. Trader sentiment remains firmly bearish.
The wave structure is clear. The last completed upward wave (September 25-30) did not break the previous peak, while the new downward wave (still forming) has broken the lows of the previous three waves. This suggests that the pair is currently continuing to form a new bearish trend, specifically its first wave. A corrective wave may soon appear, but bulls have already lost market control. Regaining it would require considerable effort, which seems unlikely at this stage.
Friday's news had little impact on trader sentiment, and activity was low. The bulls managed to prevent consolidation below the 1.0781 – 1.0797 zone, offering a small chance for recovery. This week's news background will be strong, although Monday is completely empty. Tomorrow also has few key events, so the primary movements and events are scheduled for Wednesday to Friday. On Monday and Tuesday, the bulls need to hold above the 1.0781 – 1.0797 zone; beyond that, further movement will depend on favorable data outcomes. Weak data from the U.S. and EU could lead to new bearish attacks, and the 1.0781 – 1.0797 zone might not shield the euro from a new drop. If reports disappoint for the dollar, the bulls might form a corrective wave, but it would still be a correction.
On the 4-hour chart, the pair reversed in favor of the euro following a bullish divergence, though the growth was short-lived. On Friday, bearish divergences appeared on both indicators, signaling a potential decline towards the 23.6% retracement level at 1.0807. The support zone on the hourly chart remains significant, with both bulls and bears in a tight range as they await key economic data from the EU and U.S.
COT Report:
Over the past week, speculators closed 16,160 long positions and opened 29,514 short positions, shifting the "Non-commercial" group sentiment to bearish. The total number of long positions among speculators now stands at 153,000, with short positions at 181,000.
For the seventh consecutive week, major players have been reducing their holdings in the euro. This trend may indicate a new bearish movement or, at the very least, a significant global correction. The key factor that drove the dollar's decline—expectations of FOMC easing—has now been priced in. Though reasons could arise over time, dollar growth is currently more probable. Technical analysis also suggests the start of a bearish trend, indicating a prolonged decline for EUR/USD.
News Calendar for the U.S. and EU:
The economic calendar for October 28 contains no notable entries. There will be no significant impact from the news background on market sentiment today.
EUR/USD Forecast and Trader Tips:
Selling opportunities may emerge if the pair closes below the 1.0781 – 1.0797 zone on the hourly chart, targeting 1.0729. Buying opportunities are possible with a rebound from the 1.0781 – 1.0797 zone, targeting 1.0873. However, activity may be weak until Wednesday due to the limited news background.
Fibonacci retracement levels are based on 1.1003 – 1.1214 on the hourly chart and 1.1139 – 1.0603 on the 4-hour chart.