FX.co ★ Forecast for EUR/USD on November 3, 2023

The EUR/USD pair continued its upward movement on Thursday and once again tested the corrective level of 23.6% (1.0644), reaching the previous peak. Near this peak, a reversal in favor of the US dollar occurred, and the pair closed below 1.0644, which now allows us to anticipate further downward movement back to the level of 1.0524. A new close above the level of 1.0644 will favor the euro and a resumption of growth towards the level of 1.0714.

The wave situation continues to become more convoluted. The penultimate upward wave did not break the previous peak and was quite substantial. The last upward wave also did not break the previous peak. The last downward wave broke the previous low by only a few pips. Thus, we have all the signs of horizontal movement. If the news background does not disappoint today, we will witness a new drop in the pair towards the level of 1.0524.

The Bank of England meeting on Thursday dominated the background information, which I will discuss in the article on the pound. In the United States, only the report on initial jobless claims was released yesterday, and its value was practically in line with traders' expectations. In Germany, the unemployment rate (rising from 5.7% to 5.8% in October) and changes in jobless claims (+30K against expectations of +15K) were reported. As we can see, both German reports did not meet optimistic expectations and, therefore, could not trigger a rise in the euro. However, during the first half of the day, the euro was rising, which could have been due to Jerome Powell's weak rhetoric the day before. I would like to remind you that no hawkish hints were made, and the question of an additional interest rate hike remains open.

However, if the pair is in a range, the current information background is not too important. Traders are in equilibrium and are unsuccessfully trying to pull the rope to their sides.

On the 4-hour chart, the pair closed below the corrective level of 100.0% (1.0639), which suggests a decline towards the corrective level of 127.2% (1.0466). A firm hold above 1.0639 will indicate the possibility of a resumption of growth towards the Fibonacci level of 76.4% at 1.0790. There are no emerging divergences with any of the indicators today.

Commitments of Traders (COT) Report:

In the last reporting week, speculators opened 1256 long contracts and closed 1587 short contracts. The sentiment of large traders remains "bullish," but it has noticeably weakened in recent weeks and months. The total number of long contracts held by speculators is now 215,000, while short contracts amount to 130,000. The difference is now less than twofold, although a few months ago, the gap was threefold. I 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 start a new "bullish" trend. Such a background is currently lacking. Professional traders may continue to close their long positions in the near future. I believe that the current numbers allow for a continuation of the euro's decline in the coming months.

News Calendar for the USA and the European Union:

European Union - Unemployment Rate (10:00 UTC).

USA - Average Hourly Earnings (12:30 UTC).

USA - Nonfarm Payrolls Change (08:55 UTC).

USA - Unemployment Rate (12:30 UTC).

USA - ISM Non-Manufacturing Purchasing Managers' Index (14:00 UTC).

On November 3rd, the economic events calendar includes five entries, each of which is significant. The impact of the news background on traders' sentiment on Friday can be very strong.

Forecast for EUR/USD and trader advice:

Buying the pair was possible on the hourly chart with a bounce from the level of 1.0524, targeting 1.0644 and 1.0714. The first target has been reached. New buying opportunities arise when the price closes above 1.0644. I recommended selling on a bounce from the level of 1.0644 or one of the previous two peaks. The target is 1.0524. These trades can be kept open at the moment.